Apple Inc. NASDAQ:AAPL" target="_blank" rel="nofollow">(NASDAQ:AAPL) faces a challenge in China as sales of its iPhone have been sorely outpaced by Samsung it's major hardware competitor. The news comes just as Apple announced a second business partner in selling its phones in China. Apple maintains a figure of about 7.5% of the Chinese Smartphone Market. Samsung claims a share of 24.3% of the same market. China has the world's largest population and so the worlds largest smartphone market. The country's increasing wealthier class have been interested in the phones for their usefulness as well as having them as status symbols.
Samsung's dominance may stem fro its strategy of availability on all three of China's major mobile network with 3G capability. Apple has now partnered with two of the Network but the third, China Mobile Ltd., is the largest in the market and Apple's iPhone is not available with that provider. Apple's new partner, China Telecom Inc., began selling iPhones last week. It is China's smallest carrier. This means the effect they might have on Apple's market share is limited.
China has almost 1 billion mobile users and with this new deal Apple has access to only about one third of the customers. The problem originates from China's largest telecom provider, China Unicom, which uses a unique 3G standard incompatible with other technology. Samsung chose to modify its phones to get on the network while even after clearly considering it, Steve Jobs met with China Unicom's director befor introduction into China, Apple declined to change the consistency of their range. It is likely that once a standardised LTE network comes online in China it will be used by Apple's iPhone. The next iPhone will likely be 4G capable after the technology's introduction on the iPad.
Apple's share of the smartphone market worldwide does not reflect its difficulties in China. The company now holds the number one spot worldwide with Samsung in second place. In China Apple is struggling in fifth. This news comes after trouble the technology pioneer has had in recent weeks over its use of the iPad brand name in China. It had been sued by a Chinese company for infringing on the name. Although seen as directly competing in the smart phone market Samsung has a different business model than Apple. That company sells several different types of phone at different prices while Apple maintains a product line of a single device with some options on features.