big win Commentary: Don’t blame Huawei for Apple’s waning influence in China
Updated:2024-10-08 03:14 Views:106LAUSANNE, Switzerland: Few business relations are as exemplary of symbiosis as that between Apple and China.
China has been a lucrative market for years, with a vast, willing-to-pay consumer base that keeps throwing cash at Apple. Meanwhile, it is the only country with the manufacturing prowess to fulfil Apple’s ferocious demand for a meticulous supply chain. This combination has served Steve Jobs’ and now Tim Cook’s global ambitions.
Suddenly, that firm grip on the world’s second-largest economy is slipping. Apple’s challenges in China look insurmountable.
As of mid-2024, Apple has slipped out from among the top five smartphone vendors in China. Set at 14 per cent market share, it now ranks number six in the country. Ahead of Apple are Vivo, Oppo, Honor, Xiaomi, and, of course, Huawei.
It may be tempting to assign blame to geopolitical tension. However, the generalisation that Chinese consumers gravitate toward domestic products because of national pride needs to be more realistic and believable.
The more obvious answer lies in Apple’s underwhelming offerings in the country.
TEPID RECEPTION OF IPHONE 16Once upon a time, the iPhone unveiling was a global spectacle. Fervent fans queuing outside Apple stores were familiar sights in big cities like New York and Shanghai.
But in 2024, the iPhone 16 event merely felt like a familiar musical piece on repeat, hitting the same notes over and over again.
The latest iteration presented a marginally faster A18 chip, slightly larger screens with thinner bezels, and a new camera control button on the side. Everything is mostly incremental. Sure, the enhancements are technically sound, but nothing groundbreaking.
Investor reactions mirror consumer ambivalence. Shares of Apple dipped 3 per cent following reports that pre-orders for the high-end iPhone 16 Pro and Pro Max were lower than those of their predecessors.
And as if someone at Apple HQ had already divined how weak the demand would be, Apple has cut iPhone 16 prices in Australia and India.
But not all is lost. If all that hardware refinement can no longer lull consumers into paying top dollar for upgrades, here’s one more lifeline: Artificial intelligence might save the day. Life beyond the iPhone 16 could still be rosy.
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Commentary: Apple’s iPhone 16 launch shows AI is shaking up the tech giant’s core market 
Commentary: Tim Cook controls the iPhone, so he’s the new AI kingmaker PIVOT TO AIAI chatbots like ChatGPT and Gemini can remind you to pick up the kids, how much deep sleep you got last night, and when you overate. Tim Cook saw an opportunity to aggregate and integrate these third-party capabilities into one device for a seamless user experience.
“Apple Intelligence” is poised to leverage Apple’s control over hardware and software to create a unified, privacy-centric experience.
But the catch is that Apple can’t afford to build a general-purpose AI model from scratch. Even Microsoft’s Copilot is ChatGPT-enabled. Apple won’t be able to play catch-up on basic research.
Instead, Apple is set to inject OpenAI’s technology into Siri and other default writing tools in text, email, search and so on. The result is you don’t need to send queries to the cloud. All the AI functions will be on-device processing, protecting user data privacy and improving processing speed. Gone are the days when you had to wait five seconds before receiving an AI response.
So Siri will be smart and conversational, knowing your next move and listening to your intent without showing you any contextual advertisements by Facebook or Google. This is a huge deal, and it will be a great differentiation.
Alas, this AI ticket won’t save Apple in China. Beijing has not allowed foreign AI services like ChatGPT; thus, the partnership with OpenAI is infeasible for the Chinese market. Of course, Apple intends to pair up with Baidu to integrate local large language models. But these local models, while functional, still lack the sophistication of OpenAI’s.
So, Apple’s China situation is still back to square one. Its inability to pick AI tools to integrate into the Chinese market will weaken its position.
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Commentary: Whether you like it or not, AI chatbots are coming for your phone 
Commentary: How Huawei and Apple swung and missed for Chinese consumers TECH DECOUPLING BETWEEN US AND CHINAAll these drags are compounded by other brands like Huawei, Oppo and Vivo, which continue to push for hardware innovation.
The unveiling of the Mate XT by Huawei has raised eyebrows. Here is a trifold smartphone thinner than Samsung models and, when fully unfolded, comparable in size to an iPad mini.
It doesn’t come cheap, but people are loving it. At a hefty price tag of US$2,800, the Mate XT received more than 3 million pre-orders within days.
Still, Huawei’s latest triumph is not the reason for Apple’s woes. It’s companies like Oppo and Vivo that have steadily enhanced their offerings. Their incremental improvement on reliability, cost efficiency and hardware features has closed the gap on Apple.
The technological decoupling between the US and China has gone one step further. Apple will continue to win in the Western market, but the Chinese market belongs to local companies. Despite the close relations Apple has cultivated with China over the decades, even Tim Cook cannot buck the trend.
Howard Yu is the LEGO® Professor of Management and Innovation at IMD business school in Switzerland and serves as Research Director of the Center for Future Readiness.big win