Apple in China: Free Fall

In the third quarter of 2016, Apple's market share fell to 7.1%, down from 11.4% a year earlier. On the other hand, OPPO's market share jumped from 10% to 20% during the same period. Why is it happening? What should Apple do?

Once a product is introduced in the market, competition force starts responding to it. Due to the competition force, in the form of imitation, innovation and substitution, the willingness to pay for the introduced product starts drifting downward, eroding the sale. Due to this effect, within a span of just one year, the sale of the first version of iPhone reached to zero. Apple had two options to deal with: reduce price, or introduce better version. Apple pursued the 2nd option. With significant innovation power, Apple was very successful in introducing far better products than the previous version, at regular intervals. As a result, iPhone was quite strong to deal with the market force--effect of imitation, innovation and substitution. But over the years, Apple's ability to innovate to counter this force has reached to saturation. 

As a result, the effect of competitors' force powered by imitation and innovation has been getting stronger and stronger--day by day. To deal with such force, what should Apple do? One option is to reduce the price. Another option is a bit radical: Creative Destruction. Apple should pursue the substitution path to bring quite different product, to destroy the market of iphone. In absence of creative destruction to kill the market of iPhone, there is a strong possibility that Apple will lose the market of iPhone to the force of imitation and innovation.