SMARTPHONES: iPhone Set for Ho-Hum China Launch

By on

Bottom line: The new iPhone 6S models will post lackluster sales during their first weekend in China, but could gain momentum later as the nation’s 3 mobile carriers launch aggressive promotions for their new 4G services.

High hopes for China with new iPhone launch

China has become a center of attention for Apple (Nasdaq: AAPL) these last few days, on hopes that the world’s largest smartphone market will help to power the latest iPhone to a record launch. Apple is being quite circumspect about the situation, saying only that global pre-orders for its new iPhone 6S and 6S Plus were “very strong”, ahead of their official September 25 launch date when they will become available in stores.

Analysts are saying they expect China to play an important but also muted role in the early stages for the iPhone 6S, accounting for as much as 15 percent of global sales in its first weekend. At the same time, another report is spotlighting discrepancies in iPhone 6S prices in different global markets. As usual the report shows that models in China will cost around 20 percent more than the the US, though Chinese prices will be comparable with Britain, France and Germany.

All that said, my own view from the ground here in Shanghai is that the latest Apple launch has been largely a non-event. Chinese buyers were accustomed to being treated as second-class citizens by Apple for years, though that has changed sharply in the last 2 years under the leadership of CEO Tim Cook. But in this case, I do feel like Chinese buyers are greeting the new iPhone with the same somewhat indifferent global response of “What’s new here?”

Analysts are also taking a conservative view of China, even after Apple said that opening weekend sales for the new iPhone 6S and 6S Plus were likely to beat the launch weekend for its previous model, based on pre-ordering activity. (English article) The company’s last launch in October last year saw Apple log sales of 10 million units for its the iPhone 6 models during their first weekend of sales.

During last year’s launch Apple announced it sold more than 4 million iPhones within the first 24 hours of taking orders. This year, however, it didn’t give any specific numbers for that period and only said that customer response was “extremely positive” and pre-orders were “very strong”. One analyst said he expects new iPhones to log sales of as many as 13 million units in their first weekend, with 2 million of those coming from China.

Unimpressed Chinese

That prediction means that China would account for about 15 percent of first weekend sales, which really doesn’t look that impressive. Greater China accounted for about a quarter of Apple’s total revenue in its latest reporting quarter, providing $13.2 billion versus a global total of nearly $50 billion. Thus a forecast for China to provide 15 percent of first-weekend iPhone 6S sales would actually be below the country’s overall revenue contribution for Apple.

At the same time, a comparative report on iPhone prices around the world says China will still be among the most expensive markets for buyers of the new smartphones. (Chinese article) That chart shows the US and Canada will be the cheapest markets for new iPhones, while the models will be around 20 percent costlier in China, the UK, Germany and France. The Asian markets of Singapore, Hong Kong and Japan will be in between, meaning we can probably expect to see the usual smuggling of iPhones from those markets to China to take advantage of price discrepancies.

At the end of the day, the global view that the iPhone 6S and 6S Plus don’t offer very much new seems likely to set the tone in China. It’s always possible the market could surprise and post stronger-than-expected early sales if the country’s 3 telcos launch aggressive packages to promote their new 4G services. But I suspect such packages won’t come until later, and the iPhone 6S will ultimately post a lackluster debut for Apple in China.

Related posts:

(Visited 178 times, 1 visits today)