For years, dominated the market for high-end smartphones in China. No other company made a device that could compete with the ‘s performance — or its position as a status object in the eyes of wealthy, cosmopolitan shoppers.
But evidence is mounting that, for many in China, the no longer holds the appeal it used to. During the first six weeks of the year, historically a peak season for Chinese shoppers to spring for a new phone, sales fell 24 percent from a year earlier, according to , which analyzes the smartphone market.
Meanwhile, sales for one of ‘s longstanding Chinese rivals, , surged 64 percent.
It’s a challenging time for . Analysts say its latest product, a $3,500 virtual reality headset released in February, is still years away from gaining mainstream appeal. This month, has taken two regulatory hits: a fine of nearly $2 billion for anticompetitive music streaming practices and a U.S. government lawsuit claiming violated antitrust laws.
For a decade, China has been the ‘s most important market after the and accounted for roughly 20 percent of ‘s sales. Now the company’s grip on China could be dislodged by a series of factors: a slowdown in consumer spending, growing pressure from for people to shun devices made by U.S. companies and the resurgence of national champion .
“The golden time for in China is over,” said Linda Sui, a senior director at , a market research firm. One of the biggest reasons is the rising tension between the and China over trade and technology, Ms. Sui said. Without a significant lessening of geopolitical stress, it will be difficult for to retain its position.
Few companies have more to lose from these heightened tensions than , whose newest handset, the , went on sale in September. It is the first iPhone line to feature a titanium frame and include an action button that can be programmed to take photos or turn on the flashlight.
“Five years ago, had really strong branding in China — people would bring tents to wait through the whole night outside the for the next product launch,” said Lucas Zhong, a -based analyst at , a market research firm. “The launch wasn’t nearly as popular.”
Six months later, has plastered billboards across cities like , reminding residents they can still buy an nearby. Similar promotions helped the account for four of the six top selling smartphones in China in the final three months of last year, the company said during a call with analysts. But the prominent advertising did not persuade Jason Li, 22, to visit the on , in the heart of ‘s shopping district, when he needed to replace his .
Instead, Mr. Li went to the flagship store directly across the street, where he contemplated the Pro.
“I don’t want to use anymore,” he said, referring to the ‘s operating system. “It’s a bit stale.” declined to comment.
For some in China, buying a phone has become a political statement. Debates over whether using an is disrespectful to Chinese tech companies or akin to handing personal data over to the U.S. government have erupted online. Last year, employees at some government agencies reported being told not to use for work.
These directives surfaced less than two weeks after unveiled the Pro, a smartphone equipped with the company’s own operating system and a computer chip more advanced than had previously been made in China.
