Apple iPhone lost Q2 market share in China, but iPhone SE offers hopeful signs

A new smartphone report confirms Apple’s struggles in China but also points to some developments that may help the tech giant turn things around in this critical market.

In late July, Apple reported that its third quarter (the three months ending June 30) sales in China dipped 33 percent compared to the same period a year ago. And the numbers highlight the challenges Apple faces overall as it attempts to get back into to growth mode.

A new report today from Kantar Worldpanel ComTech echoed those gloomy numbers, noting that for the three months ending June 30, Apple saw its market share in China decline to 17.9 percent, down 1.8 percent from the same period one year ago.

“iOS share decline has also pushed Apple behind Huawei at 25.7 percent and Xiaomi at 18.5 percent,” said Tamsin Timpson, strategic insight director at Kantar Worldpanel ComTech Asia, in a statement. “While the iPhone 6s and 6s Plus remain the top-selling smartphones in the region, pressure from Huawei’s Mate 8, P9, Xiaomi’s RedMi Note 3 and Mi 5, and Oppo’s R7 has led to increased competition in the market.”

Of course, to counter some of the pressure from lower-cost Android devices, Apple earlier this year released the moderately priced iPhone SE. According to Kantar, demand for the iPhone SE in China actually outstripped supply, which limited the new phone’s ability to help Apple hold its ground in terms of market share.

“With the continued supply constraints of the iPhone SE, that model was not able to make the expected impact, accounting for 2.5 percent of smartphone sales in the second quarter,” Timpson said.

If Apple can get its supply chain balanced, it could regain some ground in China, according to Kantar.

Apple also got some good news in the U.S., where its market share gained 1.3 percent against Android in the quarter, and in Europe’s five biggest markets, where its market share was up .7 percent.

Finally, while the new iPhones to be unveiled next month aren’t expected to be radically different, Kantar notes that Apple could be on the verge of benefiting from a big replacement cycle, because 49 percent of U.S. iPhone owners and 51 percent of Chinese iPhone owners currently have iPhone 5s or older.