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Could the iPhone Lose Its Foothold in China in Q1?

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A Rosenblatt Securities analyst thinks Apple (AAPL) could lose iPhone market share in China in the first quarter, reported CNBC yesterday. Analyst Jun Zhang said, “We remain cautious on iPhone sales as recent signs point to Huawei’s 5G Mate 30 smartphone starting to gain market share in China in the high-end segment.” He added, “Huawei has launched eight 5G smartphone models in China. We believe Apple will lose market share in China in the March quarter.”

Apple’s delay in launching the 5G iPhone has already paved the way for many Chinese brands to gain popularity. Zhang indicated that in China, Huawei’s 5G Mate 30 Pro model garnered maximum popularity in November. It even outpaced the iPhone.

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Canalys October report in line with Zhang’s forecast

Zhang isn’t the only analyst to feel this way. In October, Canalys reported that in the third quarter, Huawei grew 66% and achieved a massive 42% market share in China. This marked Huawei’s sixth straight quarter of double-digit growth. Meanwhile, contenders Xiaomi, Vivo, Oppo, and Apple have a combined 50% market share.

Nicole Peng, Canalys’s vice president of mobility, said, “Huawei is in a strong position to consolidate its dominance further amid 5G network rollout, given its tight operator relationships in 5G network deployment, and control over key components such as local network compatible 5G chipsets compared with local peers.” Louis Liu, another Canalys analyst, explained that Apple had seen a positive response for its iPhone 11 in China. However, it faces looming challenges from 5G vendors, who are planning massive promotions around it over the next two quarters.

On the global front, it’s the iPhone

However, TrendForce points to a different scenario on the global front, according to Pandaily. The research company feels that the success of the iPhone 11 in China will help Apple outpace Huawei in the fourth quarter. Apple’s global iPhone sales will climb to 69 million units, while Huawei will sell 55 million units in the quarter, according to Trendforce. Citing the report, Pandaily stated that the main reason for Huawei’s international shipment drop was its potential incompatibility with Google Services, which is dominant in Europe and North America.

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Xiaomi to compete with Apple in Japan

Meanwhile, Apple may also be facing competition from Chinese brands in Japan. This time it’s Xiaomi at play. Yesterday, Bloomberg reported that Xiaomi plans to surpass iPhones in Japan with an affordable smartphone and attached fitness tracker. The company indicated that it would launch its Mi Note 10 series in Japan this month for preorder. The smartphone will feature a 108-megapixel camera and will have an initial price of $486.

iPhones are immensely popular in Japan, and in the first half of 2019, Apple had a 44.6% market share, according to a report by the Japan Times yesterday. It stated that Xiaomi could benefit from the timing of its entry into Japan. The country’s government has mandated stringent pricing disclosures for smartphone manufacturers. It’s also capped the excessive discounts certain brands offer to boost their sales. Xiaomi aims to capture the market with smartphones priced at half as much as the iPhone 11 series.

While it won’t be easy for Xiaomi to displace Apple altogether, it could surely eat into Apple’s market share in the affordable smartphone space. Xiaomi is seeking out a market in Japan because its home market, China, is dominated by Huawei.

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2020 likely to be a turning point for iPhones

2020 is expected to be a very dynamic year for Apple. The market is eagerly awaiting its 5G iPhone launch and is also likely to pay a premium for it. Last week, we also discussed how Apple is planning to change its strategy for iPhones in the future. In 2021, the company plans to launch its iPhones twice a year to reduce its upgrade cycle and boost sales. It also intends to bundle its iPhones with its hugely popular AirPods in 2020. There are also various analyst predictions making the rounds about the number of iPhones Apple will launch next year, and there’s a lot of buzz about the iPhone’s future tech specs.

Apple is determined to revive flagging iPhone sales, and China is a crucial market. To stay afloat in the Chinese market, it must work on its pricing strategy. The official launch of its highly anticipated 5G iPhone will also be critical. Otherwise, other 5G carriers in China could eclipse it in no time.

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