iPhone sales get off to slow start in China

Mon, Nov 2, 2009


Apple has had its eye on the Chinese smartphone market and its 700+ million subscriber base for some time now, but the iPhone’s debut in Beijing last week has gotten off to a relatively slow start.

The Wall Street Journal reports that despite a noticeable interest in the new phone, stores weren’t experiencing sellouts, which has often been the case when Apple hits a new market for the first time.

Hundreds of people braved cold and rain to attend a Friday night party thrown by China Unicom (Hong Kong) Ltd., the state-owned carrier selling the iPhone, at a Beijing shopping center. Still, the crowd seemed subdued compared with the thousands who turned up at stores when the iPhone was introduced in markets such as the U.S. and Japan, where it quickly sold out in many locations. As of Sunday night, stores around Beijing still had the iPhone in stock.

There are a number of factors which might help explain why the iPhone hasn’t taken China by storm.  For starters, there’s the price.  With some of the available phone plans under China Unicom coming in at $130 a month, the iPhone may simply be an unaffordable luxury for many in China, where the average phone bill for a China Unicom subscriber is about $6.19 a month.  Second, the iPhone in China do not come with built-in Wi-Fi due to a law in the country that bars WiFi in mobile phones.  That coupled with the high price of the iPhone doesn’t exactly make for a compelling device.  Third, and perhaps more importantly, is the plain fact that China is a hotbed for gadget knockoffs, and in particular for third party iPhone imitations.  iPhone pretenders are the norm in China, with some companies mimicking Apple’s flagship product with impressive detail, right down to copying Apple’s packaging structure and design.  And lastly, the iPhone has been available for over 2 years now, and the number of unlocked iPhones in China is astounding.  It could very well be that a large percentage of interested iPhone owners in China bought one long ago “from unauthorized sellers.. from Hong Kong or other countries.”  Some estimates peg the number of bootleg iPhones in China as high as 2 million.

Still, the key thing to remember is that Apple is finally in China, and while things may have gotten off to a relatively slow start, you have to imagine that sales will pick up going forward, especially when Apple releases its 4th gen iPhone, which will presumably happen sometime next summer.

Financially speaking, the iPhone may prove to be a significant factor in Apple’s future earnings, with USB analyst Maynard Um stating that even if Apple were to sell just 1 million iPhones in China in 2010, it would effectually increase Apple’s EPS by $.04.



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