Microsoft aims to pass Apple iPhone market share in China with low cost Windows Phones

Speaking at the launch of the Chinese-localized Windows Phone yesterday, Simon Leung, Microsoft’s chairman and chief executive officer for the Greater China region, told reporters in Beijing that passing Apple is an “interim goal” as the company’s longer-term objective is to supplant Google’s Android as the local market leader.

While Microsoft is in part counting on their fresh approach to mobile computing, the real tool is low-cost Windows Phones in the 1,000 yuan range. A 16-gigabyte iPhone 4S costs 4,988 yuan at Apple’s online store in China.

“We will continue to drive the price down,” Leung said. “Our goal is number one. Having a goal to be number two is not really a goal.”

Microsoft’s manufacturing partners will “definitely” offer devices in the price range of 1,000 yuan ($158), Leung said.

China is poised to become the world’s biggest smartphone market in 2012, according to the IDC, with shipments expected to will jump 52 percent to 137 million units this year, overtaking the U.S. for the first time.

IDC predicts Windows Phone will take 7.5 percent of the China market this year, trailing the 12 percent share of Apple’s IOS and Android’s 70 percent, said Teck-Zhung Wong, a Beijing-based analyst at IDC. By next year, Windows share will rise to 15 percent, surpassing Apple’s 13 percent, while still trailing Android’s 66 percent, he said. By 2016, Windows Phone is forecast to have a 20 percent share in China, ahead of Apple’s 16 percent and trailing Google’s 60 percent.

“The Windows Phone ramp-up in China won’t really begin until the second quarter, so the numbers are still low,” Wong said. “From next year the ramp-up will be more rapid.”

“Windows Phone will have a lot of equipment manufacturing partners and more device choice at more different price points,” Wong continued. “That alone, as opposed to what Apple is doing, will give Windows Phone an advantage.”

Sandy Shen, a Shanghai-based analyst with Gartner Inc. said Microsoft will also have to fight against the prevalence of iPhone and Android devices at the high-end of the market.

“It will take a while before people appreciate the offering,” Shen said. “It’s never too late for a really good product, but there are still improvements to be made on the Windows Phone device itself and to establish the ecosystem.”

Microsoft is expected to release Windows Phone 8 later this year which is expected to address features required at the the high end of the smartphone.

Read more at Bloomberg here.

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