Apple Inc. (NASDAQ:AAPL) has been making some tremendous inroads in the emerging but enormous market in China, but is Apple the winner there? According to one writer, not quite. The company might need to adjust its strategy because its smartphones can only reach a small percentage of a dynamically growing market – and is arguably the largest market in the world (India is growing rapidly as well).
Buster Heine at the blog site Cult of Mac wrote an insightful piece regarding the China market for smartphones and the current position of Apple Inc. (NASDAQ:AAPL) in that market – but also addresses the intense competition in the country because of the price point for iPhones. Heine mentions a pice by Bill Powell in Fortune magazine who makes the case that Apple inc. (NASDAQ:AAPL) still has tremendous potential for growth – but says that China is the sticking point.
Notwithstanding some past customer-service complaints against Apple Inc. (NASDAQ:AAPL) – where he company was charged by government officials of breaking China law and using remanufactured parts instead of new parts to repair devices, as one example – China has been a vibrant money machine for Apple Inc. (AAPL) in just four years since opening its first retail Apple Store in 2008 – the market has grown from just a “few hundred million dollars” up to $12.4 billion in sales during the first half of 2012. Analysts expect that Apple Inc. (NASDAQ:AAPL) may pass $25 billion by the end of this calendar.
However, Heine points out that due to the top-end price point of the iPhone devices, Apple Inc. (NASDAQ:AAPL) has not been able to gather as large a share of the China market because relatively few consumers can afford those devices – and those with low- and mid-range phones in their stables, like Samsung Electronics Co. Ltd., Lenovo, ZTE and Huawei have been their own very viable competitors in the market.
The other issue for Apple Inc. (NASDAQ:AAPL) that is preventing a larger market share is that the company has yet to reach a deal with China Mobile, the country’s largest wireless carrier with more than 650 million users. Certainly if Apple Inc. (NASDAQ:AAPL) addresses either or both of these obstacles, investors like billionaire fund manager David Einhorn of Greenlight Capital will likely begin to see some improved returns after this recent stock slide.