Apple losing smartphone battle to Samsung

Apple Inc appears to be losing the race in China's smartphone market, after it ranked seventh among the brands on offer in the first half of the year, behind Samsung Electronics Co and domestic mobile phone manufacturers.

Apple shipped 5.2 million smartphones to China as of June, according to a report issued by information and analysis provider IHS on Friday. This accounted for a 7.5 percent share of the total smartphone market in China, and was only about one-third of the share held by market leader Samsung, the report said.

The company also trailed local brands that are largely unknown outside China, including No 2 Lenovo and No 3 Coolpad.

Huawei Technologies Co Ltd and ZTE Corp, two telecom gear makers that have paid a great deal of attention to terminal business in recent years, also surpassed Apple and ranked in fourth and sixth place, respectively.

China is the world's biggest smartphone market with 1.06 billion mobile phone subscribers. Overall, 160 million smartphones are expected to be sold in the Chinese market by the end of this year, up 141 percent from 67 million in 2011, the report said.

However, Apple failed to make any noticeable achievement in the Chinese market because of its high pricing, simple product line and the company's reluctance to cooperate with China Mobile Ltd, the nation's biggest mobile carrier, analysts said.

"Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with the domestic TD-SCDMA standard," said Kevin Wang, director of China electronics research at IHS.

"For Apple, this is a huge disadvantage," Wang wrote in the report.

TD-SCDMA technology, the 3G wireless standard adopted by China Mobile, represents the fastest-growing standard for smartphones in China. Shipments of TD-SCDMA compliant phones are expected to rise 10-fold from 2011 to 2016, he said.

Meanwhile, Apple also suffers from its lack of a low-end smartphone model that would appeal to price-conscious Chinese consumers.

The price of Apple's iPhone 4S without a contract starts from 4,988 yuan ($790) each, while Chinese consumers usually select smartphones priced between 700 yuan and 1,500 yuan.

According to a survey conducted by research firm IDC, about 40 percent of the smartphones sold in China last year were priced below $200. Only 11 percent of the smartphones sold cost more than $700.

Domestic mobile phone vendors, such as Lenovo and ZTE, are capturing market shares with their price advantages. Chinese Internet companies, including Alibaba Group, Baidu Inc and Shanda Interactive Entertainment Ltd, have also joined the smartphone race, offering products retailing for around 1,000 yuan.

In addition, domestic vendors challenged Apple because "they have a deep understanding of local consumer behavior and preferences", said Nicole Peng, research director for China at research firm Canalys.

Samsung shipped 14.4 million smartphones to China in the first half - one-fifth of the 69.1 million smartphones it circulated within the country during the period, the IHS report said.