China is now the biggest smartphone market in the world, tech analyst Charlie Wolf of Needham & Co. reported in a note to clients on Monday. There were 33.1 million units sold in the last quarter alone, and Android(s GOOG) is flat-out dominating those sales. With almost 70 percent of China’s smartphone market share, Google’s mobile OS is far ahead of Apple’s(s AAPL) nearly 18 percent share. Nokia(s NOK) follows with 11 percent share this quarter. (Hat tip, AppleInsider.)
It should cheer Apple that since last year it has doubled its market share in China: In the same quarter a year ago its share stood just shy of 10 percent. But it’s very obvious that Apple needs to do something about its carrier availability in China — and fast, if it wants to compete with Android there.
The reason the iPhone grew so much in the last year, Wolf points out, is that the iPhone 4S finally became available to China Telecom’s 125 million subscribers in March. Apple also counts China Unicom as a partner, but the biggest mobile carrier in China, which is also the biggest mobile carrier in the world — China Mobile — still does not offer the iPhone.
Apple has to figure this China Mobile situation out, or its chief mobile competitor is going to continue to own China. It’s not an easy solution, however. It’s already been reported/rumored that Apple is planning to make the next iPhone compatible with China Mobile’s TD-SCDMA 3G network, which is different than almost any other 3G network on earth. As you may imagine, there are pretty important technical hurdles to that.
To make it work, Apple would need to add a specific radio to the iPhone just for China Mobile. Will Apple do that? It’s true that the company has been on a China localization binge lately, adding support for Chinese characters, as well as local search and sharing options for the region on iOS and on the Mac. But adding a separate radio is actually a huge deal. My colleague Kevin Fitchard has a really great explanation as to how hard — and expensive — it would be.
So what about localized hardware? Apple could decide to make a separate iPhone that specifically addresses this hugely critical market that runs on TD-SCDMA.
Either option would be totally out of character — Apple doesn’t make products targeted at a specific carrier or region. It’s why T-Mobile is still out in the cold here in the U.S. But with T-Mobile we’re talking about 33.4 million potential customers who might switch an buy an iPhone. With China Mobile we’re talking about 650 million potential customers.
China Mobile is the biggest mobile carrier in the world. The iPhone is Apple’s most important product. Apple has to figure out how to marry the two, especially if it has identified China as its most important market outside the U.S.