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Friday, 26 July 2013 10:24

Apple getting its butt kicked in China

Written by Nick Farrell

What the Tame Apple Press did not tell you

After the Tame Apple Press went to town spinning Apple’s results, clearer heads are starting to look at some serious problems that Jobs’ Mob is having in China. Apple Chief Executive Tim Cook believes that "over the arc of time" China is a huge opportunity for his company.

In fact much off Apple’s huge share price rise was dependant that the Chinese would follow the rest of the world and want to buy a fruity smartphone. This became more important as the US market became saturated. However what Cook did not understand was that his number one rival Samsung had been around in China far longer and penetrated much deeper into the country.

The figures show that despite Apple’s efforts its revenue in Greater China, which also includes Hong Kong and Taiwan, slumped 43 percent to $4.65 billion from the previous quarter. Notice that this included Hong Kong and Taiwan where Apple is a lot more popular. Mainland China would have been a bigger slump. Yearly figures show that Apple was down 14 percent lower from the year-ago quarter. What appears to have happen is that Apple lost Hong Kong too.

Cook admitted that he was not clear why that occurred.

To get China, Apple has to kill off Samsung, and shedloads of cheap and cheerful Chinese outfits, which are doing well locally. It also has to do that from a position of fifth place. Apple has marketed itself from worst positions before, but it also faces the problem that there are limits to what you can do with a smartphone before it gets too expensive or silly to make. Cook’s answer is to double the number of its retail stores over the next two years it currently has eight flagship stores in China and three in Hong Kong. After all cathedrals are very good at bringing in the faithful.

But Samsung has three times the number of retail stores as Apple, and has been more aggressive in courting consumers and creating partnerships with phone operators. In short Apple might have to look elsewhere for a place to save its growth figures and keep the shareholders happy.

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