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Apple Needs to Step on the Gas in China: Opinion

Stocks in this article: AAPL CHU CHL GOOG FB BURBY BIDU

Johnson's departure from the company, and the recent firing of his replacement, may have something to do with it. But Apple is a well-oiled machine and once it commits to a goal, it typically delivers on it.

With all the financial success in China over this period, it's surprising that Apple wouldn't have fulfilled on its ambitious goal.

Many other Western companies are going full steam ahead into China. Burberry (BURBY) had 57 stores in China at the start of 2012 and opened 23 stores on the mainland last year. Then again, Burberry's stock tanked in September last year on a surprising profit warning (although it's made back most of those losses in the warning's aftermath).

I have heard people speculate Apple can't acquire the right locations in China and the right prices in order to proceed. Apple certainly has high standards but I don't think such an exercise with Apple's offshore cash resources would be that difficult.

The answer for Apple's retail presence reticence in China remains unclear.

Meanwhile, in the past two years, Android's software has flourished in China. It has been well-advanced by Samsung, of course, in China. The Note and Galaxy are especially popular among Chinese elites and mainstream. But Android has also been seized upon by all the Chinese handset makers like ZTE and Huawei. Even Alibaba Group and Baidu (BIDU) have built mobile software on top of Android.

Google doesn't really benefit from this Chinese growth of Android. It gets nothing from the handset makers and Google doesn't even get the mobile information sent back to them. Baidu is used by most for search. Local mapping partners handle Chinese maps. Google doesn't even get geolocation data.

But the fact that Google doesn't benefit from Android's growth in China doesn't make it any better for Apple. Apple is still playing catch-up now in China, where it was seen as being more in a position of strength only earlier in 2012.

No doubt this is partially behind Tuesday's report that Apple is working on a cheaper iPhone for release later this year. Apple likely realizes that it must be able to grab a meaningful share of this exploding mobile market in China and other emerging markets. A $650 device will only take you so far in those markets.

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