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Michael Finneran
Michael F. Finneran, is President of dBrn Associates, Inc., a full service advisory firm specializing in wireless and mobility; services...
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Michael Finneran | August 01, 2017 |

 
   

Apple Goes to China

Apple Goes to China Reception isn't nearly as warm as it is back home.

Reception isn't nearly as warm as it is back home.

My title is a reference to the phrase "Nixon goes to China," recalling former President Richard Nixon's 1972 meeting with former Chairman Mao Zedong. In the early '90s movie "Star Trek VI: The Undiscovered Country," Spock recast the phrase as the Vulcan proverb "only Nixon could go to China." And now Apple wants to go to China, too.

Apple's interest in China isn't surprising, given the country's position as the single largest mobile phone market in the world. But what is surprising is what Apple found when it got there.

One of the greatest delights I have had in following the mobile market for the past 20 years or so is the continuous revelation that the "mobile market" is not one market at all. Rather, it is a whole myriad of markets shaped by economics, the services made available by countless creative entrepreneurs, and the personal preferences found in so many different cultures.

China is probably the most unique case of a mobile market that has developed under its own rules, and those rules are now throwing sand into the gears of Apple's well-oiled marketing machine. In China, we're seeing the unfolding of a new market model, one in which services, rather than hardware, drive consumer choices.

The Great Wall of WeChat
Apple has been encountering all manner of difficulties with its dealings in China. Despite its firm stand on protecting user privacy in the U.S. and other countries, the company recently removed several VPN applications from its App store, apparently at the behest of China's powerful censorship authorities. VPNs are popular in China as they allow users to access the "real" Internet as opposed to the highly censored Chinese version while avoiding detection by the authorities.

An even bigger headache for Apple, however, is WeChat, the major social networking app in China. It's quite possible you haven't heard of WeChat, despite a current base reported to be 889 million active users, as roughly 90% of those are in China. By comparison, Facebook has a reported 1.3 billion daily active users worldwide. However, WeChat has evolved into much more than just a social networking site, so much so that we should probably define a new category to encompass it.

Apple's greatest strength, and a major contributor to the phenomenal loyalty customers have to the iPhone, comes from its ecosystem. The more Apple products you buy, the stronger the bond becomes. One of the critical elements in that ecosystem is Messages, Apple's texting app. Messages allows you to send either Apple Messages or SMS messages (to non-iOS users) in the same app. By linking all of your devices to the same iCloud account, you can have those texts appear on your iPhone, iPad, and your Mac desktop and laptop, and you can respond from any of your devices (your iPhone has to be in close proximity to the Mac or iPad to send or receive SMS messages).

One of the most important enterprise announcements Apple made in June at its Worldwide Developer's Conference was Business Chat, which offers a new range of capabilities contact centers could use to engage with customers through Messages. In my recent No Jitter blog post describing Business Chat, I also make reference to the fact that Apple may be trying to take a page out of WeChat's playbook.

WeChat is challenging Apple's hegemony and the mobile industry as a whole with a powerful and multifaceted offering that cuts across several formerly separate product categories -- and happens to be available on Android as well as iOS devices. As reported, Apple's China revenue fell 14% in the first quarter, marking a fifth-consecutive regional quarterly sales decline; China was the only region where Apple's sales fell last quarter.

WeChat has essentially built a cloud ecosystem that rivals Apple's and that has effectively worked its way into every aspect of daily life in China. According to data from QuestMobile, WeChat accounts for roughly 35% of mobile users' monthly time online. We really don't have anything in the U.S. market with equivalent scope and reach, so we have to compare WeChat to multiple U.S. offerings.

Continue to next page for more on Apple in a WeChat world





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