Top 20 Android phones in China, as per Baidu. Samsung at the top (with about 30% total share), but lots of domestic brands in there too.
For future reference, this is what at least one Motorola Android phone on sale in China looks like. No Google services at all. Hardly news for anyone paying attention, but I thought it was striking that this phone was on the Motorola stand at MWC in Barcelona this week.
This is, of course, extremely common - the great majority of Android phones sold in China are in this state. No Google services (or buried if they're there at all) and Baidu search instead of Google Search.
Amongst other things, the absence of Google Play means that they generally do not feature in Google's Android activation numbers (which in any case have not been updated since early September 2012).
This isn't a terribly new story, though this is the lowest price I've seen yet. The spec is vaguely plausible for the price: 8 inch 2-point capacitive touch screen, VIA8650 CPU, Android 2.2, 256MB RAM, 2GB ROM, WiFi, 1.3 MP camera. The promise of 'internal Word and Excel' is a nice selling point, though.
I suspect the performance for this would be horrible at best, and good luck getting many recent Android apps to run (did 2.2 have the Fragments API?), though it will do fine for web and video. Indeed, video is a major use case for such things. The battery life is quoted as 5-6 hours and that probably means standby life. But in emerging markets, if you only HAVE $50 to spend, this might be your first internet experience outside of an internet café. And depending on who you talk to, there could be well over 100m similar devices being made in China this year.
However, it hardly needs pointing out that including such devices in global 'tablet' sales for the purposes of calculating the market share of Apple, Samsung or Amazon products will create a rather misleading impression.
Incidentally, you could get 100 of these (the minimum order) for the price of four Surface Pros.
Apple has eight stores in China, compared to seven in Japan, which generates 2/3 the revenue of China and hardly has the same potential. To be fair, it also has four hundred premium resellers there and of course sells iPhones mainly through the mobile operators (but not, obviously, China Mobile), meaning that iPhone points of sale were up from 7k to 17k in the year. Even so, more effort here seems like an important priority. Tim Cook himself said he saw retail as crucial to sales of the iPad (since it allows you to explain why you might want one).
Apple's own job site only has about two dozen open retail positions in China (though I'm not sure how meaningful those listings are), but also has open spots there for retail recruiters and, most relevantly, a bunch of retail real estate analysts.
On the basis of its planned $1bn retail capex, Apple will probably open 40-50 new stores this year around the world. Four of the 40 opened in 2012 were in China - I wonder how many there will be in 2013?
I showed this chart to clients late last year: it generally got a reaction.
This is data from Baidu showing the share of Android pageviews on its properties that devices from each Android vendor generated. Samsung has about 50% of Android shipments globally - but not in China. 'Other', the swarm of over a thousand small manufacturers making generic devices with (mainly) Mediatek chipsets, is squeezing all the branded OEMs and pushing prices down relentlessly.
(This data is PVs rather than uniques, but one would expect devices from 'other' to be cheaper and have lower PVs per device, implying that the actual share of the base could be even higher.)
Of course, if you look at absolute share of the total base (rather than the Android base) Samsung is still growing fast in China. But the explosion in the 'cheap commodity' sector is not a good sign for any branded Android manufacturer.
Almost none of these devices have any Google services on them, incidentally.
This fabulous thing is one of many on Alibaba - an in-car DVD player with a detachable Android tablet (running Android 2.3) - the 'Road Terminator'. I have no idea if this has Google Play, and hence has any chance of appearing in Google's activation numbers. Probably not, but you never know.
The broader point, of course, is that Android's success spreads far beyond phones or even tablets. It is rapidly becoming the embedded system of choice in all manner of objects, replacing Windows CE and Linux (of which it is arguably a variant). This is not necessarily a problem for Google (and some of these might even generate AdSense traffic one day), but it points to the problems of thinking that raw Android device sales figures are a good measure of what is happening in the smartphone and tablet 'platform wars', or bear directly on how we should think about Apple.
An interesting set of data points from Baidu's latest internet stats pack this month.
First, the obvious: iPhone is growing fast but Android is exploding:
Second, though, and actually more interesting from a global perspective, Baidu also gives browser share (both of these charts are for PVs).
Webkit is the browser used by iOS and by Google's stock Android browser, and also Chrome. Something looks funny about that number...
- 22% of mobile PVs on Baidu use Webkit.
- 11% use iOS
- 34% use Android
So 11% use Webkit and aren't on iOS, but 34% are on Android. By extension, the other 23% are using other browsers. That means that, on these numbers, two thirds of Android phones in China (that are being used online) are not using Google's own browser. What other changes have been made, I wonder...
How big is this? On my model, there were 130m Android phones in China in Q3 (roughly the same as the total number of smartphones in the USA). 90m of these are not even using Google's own web browser.
"“Besides the technical issues, the business model and benefit sharing still need further discussion”
- Li Yue, China Mobile CEO, quoted by Bloomberg on deployment of the iPhone 5 on China's biggest mobile network
The smartphone market in China is exploding. Depending on who you talk to, there were anything from 40-50m smartphones sold in the last quarter, compared to around 19m in the USA. Combining Baidu and CNNIC data, it looks like there were around 180m smartphones in China in Q2, of which 65m were Nokia Series 60 (a rapidly shrinking base), 30m were iPhones and about 80m were Android. Running the growth forward, there are probably now 120-130m Android phones in China.
That means that of the 500m or so active Android phones in the world today, maybe a quarter are in China. Of run-rate sales of 125m or so, perhaps a third are in China.
Using the word 'Android' to describe these devices is somewhat problematic. The great majority of them come with no Google services: no Google Maps, no Google Play and no Gmail or Google Calendar. These cannot be installed by the user either, without a great deal of fiddling with ROMs. Google Search is of course largely blocked in China, and those devices that do have Google Play can only download free applications: purchases are not supported. Even the Samsung Galaxy S3 comes in this condition: no Google services AT ALL.
In other words, these devices are 'orphaned' from Google in an analogous way to the Kindle Fire. They provide no Adsense revenue and, equally importantly, give Google none of the signalling information about user behaviour and intention that, for example, feeds Google Now. The damage done to Google by fragmentation can be overstated - a forked messed up Android 2.2 phone in Turkey with no Google apps still drives search traffic - but these phones do not even do that.
This does not exactly mean that they do not constitute an addressable market for non-Chinese developers: they have much the same mix of Android versions and hardware specifications as devices in other parts of the world, and if you localise the app and offer it for free, or place it on one of the several dozen Chinese app stores - or just sell it from your own website as many Chinese devs do - then you can find users in China. It won't be easy, though.
Apple has its own problems in China. It has struggled to find the right payment mechanisms for the App Store, and the iPhone is not available officially on the largest operator, China Mobile, which has 700m of the 1.1bn mobile users in the country and a higher proportion of the best ones. This will probably change in the next few months, due to the iPhone 5's ability to support the China-only TD-SCDMA 3G standard that China Mobile uses. But in any case, the ~30m iPhones in China (half of them on China Mobile regardless, as it happens) all have something much closer to the same services and apps as we do in the west.
There is no one 'smartphone' market
China is the specific issue, but there is a general issue here as well. Talking about global unit sales is important in one sense, but if you want to understand the evolution of ecosystems, addressable markets for developers and indeed addressable markets for manufacturers, you need to look on a more local level. Hence, for example:
- 50% of smartphone sales in the US are iPhones
- On the other hand around half of European mobile users are on Prepay and almost certainly will not buy an iPhone (unless it is a second hand one, which is an interesting topic in its own right)
- In China, the hot smartphone price point is 'RMB1000' - which is around $160 - BEFORE SUBSIDY.
This point is crucial. Many Americans, accustomed as they are to a pricing structure that conceals the underlying price of the handset, make the mistake of thinking that Apple sells a 'free' phone. It does not. The iPhone 4's unsubsidised price is over $400. Conversely, you can buy any number of very basic 2G Android phones for under $50 at wholesale.
In other words, the cheapest phone that Apple makes costs around ten times the cheapest Android that a kid in Nairobi, Jakarta or Shanghai can get his hands on.
At this point, people sometimes point to the strong-selling Galaxy S3 as proof that Android sells well at high price points. The problem with this is that the S3 has (according to Samsung) sold 30m units in the last 6m or so, but Samsung sold perhaps 90m smartphones in the same period, and Android sales were close to 200m. Most of the volume is at MUCH lower prices than the iPhone.
This price difference is hugely important for market share, but it is also hugely important in understanding what it means to say that Android has '70-80-90% of the smartphone market'. It has that much of smartphone units, but it has nothing like that much of the addressable market for the typical VC-based mobile app-focused startup in London, San Francisco or Berlin. If one then considers the inarguable fact that Android users, even in the West, have a different demographic profile (which is code for 'they tend to have less money'), then that app development prioritisation looks a lot more complicated than the crude 'Android is winning' narrative might suggest.
EDIT FOR CLARITY
Obviously, devices that do not have Play or other Google services do not activate with Google and therefore do not show up in Google Activation numbers. This applies to some, but not absolutely all, of the Chinese phones. This means that the total, all-inclusive Android base is larger than Google's own figures - but not by the totality of the Chinese base.