It remains unclear why Apple is hosting a separate special event on Sept. 11 in China, a day after its US event where it is expected to unveil its new iPhone(s). Common courtesy for the time-zone difference? Perhaps, but in an age of digital live-streams and social media, there’s no way Asian journalists and tech fanboys alike are going to wait and see what Apple has to say at its events in Beijing, Tokyo and elsewhere when the web will be flooded with information from the US debut.
One thing that genuinely might make the Beijing announcement different is the long awaited agreement between Apple and China Mobile—a move that would finally give Apple full, unobstructed entry into the burgeoning China market that is crucial to it winning back market share from rival Samsung.
In 2012, it seemed that Apple would dominate the China market, noting the hoops people would jump through to own an iPhone—but things have changed.[more]
While Apple remains successful in China, it has been getting blown out of the water by Samsung’s full range of phones. Then there are the local players. “Little Rice” Xiaomi may still be little, but its influence is larger than its market share as its repeated release of wildly inexpensive handsets with tons of top features sets the market abuzz comparing it to the exorbitant costs of Apple products. Then there is the constant media barrage against Apple, such as the recent complaints from parents about the extraordinary cost of the “Apple three-piece set” (iPhone, MacBook, iPad) demanded by all new college students.
A major issue faced by the mobile maker is that its phones don’t work very well with the homegrown 3G technology used by China Mobile, a service carrier with about 65 percent of the market. A China Mobile iPhone would open up Apple to all of those customers. AllThingsD predicts that Apple could sell as many as 38.7 million iPhones in 2014. (An announcement all but confirmed that the new iPhone will work with smaller player China Telecom’s service.)
Yet, for all the hype, Apple handset would probably still not be seen as a “cheap phone.” If rumors are true, the iPhone 5c will retail around 3,000 yuan ($480), which is still way over the budget of almost any Chinese consumer and basically makes the phone unaffordable in China’s lower tier cities where the majority of spending growth is now happening. A recent survey from Sina Tech found Chinese consumers want to spend 1,000 to, at the most, 2,000 yuan ($164 to $327) for a phone, though the survey only asked about domestic brands.
What few have examined is if many current iPhone users would actually trade down, especially if the new “cheap” iPhone connects to the 4G technology rumored to be made available by China Mobile later this year.
A simple survey of some young Chinese professionals in Shanghai reveals ownership of Sony, Nokia, HTC and iPhone smartphones. Yet, all, without exception, use China Mobile. The iPhone owner admits he pays for a special package designed by China Mobile for iPhone owners that assuages the pretty terrible user experience that currently exists for China Mobile subscribers with iPhones.
When I asked if any of them would be interested in a new cheaper Apple device that worked with China Mobile, only one said said yes—the one who already owned an iPhone 5.
Abe Sauer is based in Shanghai.