Late last week, the iPhone finally made its debut in the world's largest telecom market amidst a lot of apprehensions and speculation regarding how well it will be received.
If the weekend sales are anything to go by, it sends out all the wrong signals.
Reuters reports that the total number of iPhones sold in the first couple of days since launch was 5000.Compare this with the one million units of iPhone 3G that was sold in the first three days of launch late last year and you will get an idea about the contrasting levels of customer anticipation.
In our earlier piece announcing the launch of the iPhone in China, we had discussed the numerous challenges that China Unicom faces in the Chinese market which included the easy availability of cheaper unlocked iPhones with Wi-Fi from the gray markets. Do these low numbers signal the end of the road for iPhone even as its journey begins in China? Dan Butterfield from iPhonAsia disagrees. In an article published on the All Things Digital site, Dan argues that the pricing plans offered by China Unicom had been wrongly portrayed in the Western media. He says, "When you examine the full matrix of China Unicom price/plans, you quickly realize that you can save big by going on contract vs. prepaid (pay as you go). There are even four price/plans where your iPhone if free. The iPhone subsidy increases for those who opt for more expensive monthly plans".
Dan also goes on to say that 3G is still picking up in China and China Unicom's WCDMA 3G is the best in the market and so the company should get it going pretty soon. The number two mobile carrier in China themselves seem unfazed by the sales numbers,having only recently registered their one millionth 3G subscriber. In a statement released by Reuters, China Unicom Chairman Chang Xiaobing has said,"We are satisified with iPhone sales so far, and we aim to have an additional 1 million new 3G subscribers each month in the near future".
Having said that, we need to look at the number 5000 in perspective. According to Apple COO Tim Cook, the iPhone is on sale in over 1000 China Unicom stores throughout China. That makes it 5 iPhones sold over two days in each of these stores. We are not sure if the China Unicom Chairman really had a target in mind when he said he was happy with the sales numbers, but a sales figure of 2 iPhones per store per day does not sound too encouraging by any standards.
There is now a lot of things at stake for China Unicom. Firstly, the company has already been reported to have purchased 5 million iPhone handsets from Apple which will have to be sold in order to recover the initial investment. Over and above this, Reuters reports that Unicom is also under pressure to maximize profits in order to recover huge investments made by the company along with the other telecom majors in the region to build the $58.5 billion 3G infrastructure that is now functional.
This means that while the company would be looking to bank on the sale of iPhones to increase its margins and recover the investment in 3G connectivity, the poor response till now could mean that Unicom would be hard pressed to subsidize the costs further thereby shrinking the margins even further making the investment on 3G that much harder to recover.
A Chinese investment group, CLSA Ltd. has predicted Apple to sell 460,000 iPhones in the country in one year. Considering the first weekend numbers, it only looks like wishful thinking.
What do you think?
[via AllThingsD, Reuters]
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Cell phones themselves are expensive in China, but phone services are dirt cheap. 99.9% of the people use prepaid sim cards. Only business people sign contracts with the phone companies. Most people use SMS more compare to talk on the phone. $30 prepaid sim will last for a few month as long as you don't use it for long distance call.
All other 3G phones people use in China has a camera in the front which you can use to do video chat over 3G. No one has the right mind will sign a contract to get the iPhone because you can buy one for the same price online or at the local phone stores everywhere. IPhone was out in China the same when it was out here in the states, just not officially. People who really wanted it, already have it.
China has a broad selection of various cell phones that are on par with the iPhone. Agreed… the people who wanted it already got it and without the limited NO WIFI built in it. Sad they are made there, but yet they get a crippled version of it. Good luck CHina Unicom.