A sharp drop in Apple Inc'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 Electronics keeps up a steady stream of new models across all price ranges. "There's some cannibalization 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 didn't 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." Slipping Down In the first quarter of this year, Apple ranked top in Hong Kong with 46 percent market share in smartphones, though that was down from 54 percent in the last quarter of 2012, according to market research firm Canalys. Even without releasing a new product, Apple sold 31.2 million iPhones in its fiscal third quarter, around a fifth more than analysts had predicted. But revenue from all Apple products in Greater China, which includes Hong Kong and Taiwan, slumped 43 percent from the previous quarter and was down 14 percent from a year earlier - worrying in a region where smartphone penetration is still low. Greater China accounted for 13 percent of Apple's sales, or $5 billion, in April-June - down from nearly 19 percent in the previous quarter. Hong Kong was a particularly weak spot. "It's not totally clear exactly why that occurred," CEO Tim Cook said on a conference call with analysts. "In the past three months, the number of mainland Chinese consumers of Apple products dropped about 50 percent," said Sunny Tang, a salesperson at another Hong Kong electronics store that sells Apple products. "Android (Google's operating system in many Samsung phones) is much better than Apple, and in that period Samsung released at least five phones and tablets." Nicole Peng Luping at Canalys said: "China is a very diverse market so you need to have very diverse products to serve different levels of customers - and that's the weakness for Apple." Heating Up In the first quarter, Apple ranked 5th in China with 9.7 percent market share, well behind leader Samsung with 17.7 percent, and lagging, among others, Lenovo Group Ltd and Huawei Technologies, which said on Wednesday it was on track to hit 10 percent revenue growth this year. Nomura's Huang expects Apple's China market share to slip 1-2 percentage points in the coming quarters as the novelty of the iPhone 5 fades and as new buyers opt for cheaper smartphones. The global battle for mobile supremacy is not just between Apple and Samsung. Huawei and