China has been time and again highlighted as the next area of growth for Apple, but of late, the company’s sales in the region have declined due to growing competition from Chinese smartphone makers. But if all goes well, Apple might see an increase in China sales after the launch of the iPhone 5C.
The theory is put forward in a recent research note by Morgan Stanley analyst Katy Huberty, based on a survey of 2,000 Chinese consumers:
Apple could significantly disrupt the Chinese smartphone market by launching iPhone 5C. We asked respondents that are very likely to purchase smartphones in the next 12 months but did not choose the iPhone whether they would purchase a redesigned and lower-priced iPhone 5C, one of the “Mini” products from international brands, or a comparable smartphone from one of China’s domestic brands. The survey indicates Apple could gain 13 points of unit share with iPhone 5C. About half of that share gain would come from Samsung, while most other vendors lose some share.
While a lot of folks initially expected the iPhone 5C to be priced at an extremely low-price point, it’s now clear that Apple’s targeting the mid-range segment with a price of around $400. The iPhone 5C, surprisingly, has a lot of takers in China, even at this relatively high price. Survey data suggests that the “sweet spot” for pricing the iPhone 5C would be RMB 4000, which is around $486.
Apple is reportedly also very close finally to striking a deal with the world’s biggest carrier China Mobile, which has over 740 million subscribers on its network. Expanding availability of the iPhone would also contribute to an increase in Apple’s sales, as it did in the U.S. when the iPhone lost its exclusivity.
iOS already has a lot of features specific to Chinese users, and now with hardware that more people can afford, the company can better compete with domestic players. If Apple manages to clinch the China Mobile deal, and also offers the mid-range iPhone 5C, Apple could regain the title of the world’s no. 1 smartphone vendor.