The Chinese mobile market has long been described as the ultimate prize for smartphone handset makers and app developers. China has the most people, income is rising, and the population has an insatiable appetite for mobile technology.
That's all true, except when the facts don't quite support the narrative.
For example, the conventional wisdom holds that most Chinese mobile consumers are interested in inexpensive phones from upstart manufacturers like Xiaomi, Huawei, and ZTE. And that's true, up to a point. According to IDC's latest Mobile Phone Tracker, many of those brands are trying to move up into the mid- and high-end segments.
Meanwhile the iPhone has had surprising success in China, earning a whopping $16.1 billion in revenue from "greater China" in the fourth quarter of calendar 2014. The company grabbed the top spot in the Chinese market in the first quarter of 2015, with 14.7% of the market—comprising 14.5 million phones—a 62% increase from the year before.
It also means that Chinese mobile buyers love their phablets. "In Q4 2014, shipments of smartphones with screen sizes between 5 and 7 inches constituted roughly 60% of total smartphone shipments in China as compared to roughly 40% worldwide and in the United States," according to App Annie.
That all sounds great, and it is, at least for Apple. But IDC also reported that the overall market actually slipped by 4% during the most recent quarter.
It's certainly a new development, anyway. While Chinese smartphone growth rates had been shrinking, this is the first time that they've dipped into negative territory in six years. According to a statement by Kitty Fok, Managing Director at IDC China, "smartphones are becoming increasingly saturated in China. China is oftentimes thought of as an emerging market but the reality is that the vast majority of phones sold in China today are smartphones, similar to other mature markets like the U.S., UK, Australia, and Japan."
So what does that mean?
For one thing, it means that China has taken over the top spot in iOS downloads from the United States. According to App Annie, "China's ascendance was primarily driven by downloads of Games and Photo & Video apps. Pitu, published by internet giant Tencent, became one of China's most popular photo apps in Q1 2015 thanks to its easy-to-use beauty, makeup, and cosplay filters. Photo-sharing apps like IN and Fotoplace also performed well in the quarter."
That shouldn't be too surprising, actually, as China has an estimated 520 million smartphone users (the United States has approximately 320 million people). Still, the ascendance of the Chinese iOS market could mean that international app developers will devote more effort to serving the Chinese market than the U.S. Over time, that could affect the relative vitality of the iOS ecosystem for American users.
It won't happen right away. Even though China experienced fast growth in iOS app revenue, it still trails the U.S. (a situation mirrored in many other markets) in that regard. In fact, China remains third in iOS revenue, behind the U.S. and Japan.