Apple dropped out of the top five list in China's smartphone market for the third quarter, as local handset vendors saw their shipments surge from the sales of low-priced smartphone models, according to research firm Canalys.
The maker of the iconic iPhone held the fifth rank in the previous quarter, and second place in this year's first quarter.
Samsung however maintained its spot as China's leading smartphone vendor with a 14 percent share in shipments, while Chinese PC maker Lenovo trailed behind at second place with a 13 percent share.
The big surprise was the rise of Yulong Computer Telecommunication Scientific which took third place. Yulong sells smartphones under the brand name Coolpad. The company is largely unknown outside China, but has seen its shipments in the country steadily increase as a result of its broad product profile and low-end handsets, which reach prices below $100, said Nicole Peng, an analyst with Canalys.
"They are doing especially well from their partnerships with China Telecom and China Mobile this quarter," she said. China Telecom and China Mobile are two of the country's main telecommunication operators, which together have 850 million mobile customers.
This is the first time Yulong broke into Canalys' list of top five smartphone vendors in China, according to Peng. Two other Chinese vendors -- ZTE and Huawei -- were close behind, with their shipments only slightly varying. The three companies each had about a 10 percent share of the market.
As for Apple, the company's own smartphone shipments in the third quarter grew year-over-year, but were still outpaced by the shipments from local rivals, according to Peng. Apple ranked sixth, and had a market share of 8 percent, a 1 point drop from the previous quarter.
"(The Chinese vendors) are selling their devices at a very low price that can attract first-time smartphone users," she said. "Apple's iPhone is still very expensive and it kind of limits their expansion in the country, when the target audience of where the growth is coming from is at the low-end."
In the third quarter, smartphone shipments in the country reached more than 50 million units, with China accounting for over a third of the world's total smartphone shipments, Peng said. In the second quarter, Chinese vendors dominated the country's smartphone space with a 60 percent share, and Peng expects that figure to increase over time.
The best selling smartphones in China are those bought with or without a contract for a price of between $70 to $120, she added. In contrast, Apple's iPhone 4S starts at $713 in the local market when bought without a contract.
Apple could however see its smartphone share surge in China later this year with the launch of the iPhone 5. Apple CEO Tim Cook said in a conference call last month he expects the product will officially come to the country in December.
"I'm sure Apple will have a very big increase in shipments," said Peng, who added that Chinese consumers were holding off from buying the iPhone 4S in favor of the iPhone 5.