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The iPhone is losing market share in China.

Apple's market share in China dropped for the second quarter in a row.

I chalk this up to Apple's fundamental incompatibility with China, which I've written about twice.

In particular, the iPhone is just too fricken expensive for China. The rule of thumb in China is that a phone has to cost 70% of a user's monthly salary in order to succeed in the market.

The iPhone costs two months average salary in China. Yikes!

Would you spend two months salary for an iPhone?

(Photo of fake iPhones for sale on the streets in China courtesy of: )
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Seriously 70% ?Isn't that too much? Or is it less than what an average american spends?
+Mike Elgan Mike seems to be at it these days, predicting the death of the mac, that apple and the asian super power are a match from hell and today he is counting how many iPhones weren't sold in china. I'm convinced that all this is serving well a giant advertiser! I wonder why mike hasn't covered the news about google spying on iPhone's safari users?
if they had a credit card system like ours, the numbers would shoot up. i guarantee the majority of america's "i" product consumers are in the 'buy now, pay later' group.
We balk paying up-front $200-300 for well-made shoes that will last 20-30yrs, but don't bat an eye charging $700-1000+ to our card for a gadget that will lose its battery capacitance in 2 years.
+David Kim Let's not ruin that country with a system of debt the way the U.S. ruined itself.
...and i doubt if there can be innovation without democracy and freedom.
Apple's products are seriously overpriced. Always have been, and in a depressed economy like China, these differences are only exacerbated. I'm an Android fan, and I'm heartened that there is competition in this space. I'm not happy Apple is faltering here, but I am happy that competition will force all of these players to get better.
Might as well bankrupt them They are following the Western nutrition path and will soon be Fat, Sick and Nearly Dead, like so many Americans.
+Mike Elgan This isn't a problem for Apple just in China. I think in India, people can buy a Samsung Galaxy SII and a Samsung Galaxy Note for the price of one single iPhone. iPhones in India are priced upwards of $1000.
I think the price hasn't so much impact on its market share. There are amount of high income class who can afford an iPhone easily.
Maybe that's because 74% of Chinese surveyed said "Naw, I see enough of those at work!"
+Garmon Estes trust me, i'm well aware of his posts and "articles" Thanks for the link but i already know it by heart. cheers.
What kind of fanboy is crazy enough to believe that price has no impact on market share? Price has an impact on market share in any market segment. This is B-school 101 stuff.
+Lemak Enamir , quit cherry-picking the news, and get your head out of your echo chamber. +Mike Elgan is as fair and balanced as they come.
Could they charge less if they manufactured locally? Oh wait. :-)
But can you really look at average incomes? I'm sure Apple isn't. People want the iPhone so bad that those who can't afford it simply buy the next best affordable knockoff.
After decades of communist oppression, I'm sure the Chinese are yearning for something a little more open-source.

From what I understand, Android is changing the world because it can be adapted to any need or price-point without having to get permission from anyone.
I always found Apple products overpriced, but man, 2 months worth of salary? No wonder they're losing ground over there.
and this fake Iphones.. are going abroad.. I mean.. I had one of those in my hands....
+Michael Nichols , "iPhone...knock off"?
i see what you did there ;)
people want to identify themselves with a brand's cache. reminds me of an episode of Housewives of [insert city here] where EVERY bag and luggage is Louis Vuitton.
It is a credit to the brand (and marketing) that they have manage to shift as many as they have.
This is the decline of the hype. Hype is stupid. Finally! GM reports huge profits. America will return! I hope so!
If is expensive in China what do you call it here in USA?
I say USA sucks. As an American we are just not that good anymore! Americans are living in Stupidville.
Apple products are pretty much non-existent once you go east of Berlin. That's what gets me about the whole Apple world domination talk that seems to be prevalent now. They're just 'too fricken expensive' for the vast majority of humanity, as you say, so unless the world suddenly gets a lot richer overnight or Apple products become radically cheaper, I don't see them taking over everything.

This was made obvious to me when I travelled across Russia with an iPod a couple of years ago. Various people that I stayed with wanted to give me samples of Russian songs they had on MP3. Unfortunately, I had an iPod and nobody I met had iTunes or Macs so we couldn't transfer them. The Russians actually laughed at me when I told them that my iPod needed to use special software without which I couldn't load the MP3s.

In the end I bought a cheap chinese mp3 player for a few bucks and used that for the rest of my trip.
You see Jon? Waste of money. Iphone is lame. If I could polish a turd I would. I am not that good at turd polishing!
Tim, I just wanted to point out that iPods are also Chinese MP3 players.
Apple needs to be non-existent. Bye Bye Apple! That man was a thief. A CROOK.
I'm an Apple Hater! Bigtime! Now ya know!
To be fair, +Jav SFX, an iPhone doesn't cost anything close to 2 months' salary for the average American. Average monthly income is about $3500 in the U.S. Even a 64 GB iPhone 4S, then is only a little more than 10% of the average monthly salary in the US. Very, very cheap compared to China. The price compared to high-end Android phones such as the Samsung Galaxy SII is very competitive.
irish d
maybe they realize that the huge expense doesnt stop at buying the unit.
"Unit" Haha! Funny word!
Goes to show you that communism does not work. Suck it up.
Ohhhh I see! Since the average monthly income in the US is $3500... That means every American can afford an iPhone! Awesome!
K. I gotta go back to school. High School I think.
For comparison, I just checked the prices for Poland and there the 32GB iPhone 4s cost 3200 zloty which is around 1 month's gross (average) salary there, according to The Economist. It can only get worse the further east you go.
Like I said minutes ago............ Apple SUCKS. True story.
Not true Claudia. Blackberry will win.
I live in a third world country and the iPhone has a very very small market share when it comes to smartphones. The reason is simple it is too expensive. People are not going to pay $800(unlocked) for a phone when their take home pay is not even up to half of that. This is why Android phones are very popular. With just $300(unlocked) you can get a fully functional Android phone.
+Michael Nichols No, it means that a statistically average American household can afford an iPhone 4S if they budget for it -- and as the article states, a statistically average Chinese household cannot. I know I wouldn't be spending 2 months' salary on any kind of phone. OTOH, everyone has priorities. If a $99 Anrdoid phone would suit your needs just as well as a $400 iPhone, then you should get that. If you need something higher end, look to either something like a Samsung Galaxy SII or to an iPhone. It's all in what you want.
Waste of time here. Get a Blackberry. They work. Business!
+Damilola Oni That's also why Blackberry products are massively popular in countries like Indonesia (4th largest population in world = 250 million people) as Blackberries there don't cost an arm and a leg and you get infinite free messaging (in a country where you're basically reliant on 3G, or worse).

It's also why people like +Robert Scoble are wrong to think that companies like RIM are facing imminent doom just because their phones no longer sell well in Silicon Valley.
No sodding way is it worth two months salary. I would spend no more than two weeks salary on my phone.
This is an interesting topic, as I am a new Mac and iPhone user. I just replaced my Blackberry at the beginning of the year and compared to the iPhone, the iPhone is much more user friendly but I like the keypad better on the Blackberry. Also once you get use to the Mac, it too is also more user friendly than a PC and I have been a PC user for over 12 years. So I am not sure I understand all the fuss in the comments. I thought we all had the freedom to choose in America? What does it matter what kinds of phones other countries are using in the consumer world and why do any of you care? Just sayin'.....
really ? so what shoul i say... in Romania it costs like 6 average sallary and most of them do spend those money for it. sad huh ?
+Tim Harrell the Blackberry is also very very popular in Nigeria (140 million people). It's very cheap. With $150 you will get a very good Blackberry phone that does the basic smartphone stuff.
I agree with you! Apparently the government doesn't want us to have freedom anymore. Just sayin'......
+Theresa Gould The #Smartphonewars are absolutely fascinating. We all are watching carefully to see who will come out on top. So far, Android phones are winning and it is looking very much like a repeat of the Mac vs. PC wars of the 1980s. Apple will always, I think, carve out for itself a very nice niche, but it will never be able to dominate any market for long. Market dynamics simply don't allow for it.
+Rob Shinn $3500 a month. Really? Show me that chart because I will punch the bastard who wrote it. Our country is Bankrupt. There is no jobs and I am not talking $8 and hour jobs at Walmart. Im talking about educated Designer like me with more than 10 years experience having to suck it up when Corporate Jihad ask you..."Would you work for $12?"

I used to make $18 Freshman no experience 10 years ago. An average American can barely afford a Celular Phone in general. I have Mac computer because they are reliable to work and nothing else... but..I also have my PC and don't belong to the CULT of Mac People. Mac uses the word "Technology" to Blind you and make you believe that you should pay that price. In other words, screw the one who can't afford Apple. They don't need to belong to the Fraternity of Mac People. That is what Mac is. A big Fraternity and the only way to join is becoming a Mac Person. Why? Cause you will buy a cock with the Apple Logo on it just to say "I have and iCock".

$3500? Boy you really pissed me off. I am happy with my Samsung Android. Lets be realistic and don't try to show the other countries that we are that Awesome. That was 15 year ago before Corporate Jihad took over our Government.
Ohhh I know! Let's all blindfold each other and throw darts at a wall covered in suggested average monthly incomes. One of us will get it right :)
if an iPhone is 2 months salary you need another source of income :) Don't report something you don't understand.
Apple icrap - Apples will always go rotten after a while, Android rocks
+Mike Elgan I understand you have much more experience on everything related to Apple and technology than I do. But clearly, you have never really lived in China before (although you may have been there physically).
"Would you spend two months salary for an iPhone? " Some Chinese would definitely say yes.
+Tim Harrell You do realise there are only the really rich and the really poor in Indonesia right? I went to an International School there (JIS) and everyone had BlackBerry's but those who were poorer had BlackBerry look-a-likes. And you only get infinite free messaging if you pay for the service through Telkomsel or another provider ($10-20) a month for the BIS service and that doesn't even include calls, although Rupiah stretches a long way.

Also, there is nothing wrong with 3G depending on what country you're in and how they have marketed it. For example the US likes to advertise 4G when really it's not 4G, it's more like 3.5G. I got pretty good speeds in Indonesia on a BlackBerry so it can't be that bad.
+Mike Elgan And please do not forget. Chinese Unicom offers a 2 year contract that covers both the service fee and the price of iPhone. The basic plan is about $900. You get the iPhone for free by paying the $900 two year service fee for the carrier that includes talks, text messages and 3G data plan.
+Todd Vierling "No, such a unit won't be as powerful as a Nexus or an iPhone, but they can usually get 70% of the way there at 20% of the price."

Hardly, a lot of those phones are underpowered and running too many things causes so much lag. And just because a phone runs Android doesn't mean it's the same experience (HTC has Sense and Samsung has TouchWiz) and there is a notable difference in the UI. iPhones also come with the ability to connect with specific Apple technology.
Definitely are too expensive for China. iPhones are an expensive status symbol unattainable for so many there.
+Jon Dye you are right. I am very Frustrated and Sad because I can't afford to pay for Strippers anymore. They need to eat you know. Poor souls going hungry because of the iPhone. That is not nice.
those non iphone thouse are badphone hhhhhhhhhhhhhhhhhhh
crash in one day
I have no desire for an iphone, I love my HTC.
Same in Italy: The iPhone costs €659, €779 and €899!!!
Consider the medium salary in Italy ranges from €500 to €1300 per month, then do your math!
Why its success? First is subtle advertising of the brand, second is because of its price it is also considered a "status symbol", so if you own an iPhone you are supposed to be cool, and last but not least: stupid people are easily brainwashed, they know nothing about tech and believe in everything TVs and ads say. Nowadays the way you present yourself is being more and more important than what you know and who you are.
I wouldn't spend 7% of a months salary on one. The world has their priorities screwed up for sure. I don't even spend 70% of income on my home!
Rick T
It's not Apple's fault that its iPhones are so expensive. That's because people keep buying them. This is economic 101. The market is driving iPhone's price, not Apple.
also here in bahrain..and i don't like iphone 4s i'm waiting for the iphone5
Mark C
Spend 2 months salary on an iPhone? I wouldn't spend $1
I want one please...I pay you one buck! Good enough there??? :P
I only spend 10% of my monthly salary for a brand new, top of the line phone without a contract, I couldn't imagine paying even 70% of it for one.
+Lo Mo, that's so true...most people in China have a fake iphone pr ipad that lasts for like 2 weeks and doesn't charge but they're cheap. 
What salary?!?
Slaves get no salary.
What are the absolute numbers doing? What is the profit share doing? Market share is a dangerous number to quote in isolation
Steve K
This just proves there are better options out there for less.
yeah, id rather have the phone on the left side of the picture... i like real buttons
I don't think people earning the average salary in China are a huge part of the target market. Apple is trying to maximise profits, not sales and they're already up against supply constraints, they don't need to lower prices.

I'd go as far as to say that Apple is a perfect match for China. Its higher prices make it much more attractive. If they dropped the price they might even lose sales. Status plays a huge role in Chinese consumption and Apple has it. In droves. That's why people literally sell their virginity or even their own kidneys to get their hands on Apple products in China.

The main change to the mobile phone market in China recently is that local brands are becoming respectable. China's manufacturing sector has become reliable enough that consumers who want quality don't automatically turn to foreign brands. The threat for Apple in China isn't other foreign brand phones, its domestic brand phones.
Why am i not surprised about this. This is horrible.
and if u work for foxcon only 6 month wages..if u r not dead first...
For 2 months salary - there definitely have to be better things to spend their money on.. Apple will probably try to target, instead the insanely, rich wealthy and successful business people, that are making all their money exporting from China, rather than the average lowly paid workers..
That doesn't stop thousands of people from buying iPhones here in the Philippines. Apple just has that effect on people, despite how much they earn. Some people I know would even loan money to get an iPhone.
Hah! Apple is losing badly to android...MWAH HAH HAH!!!!!!!
Shawn Q
Well at least One country is smart.
As emerging markets become more and more important for apple to sustain it high growth level. They will have to create a prepaid version of their phone. The truth is that it's smart business. Whether its for a person in china or India or its a first cell phone for a teen or tween. A lower cost entry into iOS is needed.
What!! Have u every been ti China. Now everyone here uses idevices. What the hell came expensive?
Excellent. This means more open source in the market or more potential for free and open source systems.

I would spend zero months' salary on an iphone
same here i would spend like $80 on a iphone 4s 32gb iphone is a pain the the rear stupid itunes to do anything XD
it's so expensive, and not compatibale
其实中国有钱的人也挺多的,我寝室四个人,两个同学已经在新年的时候买了iphone 4s,销量下降是因为之前很多的人已经买了iphone 4,而不愿意更换到4s,我想更新产品的速度可不能学习htc那样,每个月都有一台机皇,这样会产生销售的衰退。
It`s all about the little apple. great publicity and there it goes. everybody wants it. u c it in the movies, videos, music, anywhere. so why u`r so surprised ? the fact is real and concerning the governments way to deal the average income , we`re all slaves man.. more or less, a country like mine is a great resource for a lot of thing u all need. shortly, food ,materials and people to enslave. you hire a man for half of price and produces twice the work value, although for him that half price is twice, or more of an average salary in his country. so there u have it. and if u don`n do it for a good living, then what for . and... apple products are not a great concern after u buy a house. my bad if i`m wrong.
my country, a 3rd world country (ugg sounds bad uh).. the dominium is for Blackberry . I never owned one I dont like them. People here even infants at preschool have them ..all the fuss is because the ping thing.. thats all. People buy it for the messenger. I am pro Android and I love it. First experience with a Samsun Galaxy Spica , one of the first android phones.. now with my Galaxy Tab 10.1 ! the only thing Apple I own is my iPod Nano.. but I will never spend all that money for an iPhone if I can have a great Android one for less money.
Samsung is still the #1 in China. But, the demand of iPhone is high. In China, there are about 500M people, who can use just less than 50% of their monthly salary to buy a phone. I believe, 500M is good enough for any viewpoint of biz ;)
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