Apple's Smartphone Share in China Is Better, But Not Great

NEW YORK (TheStreet) - Apple (AAPL) seems to be making small inroads in its quest to gain smartphone market share in China, but it's still far behind the country's largest smartphone maker, according to new metrics.

Apple shares were falling 0.29% to $544.40 on Wednesday morning even though the tech giant's smartphone market share in mainland China rose to 7% in the fourth quarter of calendar year 2013 compared to 6% in the prior quarter, according to The Wall Street Journal, citing research firm IDC.

China is the world's largest smartphone market.

The fourth quarter was the first full quarter of sales for Apple's iPhone 5s and 5c, Apple's latest offerings. Apple released the latest versions in the U.S., China and other markets in September. Typically the Cupertino, Calif.-based company would release its latest device versions in China several months later.

Still, the research shows Apple still has a ways to go, particularly since smartphones using Google (GOOG) Android's operating system, like Samsung phones, are less expensive than Apple devices. The market research showed that Apple was the fifth-largest smartphone vendor in China, according to the Journal article.

Apple's quest to gain market share in the Chinese market is a tough one. Apple is competing with companies that provide consumers with cheaper options, fueling a debate over whether Apple has to compete on volume, the article states.

Samsung held onto its top position with a 19% share of the Chinese market, followed by Lenovo, with a 13% share, the article says. Third and fourth in the market share ranking was Coolpad, owned by Yulong Computer Telecommunications and Huawei Technologies, respectively.

Yet Apple is expected to get a further boost in the first quarter due to a new agreement to sell phones through China Mobile (CHL), the country's largest carrier with more than 760 million subscribers. China Mobile started selling Apple devices on Jan. 17.

Last month CFO Peter Oppenheimer said on the company's first-quarter earnings call that China is an "incredibly important market to Apple," with iOS devices already accounting for 57% of all mobile web browsing in China.

CEO Timothy D. Cook followed up saying that even in just the first week of the China Mobile deal it was "the best week for activations we've ever had in China" despite only selling in 16 cities.

Cook projected that Apple plans to be selling phones in roughly 300 cities by the end of 2014. "We've got quite the ramp in front of us, and we're incredibly excited," he said on the call.

Apple already reached a "high water mark" in last quarter, Cook said, referring to revenue from retail stores jumping 31%.

"We had some very, very strong sales on iPad," Cook said. "IPads in greater China were up 64% year over year, Macs were up 28%. This compares to a tablet market in China that's growing at 21% per IDC, and a PC market that is contracting by 7%. And so in addition to the great iPhone news with China Mobile and how we're looking there, we really turned in a stellar quarter in greater China overall, and we are very proud of it."

--Written by Laurie Kulikowski in New York.

Follow @LKulikowski

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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