App Analytics Report: Apple Holds Majority of China’s High-End Smartphone Market
The latest China Mobile Internet report from mobile app analytics platform Umeng revealed several smartphone and tablet usage trends that may spell good news for Apple’s (NASDAQ:AAPL) growth in this emerging market. Umeng is similar to app analytics firm Flurry, but derives the majority of its data from China’s market. In the report obtained by freelance analyst Benedict Evans, Umeng noted that the number of active smart devices in China topped 700 million at the end of 2013.
Although this large market is still dominated by low-cost Android devices, over a quarter of China’s smartphone users owned a high-end device by the end of 2013. Twenty-seven percent of active smartphones used in China in December of 2013 cost over $500, according to Umeng’s data. Apple’s iPhones accounted for approximately 80 percent of this market segment in China. Obviously, the increasing size of the high-end smartphone market in China is good news for premium device makers such as Apple.
Apple’s growing official presence in China has also led to a substantial decrease in the number of jailbroken iOS devices since the beginning of 2013. According to Umeng’s data, about 30 percent of all iOS devices in China were jailbroken at the beginning of 2013. By the end of the year, this share had fallen to 13 percent. Last year, Apple hosted an iPhone premiere event in China for the first time. Umeng speculated that the ability to get new iOS devices quickly via official channels instead of the black market has led to an overall decrease in jailbroken iOS devices.
Umeng also noted that Apple users in China are becoming more aware of the security risks associated with jailbroken iOS devices. This may have also led to a corresponding increase in the popularity of mobile games that use officially licensed IP (intellectual property.) By the end of 2013, 20 percent of mobile games used officially licensed IP, up from 13 percent in June. Last December, an iOS 7 jailbreak developed by the “evad3rs” developer team caused some controversy when it was found to include a default third-party Chinese mobile app store that hosted many pirated apps.
The declining use of jailbroken iOS devices will likely continue this year due to Apple’s official launch on China Mobile’s (NYSE:CHL) network on January 17. As noted on China Mobile’s official website, it is the world’s largest carrier with over 771 million total subscribers on its network. Millions of unlocked iPhones were estimated to already be in use on the carrier’s 2G and 2.5G networks. However, the availability of official iPhones on the 3G and 4G networks will likely drive more users to ditch their jailbroken devices. This in turn could boost Apple’s revenue through its official App Store and other services.
The Greater China market, which includes China, Taiwan, and Hong Kong, has become increasingly important for Apple’s bottom line over the past several years. According to the company’s last quarterly report, Apple’s total sales in the region rose 29 percent to $8.84 billion for the quarter ending in December.
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