Nokia: On Top In China Today, But What Lies Ahead?

A lot of people have been sharing a table that was released yesterday showing Nokia’s Ovi app store with a commanding lead in China — an edifying counterpoint to those who like to say, categorically, that Nokia’s in decline. But news coming in this week from titans like Apple (NSDQ: AAPL) and a Chinese home-grown media company underscores just how under threat that lead may be. (See the table after the break.)

The table, compiled by the Chinese analyst house iResearch (a translated page can be viewed here), shows that Nokia’s app store has been accessed the most in the country, with 65.2 percent of Chinese mobile users “regularly” accessing the store. China Mobile’s MMarket is the second-most accessed, at 57.7 percent. The third-largest comes quite far down in the percentage stakes. It’s Google’s Android market at 13.7 percent.

These numbers don’t seem to have anything to do with downloads or how much money is made from individual app stores, but more to do with the fact that Nokia (NYSE: NOK) is the most popular handset maker (and one of the most forged, it turns out), and China Mobile is the biggest mobile operator.

The balance, however, looks like it may be shifting away from Nokia.

This week, when Apple reported its impressive quarterly results, one of the standouts was its performance in China: Apple said it had $2.6 billion in sales in greater China (which includes Hong Kong and Taiwan), a four-fold increase over the same quarter a year before when Apple made less than £1 billion.

Apple also has a strong retail presence in the country, both in terms of physical and online stores. The Chinese locations got the most foot traffic of any of Apple’s popular chain of retail stores. Apple’s COO Tim Cook said the company had identified China several years ago as a “top priority” — and it looks like that targeting has paid off. Apple only ranked at 9.4 percent in the iResearch list this time around.

Apple is not the only one nipping at Nokia’s heels. This week Central Chinese Television launched a new mobile advertising service with 3rd Space for its various mobile portals and apps. This in itself is not likely to compete with an app store per se, but what that deal revealed was that big content companies in the country see some platforms as more lucrative than others, even if they are smaller.

In addition to its mobile web portals, CCTV has an iPhone app. The next app it will develop will be for Android, said Richard Newsome, commercial director for 3rd Space. Only then will the broadcaster look at Symbian.

“Symbian is the dominant OS but we feel that is changing reasonably quickly to Android and iPhone. Android particularly,” he said.

There is also the very real prospect of all the handset makers developing low-cost handsets using the free-to-license Android. One of the more prominent of these, the Chinese vendor ZTE, said that it hopes to grow its device shipments by 40 percent this year as it aims to become the third-largest handset maker in the world.

Given all of this, it’s not really surprising that when Nokia announced this week that it was dropping its unlimited music service in most markets, China was one of the countries where it’s kept the service intact: against Android-based competitors selling sub-$100 handsets, and high-end-but-pricey Apple gems, it needs to make sure it can hold on to the middle by mixing cheap content — and in this case, “free” — with handsets that may not be.