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Why Did Apple Lose Its Top Smartphone Position in China?

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Apple was the number-one smartphone player in China in 1Q15

China remains the most important market for Apple (AAPL). In the June-ending quarter, Apple’s revenues from Greater China (Hong Kong, Taiwan, and China) grew at a year-over-year rate of 112%. This growth was mainly driven by the success of the iPhone 6 and the iPhone 6 Plus in China (FXI). The huge response to Apple’s iPhone in China is mainly because of Apple’s brand image and the larger-sized iPhone 6 and iPhone 6 Plus. Apple’s 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus are much bigger than the company’s previous model, the 4-inch iPhone 5S.

Apple also continues to benefit from its partnership with China Mobile (CHL). China Mobile is the world’s largest telecom provider. It serves more than 800 million subscribers.

Consumers are now waiting for a new iPhone release this September

According to a report from IDC, Apple was the top smartphone player in China in 1Q15, with Xiaomi, Huawei, Samsung (SSNLF), and Lenovo (LNVGY) behind it. However, according to a report from Counterpoint for 2Q15, Apple is now ranked third in the smartphone market in China, with Xiaomi and Huawei ahead of it. The above chart shows that Apple’s share in the Chinese smartphone market has declined from 17.8% in 1Q15 to 12.2% in 2Q15.

The main reason why Apple lost its top position in this market is the loss of the novelty factor for the iPhone 6 and iPhone 6 Plus. These phones are now 11 months old. Consumers are waiting for Apple’s new iPhone release, the iPhone 6S, in September this year. This is another reason why people have kept purchasing older iPhone versions.

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