Apple Underwhelms in China, Too
It's hard to imagine, but this week's iPhone launch has left the Chinese even less enthused than the rest of the world.
Not only are many unimpressed at the price, but they were also fuming at the lame Beijing launch. Although it was the first such event in China, Apple Inc. (Nasdaq: AAPL) could think of nothing more enthralling than replaying a video of the Cupertino event several hours earlier, as The South China Morning Post pointed out.
At 4,488 Yuan Renminbi (US$734) for the 16GB version, the iPhone might be within reach of well-heeled consumers in Beijing and Shanghai but is unlikely to win over punters in so-called third-tier cities and beyond, who have never owned a smartphone.
This is underscored in the results of an online survey by research firm iiMedia (in Chinese), which found that just 5.2 percent of those polled were interested in the iPhone 5C, while only 4.7 percent said they considered it affordable.
In another online poll (again in Chinese, naturally), more than 80 percent said the price was too high.
But Apple's market share in China fell to just 5 percent during that three-month period, putting it in seventh place behind Samsung Corp. and local brands such as Lenovo Group Ltd. (Hong Kong: 992) and Huawei Technologies Co. Ltd. .
Apart from the rising competition from Asian smartphone brands, China has troubled Apple because of its inability to strike a deal with China Mobile Ltd. (NYSE: CHL), which, with 745 million customers, accounts for more than 60 percent of the country's mobile user base.
That Apple has no deal with such a major player has largely been attributed to the device-maker's unwillingness to make phones for China Mobile's under-strength TD-SCDMA 3G network.
However, it's not clear what kind of impact this has had on Apple's market penetration in China. Apple has distribution deals in place with the two other Chinese service providers, China Unicom Ltd. (NYSE: CHU) and China Telecom Corp. Ltd. (NYSE: CHA), which have been signing up as many new 3G subscribers as China Mobile during the past 12 months. Both have begun taking orders for the new iPhones, and will begin selling both devices on September 20.
CEO Tim Cook has made a number of trips to China this year, and, at this stage, Apple appears to be close to a deal with China Mobile. The approval of the first LTE TDD iPhones for use on China Mobile's network this week seems to confirm that.
Analysts have suggested to the Financial Times (subscription required) that China Mobile would be keen not to have high-end users on its 3G network. "Why would China Mobile ever highlight the inadequacy of its 3G network by officially licensing an iPhone?" one said.
So, it's all about 4G.
China's State Council has called for 4G licenses to be issued by year-end. Zhang Xiaoqiang, a vice-chairman of the main economic planning body, NDRC, said Thursday that the licenses would be issued "soon."
— Robert Clark, contributing editor, special to Light Reading