The iPhone 5 made its highly-anticipated arrival in China today, but despite strong pre-orders (China Unicom received 300,000 pre-orders), it remains to be seen whether this will help Apple’s eroding share of the world’s largest smartphone market.
Though the iPhone continues to be hugely popular among Chinese consumers, this may not be enough to hold onto the interest of China’s 290 million smartphone users. China is still Apple’s second-largest market, but iPhone sales are losing traction to competition from Samsung and Nokia, as well as domestic handset makers such as Huawei, ZTE and Lenovo, all of which have produced cheaper Android-based devices. Earlier this month IDC reported that Apple’s ranking in China’s smartphone market fell two spots to sixth place during the second quarter, while rival Samsung took first place.
One crucial element is whether or not Apple will be able to strike a deal with China Mobile. It has been stuck in talks with the country’s biggest carrier for about four years. One of the key roadblocks to an agreement is the lack of compatibility between China Mobile’s proprietary network and iPhone’s mobile radios.
Furthermore, China Mobile and Apple must hammer out differences over revenue models. China Mobile CEO Li Yue said earlier this month that “China Mobile and Apple still have to solve many issues, such as the business model, articles of cooperation and revenue division, but I believe we will reach an agreement eventually.”