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Apple’s China Problem (stratechery.com)
124 points by uyoakaoma 225 days ago | hide | past | web | favorite | 180 comments



This seems to confuse some people, the author is not saying Apple have a monopoly on smartphones. What the author is talking about is the locked-in ecosystem that Apple owns, iOS and macOS (watchOS/tvOS).

> Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control.

The problem that Apple is having in China is that WeChat is the driving "platform" ecosystem, not the OS or the brand.

In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat.

If Microsoft sells a Windows Phone with WeChat as the default app for everything, they may have a hit in China but it would not be a sustainable hit because again, WeChat can run on iPhone or Android or any other OS.


How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world?

To put it in perspective, this is like what the web did to Windows circa '99 - '05. Lesser examples might be spreadsheets or Adobe Photoshop.


> "How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world?"

It's not that wild considering that the iPhone hasn't even existed for quite a decade yet and Android has been around for an even shorter time.


Why is normal competition considered not sustainable, and lock-in is viewed as a norm? Lock-in should never be a norm. Apple and MS are just too used to be monopolists and can't stand fair competition.


Lock-in is a natural consequence of having a platform. It's perfectly normal and happens without even making any explicit attempt at having lock-in. Any time you provide a platform and people build on top of it, you have automatic lock-in. This has nothing to do with "fair competition".


Lock-in can be avoided, if platform is designed to be open. It's only "natural" when non portable or non standard things are used. Problem with Apple and MS is that they use the later on purpose.


An "open" platform is still a platform with lock-in. The only thing "open" does is allow other vendors to decide if they want to support that platform too. But, for example, you can't take a web site and use it on a platform that doesn't support web pages (e.g. you can't browse the web on an AppleTV).

> Problem with Apple and MS is that they use the later on purpose.

There are really significant downsides to open platforms. They're harder to build, develop much more slowly, generally have a big issue with multiple implementations not actually behaving identically (just look at the development of the web for a plethora of examples), end up being design-by-committee which usually ends up as a worst-of-all-worlds design, etc. Companies like Apple and MS build closed platforms because that ends up being hugely better for their users. They don't do this out of a desire to have lock-in, lock-in is just a natural consequence of using closed platforms.


As you said, open platforms allow untying them from specific owner. If you use any platform, it's a dependency, sure. In this sense it can be a hard to replace dependency. That's a separate problem though from platform being available from one place only. The later is vendor lock-in, which I was talking about.

> There are really significant downsides to open platforms.

Comparing downsides makes sense only if competition is on merit. MS and Apple don't compete on merit, because of the lock-in above. One of the glaring examples of this garbage is Apple banning competing browsers on iOS.

> Apple and MS build closed platforms because that ends up being hugely better for their users.

No, they do it to get that insane retaining percentage caused by lock-in. When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.


> MS and Apple don't compete on merit, because of the lock-in above.

That's bullshit. Of course they compete on merit. You don't have lock-in until you actually acquire the customer, and until they've been using your platform long enough to buy into the lock-in. The platforms are absolutely competing on merit in order to attract new customers, and to ensure the current customers are happy enough that they don't pay the cost of jumping platforms.

> When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.

You completely misunderstand the article. It's not saying iOS is not better. It's saying that Chinese users are using WeChat as their platform and largely don't care about the underlying software platform that WeChat is running on. For the most part it doesn't matter whether iOS or Android is better, because the Chinese users are completely ignoring that and using the common WeChat platform. So the fact that Chinese iOS users might switch to Android doesn't mean iOS is worse, it just means the fact that it's better is irrelevant.


Competing on merit means no dirty monopolistic tricks, like saying "you can only use our browser here. Tough luck if you want to use something better than that". So they clearly don't compete on merit when they make all those weird restrictions.

> You completely misunderstand the article.

I understand it well. The article says, that in China the situation ironically managed to undermine Apple's lock-in (though replacing it with Wechat lock-in). This way Apple only serves as another hardware option. So Apple has to compete on merit with other hardware makers.


You know it's a platform when, if you step off, it really hurts.


> In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat.

The root cause for this is it's a high-walled market. If you can compromise and be allowed to grab a spoon as an outsider. It's already a win. Just look at other big name service providers.

Apple is a huge winner among outsiders in China market since they can make nice profit through physical product alone.


To be fair Google has even more of the same problem as their services are blocked in China.


tl;dr in China, WeChat is the Operating System and Platform and iOS is becoming "firmware".


This is not an issue just for China. Naver/kakao in South Korea also are like this. Apps that are all-inclusive are the norm. It's because the government is picking winners. Ie, someone tied to the government.

Edit: Alternately, West-style VC wasn't funding companies so Asian gov't stepped in.


The market working around Apple's walled garden. I suspect no one at Apple is surprised it finally happens.


Great summary.


Chinese people want the Apple brand they don't care about iOS. If iOS was the status symbol it would get pirated and installed elsewhere. Apple has a strong brand because of it's history as a premium device company internationally, that's all. Their brand was their first mover advantage in China but now Chinese companies are closing that brand gap and since WeChat rules the software side Apple is going to have a hard time being a big player until it can differentiate itself on something other than brand.


Other than the brand factor, iPhone is actually a better phone. Before the current iPhone I have, I had always been an Android user. I used entry-level Android phones, high-end Android phones such as Samsung Galaxy, iPhone is clearly a better phone. iOS feels more smooth, reliable, battery-efficient in many ways than Android phones. Honestly, I have not looked back since the switch.


Without wading into a my-anecdotes-against yours battle, I think most would agree that at this point Chinese smartphone shoppers have options from Xiaomi and Huawei among others[1] that are of equal quality to Apple hardware (and may be better designed for their market).

1: http://time.com/4547129/china-smartphone-market-oppo-vivo-xi...


Huawei version of Android even looks like iOS.

I wish they had copied the more elegant windowsphone UI instead.


The world has access to phones from Xiaomi and Huawei.

If they were equal to iPhones they would be selling out in Ireland, Australia, Cambodia - everywhere. Guess what ? They aren't equal to iPhones.


Xiaomi are not available for sale outside of China. (Well, not without jumping through hoops and weird resellers).

They have zero name recognition worldwide and the platform is fitted to the china market. There are some minor localisation and translation work to go global. Most important of all: They lack the brand recognition (westerner are very sensitive to branding and associate china with cheap shit).

Outside of that, they do S6/iphone7 equivalents for half the price.

They could blow away every single android manufacturers single handedly if they went global.


I feel exactly the same way after switching away from top-tier Android. Never going back.


> iPhone is clearly a better phone. iOS feels more smooth, reliable, battery-efficient in many ways than Android phones.

So what you're saying is that iOS is a better OS.


> Other than the brand factor, iPhone is actually a better phone

But since a couple of years, any smartphone in a mid range price is good enough.

iPhones provide better experience and hardware? Perhaps, I won't debate that, they are premium and Apple does a fantastic job integrating their software with their hardware.

But to an average user, why pay +$700 when to their use case a $300 smartphone servers them well?


iMessage is the only distinguishing benefit iPhone has. If WeChat or other apps are more popular in a market, I see Apple having a serious challenge.

The UI on the iPhone is incredibly challenging for me, especially web browsing.

I have a long list of criticisms on Android but both platforms seem incredibly flawed. The companies appear busy concoting marketing features and not with improving the functionality and experience.

I'm staying with the iPhone purely because of iMessage and Snapchat. I also don't want to waste time on the web, so the clunkiness is a benefit.


> The companies appear busy concoting marketing features and not with improving the functionality and experience.

Really?? I feel Google and partners are introducing great new things and polishing existing stuff on a daily basis.

Windows phone on the other hand is doing the exact opposite :(


Google, charitably, continues to step on their own d|ck at every possible opportunity when it comes to text communication (chat and sms). Apple definitely got this overwhelmingly correct with iMessage. Google can't even decide what stuff belongs in what app, and they've done the Hokey Pokey more times than I can count. SMS is now integrated in Google voice. SMS is now integrated into Hangouts. SMS is now moving out of Hangouts and into Messages or maybe Allo or maybe Duo. And optionally in a ravamped Google Voice.

Gchat is now in Hangouts. Hangouts works also in a laptop web browser. Allo and Duo and Messages do not work in a browser. And Allo will spam the recipient to also download Allo when delivering the message.

Meanwhile, in Hangouts, for two years, I can't play voicemails, I get a message that it's unavailable. One every phone I've bought including a Google Nexus branded phone, and a Motorola phone when Google owned Motorola.

Anyway, I'd say great new things sure. But there's always yet another new thing and new way of doing it. It's exhausting. There is no such thing as polishing existing stuff. They move on to new things before polish really ever catches on.

What's Windows phone? (Nevermind!)


To be fair, apple has still not fixed their screw-you-for-leaving-ios-for-android SMS delivery bug after three years and one class action lawsuit...

What is windowsphone? The best smartphone OS before it was sabotaged from inside.


I agree there's shenanigans with iMessage, which is why it's not perfect. But I personally have no evidence it's malicious rather than incompetency, and in other respects it's better than what Google is doing by leaps and bounds. (And I use Android, not iOS).

Windows Phone, I think given how far behind Microsoft was at the time it finally was released, they should have rolled it out as completely free and open source. And even at anytime up until about two years ago they could have done this. Now, I think it wouldn't matter. Too bad.


As far as I know you can deregister a number from iMessage by logging in to your appleID on the web. There's no simple way for hem know whether you've switched to android or just put your phone in a drawer unless you log in and tell them.


Chinese people want the Apple brand they don't care about iOS. If iOS was the status symbol it would get pirated and installed elsewhere.

There is still a significant difference in quality! My girlfriend's Samsung phone has a lot more battery problems. The interface for changing settings isn't as nice. Changing the battery in a Samsung is a bit of an adventure, even for someone who has serviced his own Macbook over many years.

In terms of experience, Apple still has it over Samsung.


Yep, that is the exact point of the article, but much more succinct.


Aside from it's verbosity, the only nit I have with the article is that it muddles it's own point by talking about iOS as a monopoly.


I don't think so. Ben's point (as I took it) was that Apple has a monopoly on iOS (because only their devices have it) and that gives them a very strong hold on users, there is too much friction in switching to Android.

But in China if people don't really care about iOS that monopoly is worthless and their normal strategy for retaining users doesn't work, which means they're competing on a completely different basis in China than anywhere else.


Good point, I didn't get the nuance from my first pass reading it.


Chinese consumers do care about iOS vs Android. It's just that the Android ecosystem has been much too horrible in China (Play being blocked, big-name companies have their own "app store", affiliated apps keep waking up each other in background to increase DAU). Those problems go away automatically if you pick iPhone.

The best-selling Android phones in China (Oppo/Vivo, Huawei, Xiaomi) have this horrible problem in control, by providing their customized Android with aggressive permission control, background apps cleanup etc. This also closes up the gap between iOS and Android without Google's presence.


How would iOS get pirated when the only way to install it is by using a certificate that only Apple holds? If it was easy enough to reverse engineer iOS and remove that install requirement, I'm sure it would have been done by now.


not really, and it's been done (not entirely successfully though).

https://twitter.com/CotullaCode/status/352176812194922496

I worked with Cotulla in the HD2 community during the htc-linux days and we had iOS 5.x booting on the device up till springboard, there were definitely issues but not "impossible".


Seriously? There is a thriving jailbreak scene for iOS. It doesn't sound insurmountable at all. I think the only reason there's no iOS analogue to the Hackintosh is because nobody has bothered.


Consumers in China do know iOS and iPhone are better. As I mentioned in another comment, it's just very hard for an outsider to get into China market as a service provider.


> Chinese people want the Apple brand they don't care about iOS

These kind of statements are ridiculous.

(1) There is no evidence. (2) It assumes all of the Chinese think and act the same. (3) It assumes brand is the only decisioning metric when design and implementation can equally be important.

> If iOS was the status symbol it would get pirated and installed elsewhere

The look & feel of iPhones and iOS has been pirated and reimplemented on Android since day 1. You can goto MBK in Bangkok or Shenzhen in China and buy dozens of different models. Guess what ? They are nasty and buggy as hell and so don't sell.


The problem with many tech analysts is that they are Apple fanboys without even knowing that they are. Stating that Microsoft Surface and Samsung S8 are not competitors of Apple just because their products don't run Mac OS/iOS is pure fanaticism at the very least.

Nevertheless, I find that the main point of the article is right. But Apple's China problem is also a very important problem for Google (actually, it's worse for Google).


I actually think the author has a good point.

When the owner of an iPhone wants a new phone, they overwhelmingly buy an iPhone. The author makes the point, and I agree, that it is because of the iOS software and not the iPhone hardware.

iOS users already have made investments in iOS apps, talk to their friends using iMessage, and are used to the look and feel of the OS. If these users could buy a Samsung phone with iOS on it, I suspect many would (say for phones with better battery life or other features).

So when in China a user spends the vast majority of their time in one app, that app kind of becomes the OS, and there are much lower switching costs between Android and iOS. Customers in China are in large part just choosing which hardware to run WeChat on.

That said, the history in desktop OS tells a less clear story.

In 1998, Windows was what almost everyone needed to buy, because they needed to run Windows software. Overtime the web browser (which works the same across operating systems) became where people spent most of their time, and ChromeOS and Mac were able to gain market share.

Apple laptops still have significant market share and pricing power. But when you compare the Samsung S8 vs iPhone 7, I see much fewer differences than the MacBook vs HP/Dell whatever.


It is neither because of the software not because of the hardware; it's because of the brand recognition, which is obviously higher for Apple than for Samsung or Nexus.

It's the same for cars; I wouldn't be surprised if VW or Mercedes or even Toyota are able to keep more customers than Renault or Fiat, just because the "faithful Mercedes customer" is a thing that people talk about and the "faithful Renault customer" is not.


> Stating that Microsoft Surface and Samsung S8 are not competitors of Apple just because their products don't run Mac OS/iOS is pure fanaticism at the very least.

For me they are not. I've used Android on quite a few phones ranging from HTCs to various Nexus devices. It always had weird issues, the most annoying of which was some google process randomly spinning out of control and killing the battery in ~10 minutes.

I'm back on iOS now, and for the most part it works. I see some interesting HW from Samsung, et al, but then I'd be forced to use Android again. So yeah, I think the author has a point without being a fanatical about Apple.


> Stating that Microsoft Surface and Samsung S8 are not competitors of Apple just because their products don't run Mac OS/iOS is pure fanaticism at the very least.

For me they are not. I've used Android on quite a few phones ranging from HTCs to various Nexus devices. It always had weird issues

I ran into so many limitations of iOS, that I now run pure Android and have never been happier.


He didn't say that MSFT and Samsung weren't competitors of Apple. He said MacOS and iOS are monopolies. Those are two different things.

You can switch from a monopoly over a specific service/product to a similar but not identical one. MacOS has applications and features that Windows doesn't. It historically enabled features (sealed batteries) that Windows didn't, that provided better performance.

And MacOS can run linux and windows. For people who value those things, MacOS is a complete monopoly.

iOS is even more differentiated from Android. Android won't support all the music/movies/shows I've bought from iTunes, does't work with iCloud, etc. It doesn't airplay to my other Apple devices.

These "monopolies" are why Apple is successful. When they switched to Intel they didn't lower costs by adopting commoditized PC hardware designs and outsource OS development to MSFT by licensing windows. They used Intel to provide more powerful and more flexible Macs, and continued to differentiate themselves by adding value with aluminum bodies, retina screens, mag-safe adapters, thunderbolt, etc, etc, etc.

I think Apple understands much better than most of us geeks that their customers spend a lot of time with their devices and on their Macs. If I pay $1000 more for an "equivalent" Mac than Windows PC, it costs me about 50 cents more per work hour. Which means my payback needs less than a 1% increase in productive. And it's trivial to get far more than that because despite having similar processors/ram/storage, they are in no way equivalent in build quality, flexibility, and usability.

Where Apple's model fails is for the people who don't make much per hour, so building your own, or getting the cheapest, makes sense.


> It historically enabled features (sealed batteries) that Windows didn't, that provided better performance.

You are saying this as it was an undisputed fact. Which is the exact issue OP pointed at.


Sealed batteries are the reason I switched to Mac laptops. I used to carry an extra battery with my top of line dell laptop to make it through a flight. Then i read about the amazing battery life MacBooks were offering and switched and was able to make it through a single flight without every charging a backup battery again.

It wasn't just sealed batteries, but they offer better performance because they can better customized to fit available space in the laptop. To do that the OS has to have special drivers that condition the battery, or your battery will age rapidly and need replacement in a year or so. Apple put that into MacOS, which was a huge benefit in itself.

Sealed batteries also make devices lighter and sturdier. Fewer openings, more rigid enclosures.

These all seem like minor advantages, but they specifically led to me and others to became a Mac user.


I am sorry, you are missing the point. Your anecdata doesn't make a fact, neither does your perception. This is what OP was trying to get across.

I switched from a white MacBook to black Asus many years ago. The former lasted 6 hours while the replacable battery of the Asus lasted 9-11 hours.

Now I don't go around claiming Asus is better than apple, replacable is better than sealed or that black is better than white as it was a universal fact.


They haven't made a white MacBook in a very long time.

At the time I made my switch, a MacBook Pro lasted 7 hours, my Dell with very similar configuration lasted 4.5 hours. There were numerous technical discussions about how custom sealed batteries could provide more density in the same or smaller space. But their problem was they weren't usable because they typically lost capacity after a years worth of charge cycles, so no one could figure out why Apples didn't. Until they realized MacOS had special conditioning software in it.

And while today's laptops have roughly reached battery life parity, for years MacBooks were indisputably the best at it. Look it up, the facts are out there.


The fanboyism is strong on this one.

> iPhone users very rarely switch to Android, while a fair number of Android users switch to iPhone

> this is the point that was forgotten the last time Samsung was held up as an iPhone threat — a Samsung smartphone does not run iOS. That has always been Apple’s trump card

Considering this is a stats blog these bold claims are both made without any proof. And Android being a far cry from iOS is an antiquated position to take in 2017. They caught up quite some time ago.

The core difference is usually lock-in from using the Apple eco-system. But on a UX/hardware value level Apple doesn't have a significant advantage over companies like Samsung anymore.

But agreed re: the china problem, I wish he focused more on that over making sweeping statements about Apple's (imaginary) unmatched competitive advantage.


Various third party firms have said for years that the amount of switchers from iPhone to Android pales in comparison to the switchers to iPhone.

Also Apple usually says it themselves on their earnings calls.


These switching numbers do exist but they're coming from Apple so take it with a grain of salt. It's like DXOMark never reviewing the iPhone 7 Plus while Google claims how much better their phone is compared to the iPhone. The numbers are true but the bias is strong.


>> The problem with many tech analysts is that they are Apple fanboys without even knowing that they are.

That's true for most of the discussion on the internet: so much talk about how Apple's chips/apps/ui/build-quality/founders/etc are so much better.

But almost no talk at all about how modern brands get built, and what such brands give to users: for example, the ability to tell stories(implicitly or explicitly) to themselves and others, stories that make them feel good about themselves.

And i don't think it's fair to demand those users to forefit that right, after they paid so much for it.


If you think brand is the reason Apple succeeds, you simply are way over-discounting or don't understand unique platform features/benefits.

Brands become powerful only when they are true. All the marketing in the world can't successfully position your products as valuable and unique, if they aren't. You can't fool people for long. The gods of the advertising industry want you to believe they can sell ice to eskimos, but they are merely selling their book.


Branding isn't the sole reason for Apple's success. But it is probably an important one.

As for the general power of branding: many commodity like products make lots of money through branding, be in the fields of luxury or fashion.


Yea, I don't think you understand branding. Branding is the power a product gets from fulfilling it's promise to consumers.

Example: Coca-Cola. People don't buy Coke because advertising tells them to, people buy Coke because advertising reminds them to. Coke has a strong brand because Coke consumers prefer it's taste.

Numerous taste tests have shown this. Sam Walton spent millions on a better tasting drink than Coke, proved it was better in every taste test, and Walmart's coke bombed when it was released despite a heavy marketing push and excellent product placement. It bombed because despite the results of taste-tests, customers had developed an affinity for Coca-Cola. It was always good, they could trust it's consistency and flavor, and they really weren't motivated to gamble on something new.

In the cases of luxury or fashion, their unique benefits may be subtle, so subtle you don't even notice them. But their customers do and once they experience them they continue to buy from the same vendors. It can be as simple as a purse that is extremely attractive, yet durable, yet useful with the perfect number of pockets for your needs. Once you have that pleasing experience you are far more willing to buy future products from the same vendor, thinking, they know what they are doing, they think like I do, etc.

In smartphones and Macs, Apple has consistently provided high quality hardware with innovative features, and powerful but easy to use software. That's built up a brand where Apple customers have high expectations for their Apple product experiences, and that brand can only remain strong if Apple doesn't disappoint them.


> Numerous taste tests have shown this. Sam Walton spent millions on a better tasting drink than Coke, proved it was better in every taste test, and Walmart's coke bombed when it was released despite a heavy marketing push and excellent product placement. It bombed because despite the results of taste-tests, customers had developed an affinity for Coca-Cola.

Wait... this seems like evidence for the exact inverse of your thesis. If a better-tasting product comes on the market, for cheaper, with reasonable marketing, and still bombs, it sure seems like the value of the brand has become disconnected from the innate quality of the product.

Obviously, branding alone won't sustain a terrible product. But no one here was arguing that.


If you think about it, it's not. Coke has a great brand because their products pleased consumer expectations, just like Apple. Cokes brand is so good people won't switch even if given a potentially better product, because Coke has always tasted good to them, Sams Cola might not.

There is a significant difference between Apple and Coke. You always buy Macs because they are better for your workflow and find the experience delightful. That makes you usually want to replace one with another. You then have a bad experience with a Mac purchase. You now are far less likely to trust Apple and the Mac when you make your next of purchase.

Coke doesn't suffer the same problem. The joy of its purchase is the consistency of the experience, it's always the same. You know it will never disappoint that taste desire. That's why Coke never ever allows its bottlers to vary the formula even minutely. That way They can never lose your trust. If you drink it from fountain dispensers, your experience is less consistent, making that a more challenging market fir them.

So yes Apple is helped by branding. But like all great brands, Apples brand was built from product excellence, not advertising. Advertising is just a reminder or purchase trigger for the good feelings you already have for the brand.

"Yea, those AirPods look cool, that reminds me I wanted a pair because I expect them to work really well. I should do that now"


I agree with your point, but would add the nuance of "how much do you actually care?". Humans use heuristics (aka rules of thumb) to answer questions that don't really matter as much, ex "what should I drink". Coke has become that rule of thumb, you don't want to spend extra bandwidth thinking of an inconsequential decision.

This is NOT true for questions where there is a bigger consequence. I feel one is much more rational in those decisions (you carefully consider multiple choices when purchasing a phone, car, etc.) This means there is a greater opportunity of disruption because your brand, while still very important, is not the main differentiation anymore and is not the "rule of thumb".


They're not competitors in the segment of the market providing macOS, because they don't run it.

Some people will be willing to look past it, but it's still a huge advantage for Apple. When I'm choosing my next laptop, though the Surface and the Dell XPS might seem nice, neither of them run macOS, and that's probably a dealbreaker for me unless Apple's laptops get really far away from my needs.


> neither of them run macOS, and that's probably a dealbreaker for me

I strongly suggest that you give Linux a shot. Depending on the distro, it can be very nice, and it means that you get to keep both your money and your freedom, which I really appreciate.


I am bemused by your suggestion I haven't used Linux before.

I switched to OS X after having switched back and forth between Windows and Linux for several years, always getting upset with each other's deficiencies.


I switched to OS X after having switched back and forth between Windows and Linux for several years, always getting upset with each other's deficiencies.

Same thing happened to me in the early 2000's. I also just bought a Windows gaming laptop with a GTX 1070 GPU to do VR development, but I find I still find my non-VR experience as a dev and a user superior with my 2012 Macbook Pro!


Applications matter.


You're not wrong, but all the applications I care about run on Linux:

- emacs

- vi

- zsh

- st

- SBCL

- tmux

- Inkscape

- sxiv

- Firefox

- Gnucash

- GraphicsMagick

- Nethack

- Dungeon Crawl Stone Soup

- Minecraft

Of those, only Minecraft isn't developed on Linux first (and maybe Firefox, depending on how you define that condition).

I can be productive. I can read email (in emacs, of course!). I can play games. I can read documents. I can browse the Web. I feel as though my needs have been met.


That's what makes you a representative of a tiny minority.

I've spent part of a career writing software for people whose daily workflows required Photoshop, Illustrator, QuarkXPress, and a dozen other supporting applications, and they always ran much better on MacOS and were far easier to use and train people to use.

But even those people are still a tiny minority, where most of the world revolves around MSFT Office and hundreds of applications on Windows.


Switched to do a 13 and ubuntu finally. For a dev, we have another choice at least.


I think you underestimate the degree of vendor lock in Apple has. If you are a heavy user of iMessage, and you are a participant in multiple iMessage group threads, and you switch to Android, you will never be able to participate in those threads again. There's no way to convert an existing iMessafe thread to a hybrid MMS one without getting every participant to delete the old thread and start a new one. Good luck communicating that fact to all of your contacts

Every time I post this on HN I get a bunch of people telling me you can deregister your phone number, or start a new thread, but iMessage won't convert its own threads to MMS automatically. Every participant in every thread has to delete it. This is considered expected behavior by Apple.

If you want uninterrupted communication with your contacts, and you can't afford a few missed messages, you have no choice but to stay on iPhone​ forever. SMS is dead. Apple owns your messaging identity now, and it's platform locked.


Where do people use iMessage? Do they refuse to be friends with Android users? The whole phenomenon sounds bizarre, like people who only communicate with people using the same carrier or something.


It's random... if you have three friends who happen to all have iPhones, that thread will be iMessage only forever. If one of the participants has an Android, it will use MMS. I've been in friend circles where people were using mostly iPhones.


Same in my social circle - in fact if someone is on Android, we hate using text in general and go straight to FB messenger (or GroupMe depending on the size, but less so recently).


> Moreover, this sort of growth is exactly what you would expect given Apple’s iOS monopoly: iPhone users very rarely switch to Android, while a fair number of Android users switch to iPhone, which means that even in a saturated market Apple’s share should grow over time.

I'm confident that this isn't true. Economic mobility and movement goes down more often than up, and EVERY single person who has changed their phone plan goes cheaper (eventually into Android). Every vendor (ask anywhere from Sprint to ATT) knows this downgrading (into a superior android ecosystem) is close to 100% of the time, that his statement is an indication of how utterly ignorant or purposefully misleading the whole article is.

Ironically, the link embedded in that quoted sentence links to STOP DOUBTING THE IPHONE, THE MACINTOSH COMPANY Posted onWednesday, October 28, 2015, not any attempt to display the contradictory data to support the statement.


> [...] just because their products don't run Mac OS/iOS is pure fanaticism at the very least.

Is it? I like iOS and have no desire to switch, so I would never consider an S8 or a Google Pixel for my next phone. It really does matter. Even if Android is just as good there is friction in switching and people often like to stay with what is comfortable until some issue becomes too much to bare.


There's a question under which people discuss what would happen if WeChat is blocked from AppStore on a Chinese quora like Q&A site Zhihu.[1] Tencent removed a tipping the author feature from WeChat because Apple wanted a share from the tips, which made the blocking worries more realistic than many people may think.

The people on Zhihu, possibly the richer and more knowledgeable among the Chinese internet users, supported WeChat, which is a vital tool for work as well as everyday life. It's an IM, and when every relative and friend uses it, it's not possible to switch overnight if Apple actually blocks it. What's more, its only competitor in China is another product of Tencent, QQ.

So, Apple is facing a huge China problem, and it's trying to solve it. However, it is yet unclear if it can solve it, or be solved by it. I think the walled garden policy actually backfires in China. Android, as an open platform, is not that easy to kill, even though all Google services are blocked here. However, iOS can. Without a big enough market share, it will die like IE6, without Chinese developers willing to write apps for it.

[1] https://www.zhihu.com/question/58776977


And in China, many iPhone buyers are among the students and blue collar workers who buy it because it's subtly expensive, coming from a foreign country (though assembled in China), and was used by richer people. They don't buy it because it's a good phone, but because it's a luxury.

This is beginning to change, as some Android phones are actually getting more expensive to appeal to their vanity (well, being more expensive is so much easier than the reverse), and they're working on a very appealing feature for the those who mainly use the phone to take selfies and photos of their food: automatically beautification.

Also, it boosts China's computer vision technology as a side effect, which is good for us as well.


In the US at least, most of the phone is paid for by monthly installments as part of the plan so a phone which might sell for nearly $1K elsewhere appears to cost only $200 here. That has helped Apple immensely.

For my needs living in NYC with tall buildings, with need for good signal, voice quality, I use yearly iPhone upgrade on Verizon network. Verizon buys the $1K iPhone and I pay them back at less than $1.50 per day.

iPhone platforms have greater security than Android based ones and that is important to me as well.

The iPhone - Mac integration is great and minimizes complexity making my daily life easier.

Also, where I live, there are many Apple stores including a 24/365 for service for a device which is essential for my work.

I've had iPhones for 4.5 years and in that time period I've had to replace the phone 3 times for various reasons. Walking into the store for replacement is great.

But other people use phones for different reasons and most don't have the same constraints that I have.

Apparently WeChat in China makes the platform generic for most.


> I use yearly iPhone upgrade on Verizon network. Verizon buys the $1K iPhone and I pay them back at less than $1.50 per day

The math here doesn't work. One year ("yearly upgrade") at $1.50 / day means you're paying Verizon back less than $600 for a $1000 phone. Assuming, of course, that a year is less than 400 days.


There should also be an article entitled, "China's Apple Problem." The article could go many different directions, but I like the contrast between the titles.

One thought is that it could investigate the impact of big tech firms capitalizing on the Chinese market from the top down and bottom up. Utilizing cheap labor and manufacturing facilities to develop extremely expensive products which are then sold almost exclusively and at a higher relative price to the upper echelons of Chinese society.

It could also focus on intellectual property concerns which are acting as a catalyst for overhauling the Chinese intellectual property system, court system, and marketplace.


In India, dual SIM support is the best advantage Android has over iPhone. That holds many people away. People are not letting ONE of their number go away.


What do they use the second phone number for?


I know that many of the local shops in Edinburgh owned by Indian, Pakistani or Bangladeshi guys prominently advertised SIMs with special rates for calling numbers in those places. Perhaps it's something like 1 SIM for local every-day stuff, and another for calling your uncle/cousin/sister who's studying or living abroad? Also India is pretty huge perhaps some of the further apart states are considered sort of "abroad" for billing purposes by the carriers.


(1) It's often cheaper/free to call numbers on the same network.

(2) Business phone/family phone.

Edit: speaking from my experience in Eastern Europe. I assume it's similar in India.


In Brazil that would be 90% about (1) and 10% about (2).

If you run a small business, you'll also want to connect on all networks, so your clients will have one less reason not to talk to you. (But watsapp has made this point moot recently.)


Even Western Europe, I have UK and French SIMs.


With three's feel at home their pay as you go is usually ly the best data option in europe. And the other is your main number.


If you travel a lot - one is for your main phone. The other is local data card you buy at the airport.


One thing Apple has totally messed up in the Chinese market is localization. When I read Apple advertisements or texts on macOS or iOS UI, I always feel it's some foreigners who just learned to speak Chinese, yet trying to use Chinese in creative ways. They are totally understandable, but just that.

I think this at least partially affects Apple's brand building in China.


Switched to Pixel XL when iPhone 7 came out and killed headphone jack. Last thing I want on a phone, more things to charge and worry about.

Quality takes may forms. Pixel camera is reviewed to be better and screen is legit sRGB and it charges in 15min and lasts 1.5 days vs iPhone 7.

I also think iOS is a steaming turd. As an app dev for both platforms, I'm amazed people don't see the integration Android has with Pixel and others.

Let's see them "innovate" no home button in iPhone 8 along with a curved screen.

For the record this is being typed on my iPad...


If the situation in China is similar to the situation in Brazil, then it is not a surprise Apple products aren't successful there. Apple services here are very poorly supported and localized, and Apple products are too expensive compared to the relative benefit we would receive.

Why would you purchase a significantly more expensive device, with worse features, that sometimes don't work at all?

We still haven't gotten turn by turn directions in Apple Maps, for example.


But you can install Google Maps or Waze on an iPhone.

I like my iPhone because it's the fastest phone in the market. Pixel costs the same, and Galaxy S8 costs more than iPhone.


You're comparing the prices of only 2 android phones, when there are a lot more models available. None of these two phones are very popular in my country or in China.

The most popular devices here are mid-end Android phones, like the Moto G series phones.

Furthermore, what is supposed to differentiate Apple is its software, because hardware is a commodity.

Being "the fastest" doesn't appeal much to costumers as compared to price, and to the default software experience.


Yeah I guess it makes sense for people who are not rich.

Mid-end phones don't appeal to me at all.


The blog post completely misses the near total influence of the Chinese government. Yes, China is a different ecosystem and that has second order effects. But it's still important to get the direction of causality right.

In nearly every country around the world, Android phones are dependent on and dominated by the Google ecosystem. They aren't in China. Why? Because Google services are banned. So is Facebook. So are some of Apple's services. Even back when Google was cooperating with the PRC and trying hard for the local market, executives rightly or wrongly claimed that whenever their marketshare passed 30% regulators turned nasty.

Many, many foreign companies have poured resources into China and the few that have succeeded have generally done so on the strength of a global brand—such as Coke, LV or Apple. That doesn't mean that Apple's challenges in China are simply due to market forces though. China's decision to ban all K-pop, K-dramas and other Korean media over their recent missile defense system shows that much.

Simply put, WeChat violated multiple rules on Apple's App Store on its way up that have enabled it to act like the platform it does today. In any other country Apple would have simply refused to push non-compliant updates, but in China Apple faced the risk of being barred from the market entirely. Years later, WeChat is now so dominant that Apple would have to capitulate for market reasons alone.

>"WeChat is that, but it is also for reading news, for hailing taxis, for paying for lunch (try and pay with cash for lunch, and you’ll look like a luddite)"

That's just not true. Most lunches in China are not bought via WeChat. Even inside the 2nd ring road in Beijing, cash is very common.


> None of that lock-in exists in China: Apple may be a de facto monopolist for most of the world, but in China the company is simply another smartphone vendor, and being simply another smartphone vendor is a hazardous place to be.

Don't get that part. I live in Europe and sure a lot of people has an iPhone but I believe strongly that more people have an Android.

Doesn't Android have like 80% or more of the world market?

http://www.idc.com/promo/smartphone-market-share/os


He's not saying that Apple has a monopoly on smartphones; he's saying it has a monopoly on iOS.

His overall point is that while iOS has a strong lock-in effect for people already on the platform, in China the real platform is WeChat, so the iOS monopoly isn't as useful.


No, he is saying that Apple has a smartphone monopoly in the quoted paragraph.


First sentence of paragraph two states the premise of the article: "...the company has a monopoly on not just MacOS but even more importantly iOS."

The article does not assert that Apple has a monopoly on smartphones.


From the beginning of the article, which defines the rest of the them:

> Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control.


> but I believe strongly that more people have an Android.

If you go by people, Android has more market share. If you go by profit, iOS has more market share. https://www.macrumors.com/2017/03/07/apple-global-smartphone...

> None of that lock-in exists in China

This is true. If all your friends and family use iMessage and PhotoStream, then once you start using that too it creates lock-in specifically tied to software that only runs on Apple devices.

As an example, all my family use iPhones. We use PhotoStream to share pictures of family events and children and the like. If I were to switch to Android then I would lose all of that interaction, and so it's a big driver in keeping me (and other family members) on iOS.

Contrast this with China, where even on Apple devices, people generally use WeChat for doing that, rather than the Apple equivalent. WeChat also runs on Android and so you can happily switch platforms and you'll still have access to your same WeChat account with everything there.


> As an example, all my family use iPhones. We use PhotoStream to share pictures of family events and children and the like. If I were to switch to Android then I would lose all of that interaction, and so it's a big driver in keeping me (and other family members) on iOS.

There's always Flickr, Facebook &c. Many folks in my family use iCloud or PhotoStream or whatever it's called, and it does mean that I'm cut out of seeing those updates (because Apple are apparently unable to design a cross-platform webpage displaying pictures and text, in 2017), but I just don't care: I'd rather live without the restrictions of iOS and have the (relative) freedom and flexibility of an Android device.


> There's always Flickr, Facebook &c.

I don't use Facebook. Privacy concerns are another reason why I use iOS over Android.


Try www.famipix.com - we'll be launching a React Native app (iOS & Android) soon, for platform-independent, no BS photo sharing.


The problem is that so many photo providers have started up and shut down (or been shutdown after acquisition) that it requires a huge deal of trust to switch to another provider.

I can see from your site you've been around for a long time, but that still doesn't help ward of fears about future acquisition.

And even if you could convince me, then you'd also need to convince all my family to pay for something that they currently get for free.

The lock-is effect for Apple products is strong.

That said, after looking at your site, I'll definitely keep you guys tucked away in the back of my mind if I ever decide to move of iOS.


from your page: >No facial recognition. No public search. >We do not index faces nor do we allow external search engines >to index your photos.

might move that up to #2 point. add in no creepy facebook like face features storing (worded better) to drive home the point


"Apple may be a de facto monopolist for most of the world"

May this is how some peoples from USA see Apple ?

But here in EU Apple is just another smartphone vendor and most peoples are using Android.


From the very beginning, it is clear what the author was talking about:

> Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control.


Let me know when you can buy an iPhone from a different manufacturer. Again, author said Apple has a monopoly on iOS, not smartphones. That iOS monopoly takes about 80% of all the profits from the smartphone market worldwide, BTW.


Even in the US they are less than 50% smartphone marketshare, and about 10% desktop/laptop marketshare - hardly a monopoly. They just have huge profit margins which explains their buckets of cash.


AFAICT they're not a monopoly here either; most of the numbers I see are in the neighborhood of 40%.


Monopoly isn't defined by marketshare in some descriptive category, it's defined by market (pricing) power. If you have that's you have a monopoly (which makes sense, because that means that even if there are participants in the same descriptive category, you empirically are not competing with them for sales.)


It does and you're right.

But on English speaking websites the majority of users will be Americans, unless the sites have a very specific, localized audience (say, an Australian or Canadian newspaper). As a result many news will focus the American audience. One quick way to check this is to look for specific cues, for example: "the President" instead of "the U.S. president", "the nation" instead of "the American nation", etc.


It's been estimated that Apple makes 70-80% of the profits in the smartphone space. Android/Samsung sell huge volumes of really cheap phones, the users of those phones don't tend to spend money on apps, or content, or anything. Apple only sells premium phones and dominates the premium segment, iOS users still spend more on apps than all of the far more numerous android users combined.


In my country of origin (Poland) Apple devices are niche.

In Germany, where are reside they're indeed just another smartphone vendor, mostly for casual users.


The article contradicts itself; it says there's a problem, but in the long term, that iphone being 'status conferring' will ultimately prevail, meaning nullify the "problem", not become dominant necessarily:

> iPhone users very rarely switch to Android, while a fair number of Android users switch to iPhone, which means that even in a saturated market Apple’s share should grow over time.

> And to be sure, an iPhone is still status-conferring: Apple is by no means doomed, and it’s possible those China numbers will turn positive this fall.


If you think status is why Apple succeeds, you don't really understand the PC or smartphone markets.


For apple to succeed they have to actually make good devices. There comes a breaking point at which platform is abandoned en masse. Lets call it the lotus excel inflection. Or myspace facebook.

While apple had the best hardware untill 2014 I feel they are slipping behind. Two more generations and the iphone system dying overnight is not unthinkable if they dig deeper into mediocrity.


I agree with this. Their entire business model is built on providing a premium experience and value to customers who value that. If customers don't see premium value from their devices, the brand will be tarnished and customers will leave.

But so far I only see it happening in Macs.


Isnt the first point about Apple's global marketshare, and the second about China in particular?


I don't know if most people really consider the OS to be that important anymore, as the author strongly believes. The Windows Surface Laptop is no threat to Apple because it doesn't run macOS. Samsung's smartphones are no threat to Apple because the phones don't run iOS.

Then he continues with the WeChat factor to explain the shrinking market share of Apple in China. If you consider China the trendsetter in tech, that doesn't bode well for Apple in the rest of the world. It's a clear example that an OS isn't that important anymore.

If, or better when, a platform similar to WeChat emerges in Europe or the US, Apple can't rely anymore on it's OS to sell high margin hardware like the iPhone or Mac. It's not just a China problem.


By the argument of your first paragraph, Android and iOS are no threat to Windows because they don't run Windows apps.

But of course they are, just as Samsung is a threat to Apple, Apple is a threat to Samsung, etc. We are doing a set of tasks and using features and functions that multiple options provide a solution for.

Platform tie-in was once a strong bond, but has dramatically weakened. Those people who chose teams in the nascent days might be somewhat locked in, but anyone picking a platform over the past half decade has almost always created a transferable world.

As a case in point, my wife recently went from a Nexus 5 to an iPhone. Virtually nothing in her life changed: She still had gmail and the KFC app and Facebook and Hangouts and a good, standards compliant web browser and SMS, etc. For a variety of reasons she decided she didn't like idioms of the OS so she moved to a Galaxy S8, and again her world was close to identical.


I agree with this. Aside from simple inertia, switching phone platforms (at least between iOS and Android) these days is pretty painless -- after the first time that is. When I got my first Android it hurt a lot because iMessage. After convincing a bunch of family that it would be fine to get a Hangouts account, I can switch back and forth pretty comfortably now. Apps are basically equivalent. I'm back on iPhone right now because I tired of not getting updates and I no longer trust Google is living up to the "don't be evil" ideal.


It's all about platforms. In most of the world, the OS is the platform; it determines which apps are available and what the UI looks like. In China, apparently WeChat is the platform and the OS becomes irrelevant.

The closest analogy for the rest of the world is the web browser. Chromebooks are only possible because enough functionality is available through the browser without any direct access to the OS whatsoever.


"The Windows Surface Laptop is no threat to Apple because it doesn't run macOS. "

Author didn't say that, he said MacOS was a unique product which made it a monopoly, it doesn't guarantee success or losing sales to semi-comparable substitutes. But let's look at it's current state.

https://www.macrumors.com/2017/04/11/q1-2017-worldwide-mac-s...

6.8% doesn't sound like a lot, but remember the Mac got as low as 2% twenty years ago. And Macs sell for an average of $1,200 while Windows PC average sales price is around $500. So Apple has about 16% of PC revenues (and the majority of PC profits).

Apple is selling over $25B a year of Macs and growing revenues in an industry declining at 10% a year, Surface sales peaked at $3.5B and are now falling. Evidence is that Surface sales aren't a big threat to Apple because even an identical form factor isn't going to sway customers who want MacOS.


Isn't the point that weechat has pretty much become the preferred operating system in China?


WeChat is an application, not an Operating System.

The point it is that is so widely used in China that the OS it runs on is basically indifferent to the user, since he will spend most of his time in the app itself, which replaces/supplement/embeds many services that the OS (or other third party apps) usually provides.


How does that get through Apple's restrictions?


Consider what are the consequences of not having WeChat on iOS. In a sense, Apple is held hostage.


What restrictions are you talking about? Apple has no prohibitions against making the vast majority of applications.


I think you've put your finger on the strongest implication from his piece. Platform has always mattered. What does Apple do if software application out of their control becomes the only platform that matters?


Fair point.

As long as your most used apps area available on more platforms, and those are more or less equal in terms of features/performance/usability, on which platform they run it shouldn't make a big difference.

The author says "WeChat it's not Whatsapp/Facebook/Twitter", but even in there is not such a centralized service outside of China, most of the same uses are covered by ubiquitous apps.


Are you kidding? It's like every other day we hear about a new Android exploit or security flaw. At least Apple is committed to strong encryption and privacy. The OS - and the hardware integration - is an enormous selling point to me. As much as I oppose Apple's direction as of late for many business decisions (iPhone 7 headphone jack for example), the reasons stated above are why I still cannot see myself switching.


Android enables you to install apps from 3rd party stores and specifically warns people about being careful about doing this. It is not so much that Android has more exploits, but that it is more exploitable if you choose it to be.


The OS and hardware integration is a selling point. But how many people actually care about security flaws?


It's like every other day we hear about a new Android exploit or security flaw

Aside from the absurd exaggeration, you're vulnerable to clickbait journalism. Extraordinarily few of those "exploits or security flaw"s had any material impact on the market at all, seldom having a practical or real world exploit. Instead it's a theoretical by some security group looking for some free press.

They're a couple of good platforms. Rhetoric online isn't useful.


>Unsurprisingly, in stark contrast to the rest of the world, according to a report earlier this year only 50% of iPhone users who bought another phone in 2016 stayed with Apple:

At first, I was confused by this graphic. Then I realized that the author is dramatically misinterpreting it: the graphic actually means that 66.85% of phones purchased in 2015 were made by Apple and 50% of phones purchased in 2016 were made by Apple. So we actually have literally no information about Apple's customer retention in China from that graphic at all. (Unless I'm really reading it wrong?)

I wish journalism majors were required to take a stats class in college. Sigh...


I don't think this guy is a journalism major. He's an MBA with experience working marketing and strategy at Apple, Microsoft and WordPress. He's probably had a stats class.


Somehow you didn't notice the graph added up to 250%, and you snark that the author needs to brush up on statistics?

Please explain how 50 of 250 is actually 50% of everything. Especially when the author writes iPhone sales are only 9.6% of the chinese market.


Good point. I guess I should have gotten a little more sleep last night...

So I guess these ARE customer retention rates? Following his link brings me here: https://mp.weixin.qq.com/s?__biz=MjM5ODEyOTAyMA==&mid=266190... (god, what a ridiculously lengthy URL). Looks like Apple only captured 33 and 25% of the market each year, respectively- not 66 and 50%, as I thought before. In which case I think the author should at least mention the fact that Apple's picking up a lot of their competitor's customers YoY as well- that's hardly a bad thing. Maybe the Chinese market simply has less brand loyalty.


So WeChat did what Java couldn't do: Build an abstraction that made OS irrelevant client side. I guess you could say that the browser has done this too, but not fully, I guess.


The browser absolutely did this -- just compare the importance and dominance of MS Windows in the late 90's / early 00's to today.


In China, the most important layer of the mobile software stack is WeChat, not the operating system.

If true, then the next "killer app" is already here. Connie Chan's 2015 article lays out a very convincing case for this claim (http://a16z.com/2015/08/06/wechat-china-mobile-first/). WeChat, or something like it, will soon spread to other markets. Surely, Apple executives understand this and are busy working on an Apple equivalent.


The most interesting part of this article is how big incumbent companies fail. Not by direct competition, but by a new product category/service that makes the current one a pure or irrelevant commodity.


Meta question: is there a "Hacker News of China" forum where I can find this article discussed from the Chinese perspective?


Try zhihu.com. Though I don't think the quality is anywhere close to here.


The author's explanation for Apple's "China problem" is unconvincing to say the least:

> [...]behind local Chinese brands like Oppo, Huawei and Vivo. All of those companies sold high-end phones of their own; the issue isn’t that Apple was too expensive, it’s that the iPhone 6S and 7 were simply too boring.

Boring - that's the explanation for a significant dip in sales? I would have expected a list of exciting design or features that Oppo, Huawei and Vivo are putting into their phones to steal customers from Apple, because historically their flagships have been equally 'boring'.

The "China Problem" is at the crux of the matter (title of the post), and the explanation is too hand-wavy for my taste. My default attitude to tech industry analysts is cynicism; I do wonder who exactly pays for such superficial analyses and what value do they get from them?


The idea is pretty clear, I think. Apple's problem is WeChat. It's more important than the phone OS, which is different to most other countries. The effect of WeChat combined with China's sheer size is a problem for the iPhone business.


WeChat is available on iPhones and its competitors. Since it is a common factor, WeChat alone cannot explain the decline in iPhone sales.


What's the situation in China with WeChat's competitors?

Why can't WeChat copy any product in a week, if FB does?


Don't forget that China has biggest and most competitive smartphone market in the world, both in specs and price. iPhone is kinda underwhelming in the past year.


Thats Ben Thompsons point, right? That being underwhelming on features doesnt matter in any country but China, because Apple has a moat there: iOS. But iOS doesnt matter in China because there is another OS on top of it: WeChat.


I think the speculation about WeChat is overblown. Wechat is essentially important, however, it is not, even it tries hard to be, an OS yet. And very opposite to what people in the West would think, iOS has one big advantage, that is the privacy control, whereas Android platforms in China, because of the absence of Google, have serious issues of mal/spy/bloat-ware.

So it is not that in WeChat you can package your bag and transfer to other platforms in a free style. No. Even in the west, transfer to Android or transfer back, isn't that much a problem either. The reason I think people don't want to do this is because there aren't many Android phones out there if u are not a fan of Samsung/LG, specially Galaxy phones.

However, China has the most competitive market, phones are offered unlocked like 50% of the price as they sold in the West, and there are many more options/customizations. In that sense, iPhone loses its cool as THE option to go to, even for premium users, like for business people they tend to use Huawei.

Point is, Apple needs to get interesting and excited again, otherwise this won't be the end of its decline in China.


I've certainly stuck with my 6 plus, I would like another gig of ram but otherwise it does me fine. I cannot justify dumping £7-900 on a phone, so I am happy to wait it out for now.


Too bad the phones from ZTE, Huawei, OnePlus, Xiaomi, etc generally suffer from horrendous build quality. From my experience, even their flagship devices feel more like a toy and less like an actual phone. The iPhone and Galaxy, and perhaps a few one offs from other companies, set build quality and craft benchmarks.


I've been very impressed with the OnePlus 3T. Cannot fault it at the price (£400).


£400? I got mine for £330 last year (was £300 before GBP tanked).


I have a ZTE and whilst it doesn't have the build quality of the more expensive brands, I would in no way describe it as horrendous. It functions amazingly well for a phone costing £90, and at that price if it goes pop I don't really care.


it used to be like that but nowadays they are superb. I own a Huawei P9 and even the Google Pixel looks cheapo compared to it.


The real problem for Apple in China is that their brand simply isn't as strong as it is in the US. It has nothing to do with WeChat.


I agree with the first part, but the article has a point on WeChat. It is a very good example of how app vendors have stronger brands while smartphones are seen as commodities in China.


No, the article contradicts itself and makes an incorrect claim. First, it says that iPhones are bought as statement pieces, ie their hardware. Then, it says iPhones aren't as popular in China because Androids can use WeChat too. These are incompatible claims.


They are not incompatible claims.

People buy things for multiple reasons. The point of the article is Apple has a problem, one of the reasons, iOS, isn't applicable in China due to WeChat being the dominate platform (and works on all devices).

The author circles back to mention that it doesn't mean Apple is eliminated from that market since they still have other differentiators (status symbol).


"First, it says that iPhones are bought as statement pieces, ie their hardware". The author said nothing of the sort, you are projecting your own (incorrect, imho) opinions.

The author said that iOS is significant differentiator and that's why people buy iPhones. Except not so much in China now, because WeChat.


Being a statement piece does not necessarily have anything to do with hardware. It's much more about branding.


If Apple's brand is their only problem in China, then they have an immensely bright future there. The author disagrees with you.


> Unsurprisingly, in stark contrast to the rest of the world, according to a report earlier this year only 50% of iPhone users who bought another phone in 2016 stayed with Apple

Interesting. This shows that Apple don't compete properly and only achieve high sales through monopoly. That probably explains their general nasty attitude to many things, and really sick lock-in mentality.

> None of that lock-in exists in China: Apple may be a de facto monopolist for most of the world, but in China the company is simply another smartphone vendor, and being simply another smartphone vendor is a hazardous place to be. To be clear, it’s not all bad

Why is it bad? Being "simply another smartphone vendor" is the right situation. What's bad are monopolistic markets.


> hardware differentiated by software such that said hardware can be sold with a margin much greater than nominal competitors running a commodity operating system.

Apple's hardware is not differentiated by software. Their creaking software is an ancillary requirement to use their excellent hardware. If their software was their differentiator then Hackintosh's would be more widely used. Secondly, OSX is a commodity operating system. Non-commodity operating systems would be things like VOS.

> The functionality is mostly the same, and if users value a sustainable advantage in the user experience Apple deserves the profits — and power — that follow.

Sorry to be a dickhead but you shouldn't throw terms like "sustainable advantage" around like they're literal terms, when they have a very precise meaning in literature and research going back nearly half a century. Sustained Advantage specifically relates to Corporate Strategy and industry competition and is completely unrelated to user experience and whether or not a company "deserves" profits; advantage in an industry implies value accrual regardless of whether it's deserved or not. Nice UX might arise from functional level strategies, which arise from business level strategies, but otherwise they're unrelated concepts and it's not something the user should be aware of.

Misuse of terms leads to them being confusing and meaningless (e.g. Disruption).


While you may find it creaking, myself and many other people find the experience of using Apple software far better than any competing systems. I wouldn't work somewhere that asked me to use Windows. For me, and maybe I'm overly aesthetically sensitive, it would make my day to day life much worse. This is just to say that the authority with which you dismiss Apple's software as a point of differentiation is probably misplaced.


> While you may find it creaking, myself and many other people find the experience of using Apple software far better than any competing systems. I wouldn't work somewhere that asked me to use Windows. For me, and maybe I'm overly aesthetically sensitive, it would make my day to day life much worse.

I agree: Windows is just embarrassingly bad. Fortunately, there is another …

I've been using desktop Linux for almost twenty years, and it is in my experience superior to the Mac. It gets out of my way and lets me get my work done. It has multiple tiling window managers. It is the native environment for the best tools. It is truly free, both in terms of liberty and price. It runs on commodity hardware. It's fast. And, IMHO, it can be pretty too.


Differentiation also has a precise meaning in literature, and just feeling that software which comes free with Apple hardware is better than other software doesn't indicate product differentiation or a differentiation strategy. That's just personal preference.

I'm not saying that you don't/shouldn't genuinely and rightly prefer Apple software, I use Apple devices every day myself. That being said, I'd hazard a guess that you wouldn't use OSX on a Dell as your primary machine? Or iOS on a cheap Android if that were possible?


Yea, you don't understand the definition of product differentiation or differentiation strategy, because iOS and MacOS are poster children for both.

You also don't understand that MacOS isn't designed to be a commodity OS that runs on any hardware. It doesn't install with a huge database of video drivers for every possible PC out there. Running MacOS on generic hardware is problematic and not worthwhile, especially when the vast majority of Mac users can get good Mac hardware for less than a fraction of 1% of their billable rate.


Yeah, I understand exactly what the definitions of them are in detail, and somebody saying "It's differentiated because I like it better", which is what the person I replied to wrote, doesn't fit under the definitions.

I never said that attributes of Apple's product lines can't be classed as 'differentiated'.


By your logic, if Windows was a good enough OS to be a differentiator, everyone would just build their own PCs to save a hundred bucks. Because everyone has the free time, inclination, and skills to build one, and everyone enjoys tinkering with their PCs when they don't run right, instead of actually getting work done.


No it'd be more like "if Windows was a good enough OS, people would go to efforts to install it on computers that aren't made for it" (Bootcamp?).

But either way, neither OSX or Windows are "differentiators". Attributes might differentiate the products in a theoretical sense, for example branding, pricing, licensing, support, ease of use, but there's effectively only 3 widely used operating systems so it's senseless to talk about differentiation as a concept. With that low level of competition you're just talking about 'different'.

Redhat is an example of an OS that you could call 'differentiated' due to their business model and niche usage.


If you don't understand how massively differentiated operating systems are in terms of features, you simply don't understand the concept of differentiation.

For example, the number of applications an OS can run is an incredibly important and valuable feature. How well it runs those applications is also an important and valuable feature. There is a reason why Excel users usually pick Windows, and Photoshop users often pick MacOS.

So Redhat. How well does it run Excel and Photoshop?


How exactly did Apple and Microsoft create a product which they knew ahead of time would attract specific software developers? Or are you suggesting that third party suppliers turned Microsoft/Apple's offerings into differentiated products over time?

And Redhat, one of the main software offerings of a 2 billion dollar public company, can't run the software that 98% of computers can, but they aren't an example of differentiation? It sounds like you don't understand differentiation and are using the term literally, as if it just means 'different'.


Apple's developer program for the Mac started pretty much at launch. They gave out free software, documentation, and equipment to some, and substantial discounts to others. They recruited MSFT from the start.

MSFT's developer arm has always been central to providing tools and support to developers wanting to build applications for it's operating systems.

You don't think both companies realized that an operating system with many available applications was far more valuable than one without?




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