China Loves Its Smartphones

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China overtook the U.S. in the number of Internet users a few years ago. It was just a matter of time before the world's most populous nation because the largest consumer of smartphones.

Needham & Company analyst Charlie Wolf's latest report on the mobile industry shows that smartphone shipments in China soared 164% to 33.1 million in the second quarter. There were only 25 million handsets shipped in the U.S. during the same three months.

Why do you think Baidu (NAS: BIDU) made a bigger push into mobile with its Baidu Cloud announcement two months ago?


Unfortunately for Baidu, this remains largely a two-horse race. Google's (NAS: GOOG) Android becomes the runaway leader with 69.5% of the market. That's a result of Android's open-source nature, where even Baidu's smartphone initiatives are based on Android.

However, we can't discount Apple (NAS: AAPL) and its 17.3% chunk of the market. Apple had less than 10% of the Chinese market a year ago. That's heady growth, and things can get even better for Apple when the iPhone 5 comes out later this year.

See, iPhones aren't currently compatible with the country's largest carrier, but that should change with the iPhone 5 update. China Mobile (NYS: CHL) , with twice as many subscribers as the population of the United States, could easily push Apple's share of the market past 20%, if not 25%.

Nokia (NYS: NOK) is in third place, but its 11.2% share of the market will continue to shrink over time. Just as the stateside market has become a matter of choosing between Android and iPhone, China's pretty much the same way -- only it's bigger now.

Pay attention, investors.

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At the time this article was published The Motley Fool owns shares of China Mobile, Baidu, Apple, and Google.Motley Fool newsletter serviceshave recommended buying shares of Baidu, Apple, and Google and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has adisclosure policy.

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