Apple loses market share in China as smartphone buyers go cheap

Apple’s share of China’s smartphone market was cut by almost half in the second quarter as consumers opted for lower-priced handsets from domestic suppliers such as Xiaomi Corp.

The Cupertino, California-based company’s smartphone shipments in China fell to 5% of the total in the second quarter from 9% a year earlier, Nicole Peng, the China research director for Canalys, said in phone interview today.

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

Chinese handset vendors are benefiting as carriers such as China Unicom, promote low-priced smartphones like Lenovo’s A66 or ZTE’s V790, both priced at 499 yuan ($82). Beijing-based Xiaomi’s shipments surpassed the iPhone by “a small margin” and moved to sixth place from eighth a year earlier.

“Apple is only focused on the highend segment, and China’s smartphone market growth right now is coming from the mid- to low-end,” Peng said. “Apple doesn’t have any products in the mid- to low-end and that’s where Xiaomi has been building their brand awareness.”

Apple is missing out on the broadest segment of the market as it has yet to offer a device running the third-generation network of China, the world’s largest carrier with 740 million subscribers . Each of the five biggest vendors in China has an agreement with China Mobile.