Toward the end of last year, Apple scored two big breakthroughs in Asia. NTT Docomo, the No. 1 mobile operator in Japan, finally reached a deal with Apple in September to sell the iPhone in the world’s third-largest economy. And then China Mobile, the leading operator in the world’s second-largest economy, at last came to terms with Apple in December.
Those deals came too late in the year to have much of an impact on Apple’s 2013 earnings but should provide a boost to sales this year—and as we saw from Apple’s earnings and market-share announcements yesterday, the company may need the lift. It sold a 51 million iPhones in the final quarter of 2013, a record high that fell short of the 54.7 million units analysts had expected. And Apple forecast that revenues in the current quarter would come in from $42 billion to $44 billion, while analysts were expecting $46.1 billion.
Unfortunately for Apple, making gains in China, Japan, and other parts of Asia will be more difficult this year, too. According to Tim Cook, China Mobile sales of the iPhone have gotten off to “an incredible start.” Still, Chinese companies that haven’t been in Apple’s league are now moving more aggressively into the smartphone business. Huawei Technologies, the country’s largest maker of telecom equipment, is the world’s No. 3 brand, market research group IDC announced yesterday; Lenovo, the leading Chinese PC company, is close behind, at No. 4.
The shipment numbers for the last quarter of 2013 show the increased role of the Chinese smartphone makers. While No. 1 Samsung had a 28.8 percent share, slightly below last year’s 29.1 percent, No. 2 Apple dropped from 20.9 percent in the fourth quarter of 2012 to 17.9 percent a year later. “Apple had the lowest year-on-year increase of all the leading vendors,” according to an IDC report. “Now that Apple has finally arrived at China Mobile, it remains to be seen how much Apple will close the gap against Samsung in 2014.”
Meanwhile, Huawei’s share of shipments increased to 5.8 percent, up from 4.6 percent, and Lenovo’s share was 4.9 percent, up from 4.1 percent. ZTE, another Chinese company making smartphones, is close behind the No. 5 player, Korea’s LG.
With Apple now teaming with China Mobile, such local players as Huawei, Lenovo, ZTE, and Xiaomi (another hot Chinese brand) are looking to make gains in markets beyond China. China’s brands are likely to do well as demand grows for inexpensive smartphones. “Cheap devices are not the attractive segment that normally grabs headlines, but IDC data shows this is the portion of the market that is driving volume,” Ryan Reith, program director with IDC’s Worldwide Quarterly Mobile Phone Tracker, said in a statement. “Markets like China and India are quickly moving toward a point where sub-$150 smartphones are the majority of shipments, bringing a solid computing experience to the hands of many.”