Samsung eats into Apple's dominance

Tom McGregor

Many tech fans believe that Apple Inc reigns supreme in the smart phones market. However, Samsung Galaxy phones are overshadowing iPhones in the lucrative China market. The tech battle of all ages?- Apple vs Samsung?- has clicked into overdrive as Chinese consumers show greater preference for Samsung's devices over Apple's gadgets.

"Recent analysis shows that more of Samsung's flagship Galaxy S III phones were sold in the 3rd Quarter of this year than the Apple 4S," according to ZDNet news. "During the past quarter, Samsung shipped 18 million units while Apple only managed to sell 16.2 million. That's a big deal considering the iron grip that Apple has held on the smart phone business for the past few years."

Some people have perceived Apple as an arrogant corporate giant that laughs at its rivals. The company's manufacturing plants in China, FoxConn, face scrutiny over well-documented allegations of sweatshop labor conditions in which managers overwork staff.

Meanwhile, Samsung is capturing a better public relations image in the country. Chinese officials have welcomed Samsung's chip manufacturing plants with open arms, which has inspired a more loyal customer base.

"When the world's economy remains sluggish and the Chinese economy slows down, the gigantic input of Samsung Electronics in Shaanxi (province), demonstrated not only the attractive market size here but the element in local capability to accommodate sophisticated industrial projects," according to the People's Daily.

It added, "the project is a plant of NAND chips, a product widely used in smart cell phones and tablet PCs, while China has become the world's largest producer and consumer of these IT products, taking-up around 40 percent of the world's total."

Beijing has taken aggressive approach to develop the Western region of China and Samsung's decision to open a major factory in Xi'an would position it for a larger share of the smart phones market in the area.

Samsung Electronics has also become self-sufficient, meaning control over its own destiny from hardware manufacturing to marketing and advertising. Galaxy phones have upgraded to higher levels of sophistication to appeal to higher income and more selective customers. Samsung offers more affordable smart phones as well.

In the third quarter, Samsung held 14 percent of China's smart phones market, according to Canalys, a research firm. Apple didn't even rank in the Top 5 in the country and dropped below Chinese companies: Lenovo, Yulong Telecommunications Scientific, ZTE and Huawei.

Apple appears "indifferent" to its dwindling share of the China market, since its executives are treating China as a "lower-end market".

ZDNet reports that, "Samsung, probably the only real rival in the mobile phone market against Apple, releases all kinds of products in China on a timely manner, with huge investment in advertisements, as well as more affordable pricing on its various lines of handsets, particularly the high-end products including Galaxy S3 and Note that target the same consumer group in China."

Apple has earned notoriety for enforcing questionable warranty policies. Chinese consumer associations have waged bitter battles against overbearing clauses that appear to disregard local regulations.

Hence, precarious signs have signaled that Apple is beginning to lose its dominance in the global smart phones market, which brings to mind a Greek myth. According to a tale, a boy named Icarus wanted to fly and made wings. His father warned him not to fly too high because the sun would melt his wings. Icarus grew arrogant and ignored warnings so he plummeted into the sea where he drowned.

Does a similar metaphorical fate await Apple? The tech giant is dismissing challenges from its main competitor, Samsung, but this could lead to dangerous implications for the company. Samsung Electronics hasn't taken its customers for granted either.

The views do not necessarily reflect those of China Daily.

McGregor@chinadaily.com.cn

 

Tom McGregor's previous articles:

China wealth fund pivots to Asia

Daunting challenges ahead for Chinese solar companies

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Chinese eyes sparkle over silver