Apple Inc. (AAPL) Gains in China as This Market Explodes

Apple Inc. (NASDAQ:AAPL) made it real clear last year when CEO Tim Cook paid multiple visits to China that China would be a very important market in which Apple would strongly desire improved market share. However, the company’s executives were not dumb people – they knew that there is a certain level of nationalistic pride in China, and any domestic companies that make smartphones will have inherent loyalty, which greatly limits the number of people who are open-minded to outside vendors. However, Apple clearly saw an opportunity in China and has been working toward getting that foothold.

And based on some of the latest data out of that country, it seems that even before a rumored cheaper iPhone hits the market – much less the confirmed-device reports – Apple Inc. has apparently improved its standing in the China market while the market itself has exploded over the last year.  Canalys analyst Nicole Peng reported that the overall smartphone market in China  has grown by more than 150 percent in the last year, and shipments of phones into the country have skyrocketed. In the most recent quarter, there were 82 million smartphones delivered in China, while the U.S. only saw 27 million.  Both countries were in the low 30-million range  in the previous quarter.

And Apple Inc., thanks to the iPhone 5 and reported price cuts on older models, was able to move up on the market share rankings from sixth in the previous two quarters to fifth in this most recent report with about 8 percent of the market – which signifies a significant increase in numbers of iPhones from prior quarters given the dramatic increase in the market.

Samsung Electronics Co. leads the China market with 20 percent, but it is reported that 68 percent of all smartphones delivered in China last quarter were from domestic vendors. That means that Samsung and Apple Inc. as the top two foreign companies in the market, take up nearly 90 percent of the non-China market share. And one should remember that Samsung has a distinct advantage  in that it has multiple phones in the market, and it has a contract with the world’s largest wireless carrier, China Mobile Ltd (ADR) (NYSE:CHL) – a contract that has so far proved elusive for Apple.

What do you think?  How much impact would a lower-priced (nee, cheaper) iPhone make in the China market? Or, do you think Apple Inc. should stick to its status-symbol reputation and still make its top-of-the-line devices and only sacrifice margins slightly by lowering prices? And do you think Apple will ever reach a deal to seel iPhones through China Mobile and its estimated 725 million subscribers? Let us know your thoughts in the comments section below.

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