A sharp drop in Apple's China revenue in April-June underscores the challenges it faces in its second-largest market as the technology gap with cheaper local rivals narrows and as Samsung keeps up a steady stream of new models across all price ranges.
While investors marked up Apple shares as the company sold more of its iPhones than expected, the stock rally may prove short-lived as demand for its products fades in China. Analysts predict Apple will lose market share in the world's leading smartphone sector.
"There's some cannibalisation of Apple's market share from competitive mid-tier models that cost a lot less and perform as well, from vendors such as Xiaomi and Vivo," said Huang Leping, an analyst at Nomura in Hong Kong, referring to rival Chinese models.
Salespeople at several electronics shops in Hong Kong said South Korea's Samsung was a bigger hit with consumers as it offers more products. Some display counters did not carry any Apple devices.
"Samsung products have enjoyed greater sales than Apple as many mainland (Chinese) tourists tend to buy Samsung due to a greater variety of models with a wider price range," said a saleswoman at a Hong Kong computer centre. "That's why we stock more Samsung products."
In the first quarter of this year, Apple ranked top in Hong Kong with 46 per cent market share in smartphones, though that was down from 54 per cent in the last quarter of 2012, according to market research firm Canalys.