Apple Steps Up Effort to Woo China Developers to Gain on Android

Jun 05, 2014 8:02 pm ET

June 6 (Bloomberg) -- Apple Inc.’s effort to make China a growth hub will hinge on winning over more developers like Woody Wan.

Wan is the co-founder of Babeltime Inc., a Beijing-based maker of an iPhone game called Saga of Three Kingdoms. After making his first app for the smartphone in 2011, Wan found little support because Apple had few developer-relations staff in China and had only limited ways for customers to buy the programs. That’s beginning to turn around.

“Two years ago there was no developer support in China,” Wan said in an interview in San Francisco, where he was among a record number of Chinese attendees at Apple’s annual developer conference this week. “There’s been a significant improvement.”

Apple is now mounting a furious campaign to woo more developers in China, in a bid to replicate an ecosystem of games and other widgets that has helped it drive iPhone and iPad sales in the U.S. and elsewhere. Since 2011, Apple has steadily beefed up its developer-relations team in China so new apps can be approved in the country, and it has opened a new office in downtown Beijing where the China App Store is operated. Apple has also smoothed the process for how customers buy apps in China, and built new Chinese-language-specific software to benefit developers.

Catching Up

Apple is doing more to entice Chinese developers because it’s a laggard in the market. The Cupertino, California-based company ranks fifth in smartphone market share in China behind companies using Google Inc.’s Android software, including Samsung Electronics Co., Lenovo Group Ltd., Coolpad Group Ltd. and Xiaomi Corp., according to IDC. The low market share coincides with a limited number of apps -- Apple had just 150,000 apps in its China App Store as of January, a fraction of the more than 1 million apps in the U.S.

“On a scale of one to 10 in terms of importance in China, it ranks at about 11,” Ramon Llamas, an analyst for IDC who tracks the mobile industry, said of Apple’s app development. “Nobody buys a smartphone just for it to be a phone -- the value of your device goes up with the more applications that you download on to it.”

Apple is ramping up its China developer effort as its growth has slowed and it looks to new markets for a boost. Last year, the company signed a deal to distribute its iPhone through the world’s biggest mobile-phone carrier, China Mobile Ltd., opening up its devices to a subscriber base of more than 750 million. Chief Executive Officer Tim Cook highlighted China during his keynote at this week’s conference and Apple held several sessions and social gatherings for programmers visiting from the country.

Homegrown Programs

Many apps designed for a Western audience also don’t translate well in China, increasing the need for Apple to nurture a domestic community of developers. Xiang Lin, vice president of overseas business for Hoolai Games Ltd., said that apps that do well in China tend to be less realistic and include a lot of cartoons and emoticons, with games often referencing traditional Chinese stories.

The kind of coders and designers Apple is trying recruit are working in cities like Chengdu, where there’s a large campus dedicated to software development.

“Think Google campus, but 10 times the size,” said Pepe Agell, head of international for mobile-advertising company Chartboost Inc., who recently visited the Chengdu area. “The scale and magnitude of this park is incredible -- a hub of activity and innovation filled with thousands of iOS and Android developers.”

Reaping Rewards

Apple has said its focus on the country is paying off. In January, the company said China accounts for the second-highest number of app downloads in the world behind the U.S., and it’s third biggest in revenue. Of the 500,000 programmers in Apple’s developer program in China in January, half joined last year, the company said. Sales in China, Hong Kong and Taiwan totaled $9.3 billion last quarter, up 13 percent from a year earlier.

“We’ve been working at China for a while and have learned a lot, and I’m very proud of what we’ve done there,” Cook said in April on a conference call. He said App Store revenue in the country grew by triple digits in the first three months of the year.

Chinese developers said building for Apple’s devices has its advantages. It’s simpler than creating for Android, which sometimes requires tailoring an app to the many devices that use the software. Apple also has only one app store to sell through, while Android programs are available through different storefronts run by Xiaomi, Baidu Inc. and a slew of others. The iPhone’s high cost also naturally selects users with more disposable income to spend on apps.

Monk’s Hat

Vincent Diao, lead product manager for Beijing-based Yodo1, said his 2-year-old company gets about 40 percent of its revenue from Apple devices. The company works with firms like Turner Broadcasting System Inc. that are trying to get their games in the Chinese market, translating the language, modifying icons such as adding a monk’s hat instead of a Santa hat in a game, or adding levels that are based on traditional Chinese stories.

Apple is rolling out new features to make it easier for developers, Diao said, including a payment tool in 2011 that links directly to a customer’s bank account because many Chinese consumers don’t carry credit cards. Apple also has new keyboard and predictive-typing tools to make it easier to input Chinese characters, he said.

“They are improving,” Diao said in an interview at Apple’s developer event this week.