Data on China: Apple’s Biggest iPhone Market

We have always known China was going to be a key market for Apple. The only question was when. Our research has continually turned up evidence China was a booming iPhone market. iPhones were coming through the secondary market or being imported and brought onto local networks through backdoor channels even before they were officially available on those networks. Umeng’s app analytics has always been a very insightful data source regarding mobile devices in China. As we look at their latest data set we are able to see just how big of a market China is for the iPhone.

Some time over the past six months China has become Apple’s largest market for the iPhone. While our data suggested there were a lot of iPhones in China, I was surprised to learn there were more iPhones in China than in the United States. According to Umeng’s data, the iPhone accounted for 80% of the $500 dollar and above premium smartphone segment in China. The premium handset market in China is 27% of the install base, up from 15% in Q2 2013. This means from Q2 2013 to Q4 2013 the premium handset segment grew 12% in China. From our smartphone data of the current smartphone install base in China we conclude there are approximately 139m premium handsets in China. With the iPhone having 80% of that install base, it means there are approximately 111 million iPhones in active use in China. Compared with our estimate, there are approximately 90m iPhones in active use in the United States. In fact, China is Apple’s largest market for the iPhones.

Key Data Points: (All estimates, from my firm Creative Strateiges, Inc)

  1. Apple has 80% of the >$500 premium segment of the smartphone market in China
  2. The premium segment grew 12% between Q2 2013 and Q4 2013
  3. Apple has approximately 111 million iPhones in active use in China
  4. Apple has approximately 90 million iPhones in active use in the United States
  5. China makes up 32% of the current iPhone install base worldwide
  6. The US makes up 27% of the current iPhone install base worldwide
  7. China and the US combined make up 60% of the iPhone’s total install base

Given how different the two markets are with carrier subsidies, it is remarkable the iPhone install base in China has surpassed the US. A point to ponder: the iPhone has not been available on the single largest carrier in China and was no where near the most affordable device in China. Yet it has surpassed the US in install base. It is phenomenal in a market where the iPhone has not been on the largest carrier and is not the most affordable device is now the largest iPhone market for Apple. The cheapest iPhone currently in China, the iPhone 4, costs several hundred dollars more than a subsidized iPhone 5s in the US market.

Overall, what we observe – even without the conventional wisdom that said Apple needed an extremely low-cost iPhone in China to gain share – is the Chinese have surpassed the US market. The level of optimism for Apple in China could not be higher given this most recent data. Particularly if they do launch a larger screen iPhone that can truly fit the insatiable demand for a combined tablet and smartphone in China.

With China’s continually growing middle class, projected to be 512m people by 2015 (Chinese Academy of Social Sciences) it is becoming more clear why China is a key growth story for Apple and one they can continue to service within their existing strategy, with some additional regional focus as well.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research 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 and he is responsible for studying over 30 countries. Full Bio

3 thoughts on “Data on China: Apple’s Biggest iPhone Market”

  1. I’m not very good with maths but when a market segment grows from 15% of the market to 27% isn’t that roughly an 80% growth not 12%? In any case Apple’s control of the profitable segment of the market sounds encouraging.

    Another small data point which I think was widely missed recently. China Mobile announced that they had sold 1 million iPhones in February which was widely dismissed by pundits as not impressive. IMO one has to remember that iPhones are incompatible with China Mobiles 3G network so it’s only Chinese consumers willing to pay for LTE who would opt for an iPhone. Further, China Mobile announced 2 other relevant data points. First that they sold 1.4 million LTE phones in Feb of which the aforementioned iPhone accounted for 1 million. Lastly China Mobile also said they were gearing up to sell 100 million LTE phones this calendar year. Could be a substantial boon for Apple if that ratio holds up to anything remotely near its current level.

    1. I don’t think I worded it correctly. I wasn’t referencing the percentage mix of device sales but of install base. So I didn’t show the math on high end install base to get the growth figure I used.

      Totally agree with your points on China also and I think Apple’s upside there is much bigger than many realize. My points above justify that.

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