I have been a loyal iPhone user and was hesitant to switch to any other brand until my iPhone 6 finally broke down. Being an Apple fan, I personally did not have any preference for any other brand in particular. I decided to switch to Oppo R11, but only because it was free and I wanted to use it as a transition phone before iPhone 8 became available. However, one month after using a Chinese brand Android phone for the first time, I was amazed at how easy it was to transition to a different platform. I think the key reason for the ease of transition is that there is not enough stickiness in Apple services in China. Chinese users spend so much time on WeChat, so as long as all your files are transferred from WeChat to your new phone, you are set to go. WeChat was said to have captured almost 30% of China’s mobile app usage, according to the latest Mary Meeker report.
Below are key reasons why WeChat is trumping iOS in ecosystem stickiness and is almost becoming an operating system in itself:
· WeChat has become more than a chatting app in China. It comprises so many other functions such as payment, calling a cab, sharing moments with friends (social networking), reading news, shopping, following posts from official accounts of retailers and companies as well as public accounts for any topics of interest. On average, 61% of WeChat users opened WeChat more than 10 timers per day and 36% of users opened WeChat more than 30 times per day in 2016, according to a CAICT report.
· WeChat has a new function to transfer all your past chat history from your old phone to your new phone through simply a few clicks and a QR code scanning. Since a lot of important messages and pictures are stored in WeChat, this function makes switching from one phone to another even easier.
· Most of the apps from Apple have Chinese local alternatives that are customized for Chinese customers and many people are not even aware of what services or apps are offered by Apple. For example, local music apps like QQ Music and Xiami Music can satisfy the needs for most users as they have a wider selection of local songs, as well as Korean and Japanese songs, than Apple Music. Unless you are a big fan of Western music and are particularly concerned about the sound quality, local music apps will suffice. In addition, the network quality when accessing local apps is more stable than accessing Apple apps.
· Apple Pay is not widely used in stores in China whereas WeChat Payment and Alipay are omnipresent. WeChat payment and Alipay account for 40% and 50% of China’s mobile payment market respectively, based on iResearch. In addition, there are more rules and restrictions from Apple Pay than local mobile payment systems. Fingerprint payment verification was initially banned for WeChat payment and Alipay on iPhones. Apple also fought with Tencent to disable the tip function on WeChat to adhere to Apple Store rules. Furthermore, in an effort to combat its declining market share in China, Apple is bending, for example it finally conceded on August 30th, to accept WeChat payments for purchases in its App store
· WeChat is popular among all age groups in China. Elderly people are not familiar with what apps are popular and tend to just use WeChat to connect with family and friends. One of the features on WeChat that is convenient for older generations is voice messaging, as many of them do not know how to use pinyin input
· WeChat has also become the most widely used chatting app for business use. WeChat allows transferring large size files as well as making video calls.
· WeChat launched a “mini program” feature this year to allow users to access apps directly through WeChat without the need to download the apps, which is less data intensive. This new feature will further reduce users’ reliance on any operating system.
Wechat is your Facebook, your credit card, your Uber, your Amazon altogether. The rise of WeChat as an all-in-one app is threatening not only the appeal of Apple’s iOS operating system but also iPhone sales in China. In China WeChat creates less of a difference for consumers using different operating systems or brands. Some even say China’s operating system is Wechat, not Android or iOS. As a testimony, Apple’s market share in China has already dropped from 14.3% in 2015 to 10.7% in 2016. However, we believe Apple’s market share is unlikely to drop any further because the high-income group will still want to buy the premium iPhones and the strategy to sell older models with competitive price points targeting the aspiring middle income segment will also help drive volume. As for local OEMs, with the lack of differentiation in OS, they will continue to compete fiercely in exterior design and marketing campaigns. We also see improvement in UI even within Android players in China to differentiate.
