Apple tops China’s smartphone market in Q4

Driven by new iPhone 6, 6 Plus phones

Apple Inc topped China's smartphone market (Hong Kong and Taiwan excluded) for the first time ever in the fourth quarter of 2014, driven by the popularity of its big-screen iPhone 6 and 6 Plus.

However analysts noted on Wednesday that it is still hard to say how long Apple could hold this spot.

"This is an amazing result, given that the average selling price of Apple's handsets is nearly double those of its nearest competitors," UK-based consultancy Canalys said in a press release posted on its website late on Tuesday.

Apple was followed by Xiaomi, Samsung and Huawei in shipments during the period, according to Canalys, which did not disclose details of the four companies' shipments.

Apple's iPhone 6 and 6 Plus phones, which hit the Chinese market on October 17, have helped the company turn the tables on competitors. In the third quarter of 2014, Xiaomi was the top smartphone maker in terms of shipments in the Chinese market, followed by Samsung, Lenovo and Huawei. Apple only ranked seventh in the period, data from Canalys showed.

In the quarter ended December 27, Apple reported $16.1 billion in revenue in the Chinese market, a 157 percent growth on a quarterly basis and 70 percent rise year-on-year, according to a financial report released on Tuesday.

Globally, Apple posted record revenue of $74.6 billion in the quarter, up 30 percent over the same period in 2014, and net profit for that period also set a record of $18 billion. Apple CEO Tim Cook called it a "historic quarter" for Apple, according to a conference call audio record posted on Apple's website on Tuesday (US time).

Sales of the iPhone contributed to over 68 percent of the company's total revenue, according to the financial report.

The sales of the iPhone in China still did not surpass that in the US for the quarter despite some earlier predictions by analysts, Reuters reported Wednesday, citing Apple CFO Luca Maestri.

"I think it [sales in China surpassing US sales] will happen very soon," Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times on Wednesday.

However, experts said it is still uncertain whether Apple could maintain the top spot over the course of the year. "The market is very unpredictable, and many things can happen that will change how the vendors perform in the first quarter… especially with the market being highly competitive," Jessica Kwee, a Singapore-based analyst at Canalys, told the Global Times via e-mail on Wednesday.

Zhang also noted that there might be fluctuations in the rankings of handset makers in terms of shipments, but Apple will definitely top the list by generating the highest revenue.

Rivals like Xiaomi and Huawei have been trying to move upmarket recently by rolling out more pricey models. Xiaomi introduced its Mi Note on January 15 and Huawei also has its Mate 7 model for the mid- to high-end market, but they are only priced at around 3,000 yuan ($480.18), far less than the price of over 5,000 yuan for the iPhone 6 in the mainland market.

Samsung, which used to be considered a major rival for Apple in the high-end market, has been rolling out cheaper models recently. Samsung is now "really under pressure to excite the market," said Kwee.

"There is no rivalry for Apple in the high-end segment. Its brand influence is obvious," iiMedia's Zhang said.

The gross margin was 39.9 percent for Apple in the fourth quarter, it said in the financial report. In contrast, the gross margin for Samsung was 17 percent, and that for Xiaomi and Huawei was estimated to be in the high single-digits, according to a report from BofA Merrill Lynch in October 2014.

Apple's distribution in China is also expanding. Apple opened two stores in China this month, one in Zhengzhou, capital of Central China's Henan Province, and one in Hangzhou, capital of East China's Zhejiang Province. Cook said that the number of Apple stores in China will reach 40 by mid-2016, according to the conference call.