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IPad’s China Market Share Plunges as Domestic Tablet Makers Gain

August 21, 2013

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

A customer uses an Apple Inc. iPad while waiting for the official opening of the company's new store in Shanghai Photographer: Qilai Shen/Bloomberg

Apple Inc. (AAPL:US)’s share of the Chinese tablet-computer market plunged in the second quarter as Samsung Electronics Co. (005930) and dozens of local makers built on gains in smartphones to curb growth in iPad shipments.

Apple accounted for 28 percent of tablet shipments 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 surged to second with 11 percent, while half of shipments were generated by producers with 1 percent or less each in market share, he said.

Consumers in China, Apple’s largest market (AAPL:US) outside the U.S., are turning to cheaper tablets using Google Inc. (GOOG:US)’s Android operating system, following a trend in smartphones that saw the iPhone’s market share almost halve. Local brands including Ramos and Teclast are joining Samsung and Lenovo Group Ltd. (992) in capturing sales once dominated by the iPad.

“Apple has lost its luster in China in the past six months and is no longer the must-have product in any category,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “Consumers are more price-sensitive. Before, people would skip lunch to buy an iPad.”

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

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.

Huawei, ZTE

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

While Apple’s China tablet shipments in the period increased 28 percent to 1.48 million units, Samsung’s rose more than fourfold to 571,000 and Lenovo’s doubled to 413,000, Chang said.

Much of Apple’s lost market share went to small Chinese companies, according to IDC’s Chang. Tablet makers with 1 percent market share or less collectively accounted for 50 percent of shipments in the second quarter, compared with 36 percent a year earlier, Chang said.

Those local players include brands Onda and Aigo, and producers who sell unbranded products to others, Chang said. They are able to leverage the same supply chain (AAPL:US) in Shenzhen that produces components for many name-brand tablets and then copy the business model that allowed hundreds of makers of smartphones to flourish in China, he said.

Fragmented Market

“The tablet market is fragmented with many local/whitebox players,” Chang wrote in an e-mail. “Many Chinese vendors get a piece as the entry barrier is not high enough.”

The domestic vendors also are capitalizing on a lack of new products from Apple, as a new iPad or iPhone hasn’t been introduced since last year. Apple’s smartphone shipments in China fell to 5 percent of the total in the second quarter from 9 percent a year earlier, market researcher Canalys said Aug. 9.

That is Apple’s lowest market share since the fourth quarter of 2010, according to estimates from Canalys. Samsung held the top spot with 18 percent share.

Apple is set to unveil new devices later this year, and that wait is providing an opportunity for local makers, said Wang Jun, a Beijing-based analyst with researcher Analysys International. If Apple can’t release an innovative tablet soon, then Android will dominate the market, he said.

“Android has quickly seized the tablet PC market with a crushing force,” Wang said in an e-mail. Chinese brands “are hot on the online selling channels and have earned more market share with low prices and high product value.”

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

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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