The high price tag stands to deter many in the country, as local competitors are once again getting ahead of Apple in launching cheaper but similar devices.
Apple has launched the most revolutionary iPhone in a decade, but even that isn’t enough to help the company regain its former glory in China .
The Cupertino, California-based smartphone giant has been in need of better iPhones to help it recover lost ground in the country and repeat its success from back in 2015, when Chinese consumers flocked to the company’s large screen and gold-colored iPhone 6 and 6 Plus, leading to a 70% jump in shipment in the world’s largest smartphone market. The company, however, has since seen its Greater China shipment decline over the past two years, with the region the only one registering a year-over-year revenue decrease this year, as its Chinese competitors launch cheaper but almost comparable devices.
The latest iPhones, unveiled on Tuesday inside a theater at Apple’s new $5 billion headquarters to mark the tenth anniversary of the original iPhone, did have a lot of new features. The iPhone X, the company’s most expensive phone to date that retails from 8,388 yuan ($1,287) in China, has removed the physical home button as the main control point of the device, using instead a thin virtual bar at the bottom of the screen to launch apps. Its new Face ID function supports 3D facial scan to unlock the phone and authenticate payments, while the new iOS software runs augmented reality apps and can apply your facial expression onto animated emojis in iMessage.
But these offerings won't be enough to turn the tide in China. The high price tag stands to deter many in the country, as local competitors are once again getting ahead of Apple in launching cheaper but similar devices.
Xiaomi, for example, unveiled in Beijing the Mi MIX 2 just two days before Apple’s product launch event. The 3,299 yuan ($506) phone, also completely bezel-less, comes with a full ceramic body that gives it a high-end, glossy feel. Huawei, meanwhile, will launch in October the Mate 10, a bezel-less phone powered by its artificial intelligence-enabled Kirin 970 chipset, giving the device much faster data and light information processing speed. And OPPO, which became China’s largest smartphone brand by shipment last year, also have a full screen phone planned for later this year, according to multiple Chinese media reports.
But the iPhone 8 and 8 Plus, unveiled alongside the iPhone X, don’t come with enough innovations to justify their 5,888 yuan ($903) to 7,988 yuan ($1,226) price tag in China. The products’ designs are similar to iPhone 7, and in a country where consumers attach more importance to the appearance of smartphones, it's likely they won't provide enough incentive to upgrade.
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And that is exactly how Olaya Huo feels. Huo, 29, who works for an international consulting firm from Shanghai, said she’d only consider Apple if it lowers the iPhone’s price tag to less than 5,000 yuan ($767).
What’s more, Apple’s latest service offerings don’t give the company much of a boost in China either, further underscoring its long-term challenges in the world’s second largest economy.
Unlike in the U.S., where consumers are wedded to the iOS ecosystem of devices, online services and entertainment programs, Chinese users have a relatively low loyalty to Apple's operating system. The reason partly lies in WeChat, Tencent’s instant messaging app now with more than 900 million active users. The app, which an average Chinese person opens ten times a day, has become an integral part of life as it also has payment, shopping, news and taxi-hailing functions, meaning Chinese consumers don’t feel alienated for using an Android phone as long as it runs WeChat.
Another factor holding back Apple’s China service offerings is censorship. Last year, the company’s iBook and iMovie services were abruptly shut down in the country. Chinese authorities haven’t offered an explanation or said when they’d be back online.
Apple, however, isn’t without advantages in China. It still controls the country’s market of high-end smartphones, shipping 14.6 million units priced at over $600 in the first half this year, giving it an 86% share in the premium segment, according to Canalys. And it has been cozying up to the Chinese government, complying with censors’ requests to take down VPN apps and moving data to China-based servers.
But in the face of fast-rising local rivals, the company still won’t be back to its heyday in 2015, according to Canalys analyst Jia Mo.