Don’t Miss OS X Mountain Lion’s Potential in China

by Ben Bajarin   |   February 16th, 2012

Many in the media who got an early preview of Apple’s new Mac OS Mountain Lion are notably excited about a range of features. I point out a few of them in my article sharing my experience with the developer preview. Given that much of the mainstream media, or at least the sites that get the most publicity, are not based in China it will be somewhat easy to not focus on the China specific features built into Mac OS X Mountain Lion. China is a significant growth area for Apple and the improvements made for China should not be missed. Here are some of those features.

Late last year I saw a survey from Morgan Stanley that looked specifically at the PC market in China. Now by PC they mean a clamshell notebook or desktop form factor. Based on Morgan Stanley’s survey of Chinese consumers, here are the data points that stood out to me.

– Consumers in tier 1-3 cities and enterprises are key to China’s PC growth. 45% of tier 1-3 residents plan to buy a PC in the next three years vs. 36% in tier 4-6 cities. Just over half of PC owners live in tier 1-3 cities and the rest in tier 4-6. Large enterprises plan to grow 2011 IT budgets by 10%, outpacing SMBs at 2%, and spend 37% of their budgets on hardware.

– Consumer PC purchasing behavior in China is similar to developed markets in several ways. Our survey suggests Chinese consumers (9% of global units) spent $700 on their current PC, same as the US. Encouragingly, consumers in China plan to spend 6% more on their next PC and half of them plan to upgrade to a new PC in the next two years (four-year cycle).

– Our survey suggests one in five consumers want to purchase a Mac as their next PC, four times Apple’s 5% share today. However, Apple’s share gains in the near term are likely limited to the 7% of respondents who are willing to pay over $1,100 for a PC. In the long-term, as Chinese consumers become more affluent, we believe Apple could see further share gains as it is the most desirable brand, according to survey respondents.

– Apple stands out as the strongest consumer PC brand, but it may take time to monetize its growth potentials. Chinese consumers rate Apple as the most desirable PC brand well before

When you look at that data, it becomes clear that Apple has been well positioned to succeed in China. When you look at the improvements Apple made specifically for Chinese customers with OS X Mountain Lion, you can argue that the case for the Mac in China is stronger than ever.

The data from the Morgan Stanley survey points out the need for affordability with Mac hardware to come down and that is true as still only a small amount of Chinese consumers are what should be considered “affluent.” So price will be somewhat of an issue in that region but you have to also consider a brand and aspirational purchases which sometimes trump affordability or cheap. Chinese customers are very brand centric and prefer items with high brand appeal. For that I would contend that if Chinese customers have to save a few more months to get a Mac, I am willing to bet a large percentage will.

Also, iPad and iPhone are hot in that region–and cost less than the Mac. This again will make the case for the Apple ecosystem in China. All of Apple’s products help sell the others. Once you get one you most likely want them all, or at least more. iCloud’s tight integration with OS X Mountain Lion will make the ecosystem even that much stronger in every region.

Lastly, it is important to point out is that all of these specific features for the Chinese market will increasingly become a key differentiator for the Mac in that market. Compared to other “PCs” in that region these new OS X features and more will make the Mac highly differentiated in China. This also sends two messages. The first that Apple is very serious and committed to China. The second is that Apple is telling Chinese customers that they are interested in innovating uniquely for them.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • mhikl

    Interesting take, M Bajarin.

    I have lived among the Chinese and they are a thrifty people. I’ve been told that while we in the west think along the line of “how much can I save”, the Chinese think “how little can I spend”. Between the two philosophies there is all the difference.

    I have found that my friends keep their Macs a lot longer than my PC friends keep theirs. My Mac Book is now five years old and has probably seen its last OS, Lion. I shall probably revert it to Snow Leopard when I get the next iteration of the MBA. I still have old programmes that are useful. My first and second generation iPts cannot talk to the cloud so a new one is on the horizon, too.

    My All-in-One Mac started out with Mac OS 8 and continued to increase in both speed and use to its final OS X 10.2, Jaguar, five years later. I kept it and its brother, the Pismo Power Book until I bought the MB in 2007, but five years for updates is admirable.

    I hope Apple continues to keeping their OS and iOS products compatible at least five years. Your point on the Chinese saving up a little longer for the better product makes sense but I suspect they will also take into account the longevity of their products.