China iPhone launch a 'disappointment'
Analysts adjust their Chinese iPhone estimates following sales that one describes as "soft"
iPhone buyers in Guangzhou. Photo: iPhonAsia
Following press reports that China Unicom (CHU) only managed to sign up 5,000 new iPhone subscribers after four days of sales, Piper Jaffray's Gene Munster and Barclays Capital's Ben Reitzes each issued notes to clients Tuesday that tried to put a positive spin on the news.
"The China launch is a disappointment," Munster acknowledged. But he added that it reminded him of the launch of the original iPhone in June 2007, when reports that AT&T had activated only 146,000 iPhones in two days caused "unfounded concerns among investors" about the device's long-term potential.
Doing some quick back-of-the-envelope calculations, Munster estimates that 1,500 iPhones per day works out to 550,000 per year — considerably less than the 1 to 2 million iPhones he had expected Apple (AAPL) to ship to China in 2010. But he anticipates that the cost of unsubsidized iPhones in China (currently about $800) will come down, and he's sticking with his prediction that Apple will sell 9.2 million iPhones worldwide in the current quarter and 36 million in calendar 2010.
Similarly, Barclays' Reitzes expressed confidence in his report that with additional carriers, demand for the iPhone in China could "ramp up to multiple millions" over time.
Meanwhile, iPhonAsia's Dan Butterfield, sampling Chinese language press reports from the 30 provinces where the iPhone went on sale last weekend, suggests that the launch might not have been the bust it's being portrayed as.
"Despite western media predictions that the iPhone launch in China would be met with a yawn," he writes, "there were many enthusiastic buyers at iPhone retailers. The Suning store at Nanjing Commerce Plaza had some 1,000 visitors on launch day."
[Follow Philip Elmer-DeWitt on Twitter @philiped]
The iphone flopped in India too, where there is essentially no gray market…
http://www.businessweek.com/globalbiz/content/apr2009/gb2009041_266236.htm
The fact that China Unicom is allowing grey-market iPhone owners to sign up for 3G service will make it less risky for people to buy grey-market iPhones.
So those who are willing to forgo the subsidy in order to get wifi, will keep buying iPhones from Hong Kong.
No one should have expected ANY line to form at the official iPhone launch in China!
Millions of iPhones are in use in the country already. The first version, and subsequent models, of the iPhone was manufactured in China, and only in China. The chinese knew about the first iPhone before it was announced, because they actually handled the iPhones in the factories.
The chinese know that the iPhone keyboard screen is the very best way to communicate with chinese characters, and they appreciate the Apple eco-system. The iPhone is seen in public in many cities in China. It is not new, nor is it uncommon in China. You cannot go a day in major chinese cities without seeing the iPhone in use in public.
While the average chinese is concerned about price, as is everyone else, there are many chinese that want the best, and THEY want the iPhone.
Realist Writes: "What??? A negative spin on Apple from De Witt? Who would have thought that?"
Meh. DeWitt is one the more balanced writers on the street. He's just reporting the news dude. Take it easy.
Lets get real here and forget the hype usually associated with these articles.
Why does Microsoft sell windows so cheaply in China?? Cause everyone steal it for free.
Why is the sale of iPhones not out doing the West?
Cause people in China either make next to nothing and there fore live with cheap knockoffs or are rich and can get it anytime.
Just a thought here but really, so why isn't everyone making Billions out of selling in China????
Maybe its the bad Milk. 
en
Amplify the false-negatives and ignore the obvious positives? My goodness, the whole market drove Palm up from $4 to $15 with nothing by a prayer to show. At least Apple proved again that its past quarter killed the recession in its garden? Now people are all howling over China? Was China even in the picture last quarter? Have you all lost perspective?
There is an acknowledged 1 million or so iPhone (2G) running around China. Another 500K to 1 million iPhone 3G in the same place. Most users are still using 2G, Wifi or not. 3G is a new change and people have yet to discover its benefit.
As for iPhone without Wifi, the fickle Chinese government had a law forbidding Wifi, it is not Apple's choice. Get that clear.
China Unicom has already announced that they hope to remedy the Wifi situation with manufacturing changes later this year. How they will square that with buyers today who get a wifi disabled version is anyone's guess but it will happen.
China Unicom has also announced an "amnesty" program for those with grey market jail-break iPhones.
So overall, regardless of what Munster says, iPhone is doing OK in China. There are already 1.5 – 2 million grey market units running around in jail-break mode. It is a question of when they will return to the fold, so to speak.
Remember, China is a very different environment than US or Europe. A majority will buy grey market if it means getting a better deal. A sale is still a sale to Apple, grey or white.
Finally, China Unicom is a Chinese company and I expect them to know their market and be shrewd enough to make the right decisions for their consumers. Let's give this a few months to play out instead of focusing on false-negatives and ignoring the low term obvious positives.
All the negative press and gloomy predictions for the past 2 years have ALL been proven wrong and Apple has reported record sales in every category for every quarter in this period. All this while the entire industry is shrinking ( computers, phones, software)
Anyone paying any attention to these unsubstantiated analyst reports is an idiot. There must be someone really interested in dropping Apple's stock price by dissemination of fear and negative news….
Poof and it's as if everything else in the business suddenly disappeared. Let's be serious here. Are the Chinese stupid? Are investors stupid? Answers: No and maybe.
If you can get the same product for 30% less what would you do? Either way Apple is selling phones and I wouldn't be surprised if Apple managed to wrangle some type of extra subsidy out of Unicom for launching the IPhone sans WIFI. Best rest assured as long as planes fly and Fed Ex delivers overnight, folks will get their IPhones.
"Despite western media predictions that the iPhone launch in China would be met with a yawn,"
WHY DOES WESTERN MEDIA ALMOST ALWAYS TRY TO TALK AND SPECULATE NEGATIVELY ABOUT APPLE WITHOUT ANY DATA OR HISTORY? ARE THEY BEHOLDEN TO PAYING COMPETITORS OR FUNDS THAT SPECIALIZE IN SHORTING APPLE?
iPhone's sales in China was Awful! Only 5,000 units sold? Unbelievable! Go back HOME Apple and take your overpriced, WiFi crippled unwanted iPhones with you!
China is the World's largest mobile market and only 5,000 iPhone's were sold? Now that must explain why Apple's stocks have been sinking (15 points) all week!
To add more fire to their problems, new reports suggest that only 3% of the 100,000 iPhone apps are actually downloaded and installed! 97% of the apps are competely unused…nothing but a bunch of ghost apps!
iPhone has broken the record of having the most unused apps in history ever: 97,000 unused apps and growing! Pathetic.
ex ped: Not disagreeing with you, but it was 5,000 iPhones activated, not 5,000 iPhones sold.