Cheaper rivals eat into Apple’s China tablet share; A principal factor in the rise of Android tablets has been the falling price of components

August 21, 2013 11:09 am

Cheaper rivals eat into Apple’s China tablet share

By Kathrin Hille in Beijing and Sarah Mishkin in Hong Kong

Apple has lost more than 40 per cent of its share of the Chinese tablet market over the past year to cheaper rivals led by Samsung Electronics, as devices based on Google’s Android and other operating systems rapidly overtake the US company’s gadgets. In the second quarter, Apple shipped 1.48m iPads in China, 28 per cent of the tablets shipped in that market, according to research firm IDC. This was down from a 49 per cent market share a year ago. Samsung shipped 571,000, or 11 per cent of the total, in the second quarter of this year. The data echo statistics showing Apple is losing ground in the tablet market worldwide. Apple’s global tablet market share dropped to 32.4 per cent in the second quarter from 60.3 per cent a year earlier, IDC said earlier in August.While iPad shipments globally dropped 14.1 per cent year-on-year in the June quarter, shipments in China continued to grow but not as fast as competitors’, rising 28 per cent compared with the same period last year, IDC said.

That compared with triple-digit growth for other leading brands in the Chinese market. Samsung almost doubled its market share to 11 per cent by more than tripling shipments, while Lenovo’s share slipped to 8 per cent though sales doubled.

“Most . . . Android players are growing with strong price advantage,” said IDC analyst Dickie Chang. “Samsung, Lenovo, Asus, and Acer are providing more competitive products with [countrywide reach]. Meanwhile, consumers are familiar with Android OS from smartphone use.”

The waning growth of Apple’s iPad shipments follows a similar trend in smartphones, where Android-powered devices have dethroned Apple and where new Chinese brands also are increasingly strong competitors with cheap feature-rich smartphones.

A principal factor in the rise of Android tablets has been the falling price of components. That has enabled lower-cost Chinese brands to make their presence felt in the tablet market.

The average per-piece price of the touch panels used in 7-inch tablets fell 7.5 per cent to $15.60 between the fourth quarter of last year and the first quarter of this year, according to supply chain analysts at IHS.

Taiwanese chipmakerMediaTek, an important supplier to low-cost Chinese smartphone makers, has been focusing on new chips designed for tablets, while cheaper Chinese chip designers have been jumping into the tablet market too.

Mr Chang said Apple’s slower iPad shipments growth came as the company adjusted its Greater China channel inventory strategy to healthier levels, after inventory rose in the first quarter even as it shipped 3m iPads in China.

Apple could turn things round later this year when the new iPad launches in China, said Mr Chang. “Meanwhile, if Apple cut the price of previous generation [products] . . . more consumers would love to buy the Apple iPad.”

Apple IPad’s China Market Share Slumps as Samsung Tablets Gain

The iPad’s share of China’s tablet-computer market plunged by more than 20 percentage points in the second quarter as Samsung Electronics Co. (005930) built on its lead in smartphones to cut into Apple Inc. (AAPL)’s sales.

Apple’s iPad accounted for 28 percent of tablet shipments in China during the period, down from 49 percent a year earlier, Dickie Chang, a Hong Kong-based analyst with researcher IDC, said in an e-mail today. Samsung was second as its share surged to 11 percent from 6 percent a year earlier, he said.

China, Apple’s largest market outside the U.S., poses a challenge for the Cupertino, California-based company as price-conscious consumers turn to less costly tablets and smartphones running Google Inc. (GOOG)’s Android operating system. The iPhone’s share of China’s smartphone market was cut by almost half to 5 percent in the quarter as Samsung led with 18 percent and local makers like Lenovo Group Ltd. (992) gained ground, researcher Canalys said this month.

“Android players are growing with strong price advantage,” Chang said in the e-mail today. “Consumers are familiar with Android OS from smartphone use as well, so they would like to use Android tablets.”

Beijing-based Lenovo was third in the tablet market with 8 percent, down from 9 percent a year earlier, Chang said. Acer Inc. (2353) and Asustek Computer Inc. (2357), both based in Taipei, each had 1 percent share, he said.

Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment on the IDC data.

Apple’s China tablet shipments in the period rose to 1.48 million units from 1.15 million a year earlier, Chang said. Samsung’s jumped to 571,000, from 133,000. Lenovo’s rose to 413,000, from 204,000.

Other vendors among the top 10 in market share with approximately 1 percent each include Redmond, Washington-based Microsoft Corp. (MSFT), and Huawei Technologies Co. and ZTE Corp. (763), both of which are based in the southern China city of Shenzhen.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net