Apple's share of China's booming smartphone market slipped for a second straight quarter in October-December, as it lost ground to cheaper local brands and as some shoppers held off until after the iPhone 4S launch last month.
China, the world's largest mobile phone market, has not been easy for Apple, which is grappling with a lawsuit from a local firm over the iPad name and issues at its suppliers' factories over wages and working conditions.
With the number of mobile subscribers set to top 1 billion in China this year, there is cut-throat competition among South Korea's Samsung, Nokia, Apple and local firms Huawei Technologies and ZTE.
While Apple regained its top spot as the world's largest smartphone seller in the fourth quarter and for last year as a whole, it slipped to 5th place in China, overtaken by ZTE. Apple's China smartphone market share slid to 7.5% from 10.4% in July-September.
In the last quarter, Samsung knocked Nokia off the top slot, taking 24.3% of the market, more than three times Apple's share, data from research firm Gartner showed. Nokia's market share more than halved last year, from above 40% in the first quarter to below 20% by the fourth quarter.
Gartner said this week it expected Apple's iPhone market share to slip for a couple of quarters as the novelty of its latest 4S model wears off.
In the first quarter of last year, ZTE had a market share of just 3%, but ended 2011 ranked 4th with more than 11% market share. Chinese firms are gradually shifting up towards the higher end of the market, unveiling more feature-packed smartphones.
Last month, shoppers in Beijing threw eggs at the Apple store and fought with police when they were told the iPhone 4S would not be on sale as scheduled.
In Shenzhen, some genuine iPhones and iPads are smuggled in from Hong Kong, while sellers also take advantage of Apple's popularity by packaging fake iPhones in iPhone 5 boxes - even before the 4S was launched.
In Hong Kong, Apple resorted to an online lottery reservation system for the 4S model after crowd control issues disrupted initial sales.
Analysts expect Apple to stem its slide in market share in China by signing up another carrier.
China Unicom , the country's number two telecoms operator, is currently the only carrier to officially carry the iPhone. It has not officially given its iPhone sales, but analysts estimate it has sold around three million iPhones since signing a contract with Apple in 2009.
