The iPhone's magic as China's must-have smartphone is eroding.
year, eager buyers in Beijing waited overnight in freezing weather to
buy the iPhone 4S. Pressure to get it - and the profit to be made by
reselling scarce phones - prompted some to pelt the store with eggs when
Apple, worried about the size of the crowd, postponed opening.
18 months later, many Chinese gadget lovers responded with a shrug this
week when Apple Inc. unveiled two new versions of the iPhone 5. Today's
market is glutted with alternatives from Samsung to bargain-priced
(Also see: Apple unveils iPhone 5c and iPhone 5s)
"There was no big change, no surprise at all," said
Gu Lanjun, a 29-year-old employee at a Shanghai bank. Having bought the
three most recent iPhone models as soon as they were released, she said,
"I won't update this time."
That lackluster reception suggests
Apple faces a struggle in defending its shrinking share of China's
crowded, increasingly competitive smartphone market and its premium
That matters, because China is a key part of Apple's
growth plans. CEO Tim Cook told the official Xinhua News Agency in
January he expects this country to pass the United States as its biggest
"Apple's market position in China has stagnated," said
telecommunications analyst Jan Dawson of the research firm Ovum, in an
One problem, he said, might be that Apple's high price
limits it to targeting the top market tier, and customers in that
segment who want an iPhone already have one.
The two models unveiled this week "will largely be sold to existing subscribers and won't win many converts," Dawson said.
Earlier iPhones became status symbols in China even before they were formally sold here.
paid hundreds of dollars for handsets brought in from Hong Kong and
modified to work on China's phone network. Companies treated them as
luxury goods, buying hundreds at a time to give to important customers
as Chinese New Year's gifts.
Now, Apple faces increasing
competition. Samsung has made inroads into its premium market segment.
For the mass market in a country with an average annual income of only
about $4,000 per person, less than one-tenth the U.S. level, newcomers
such as China's Xiaomi offer smartphones that run Google Inc.'s Android
system for as little as 799 yuan ($125).
The rapid growth of the
lower segments where Apple doesn't compete has helped to shrink its
share of the overall market even as its sales grow.
of China's smartphone market fell by nearly half, from 9.1 percent to
4.8 percent, over the past year, according to research firm Canalys.
appeared to be trying to capture some of that lower-tier market with
this week's announcement of the lower-priced 5c. But the company's
website said it will start at 4,488 yuan ($712) in China, well above
analysts' expectations of as little as 2,500 yuan ($400).
(Also see: In world's biggest market, "cheap" iPhone looks too pricey)
were expecting a much cheaper version to expand the market to the
mid-tier segment. But that didn't happen," said analyst C.K. Lu of
Gartner Inc. "We don't see much is going on in the China market with
this new product launch."
Investors gave Apple's two new iPhones a similarly lukewarm reception.
fell 6 percent in U.S. trading on Wednesday following the announcement.
Apple stock has fallen nearly 30 percent since peaking at $705.07 when
the last iPhone came out.
(Also see: Apple shares fall on high iPhone 5c price)
Apple also disappointed observers by
failing to announce an agreement with China Mobile Ltd., the world's
biggest phone company by number of subscribers, though Apple had
promised no deal.
After this week's announcement that Japan's
biggest mobile carrier, NTT DoCoMo, would support the new iPhone lineup,
China Mobile is the last major holdout. A tie-up would require Apple to
create an iPhone that runs on China's homegrown mobile standard but
would give it a partner with 750 million subscribers.
iPhone release also marks an upgrading of Apple's marketing in China.
For the first time, the new model will be released in China at the same
time as it debuts on Sept. 20 in the United States and other major
markets such as Britain, Japan and France. In more than 100 other
countries, it will not go on sale until December.
orders for the iPhone 5s and iPhone 5c have been "much lower" than for previous
models, according to Zhang Xue, a saleswoman for China Telecom Ltd.,
one of two Chinese carriers that support the iPhone.
"Customers are much calmer when they face the new iPhone lineup," Zhang said.
Apple still has plenty of fervent admirers in China, but some complained the latest iPhones offer too few technical advances.
(Also see: iPhone 5c 'doubts' cause shares of Apple's suppliers to fall)
Guanlin, a junior at the Beijing Contemporary Music Academy, said he
traded up from Samsung Galaxy to an iPhone because Apple's operating
system seemed more stable. But he said the 5c didn't look like it would
be worth the money.
"I have lots of Apple products, yet my
complaint about the iPhone is it lacks innovation," said Liu. "I can't
see major breakthroughs in the latest models, which is disappointing."
Others complained Apple failed to live up to its stylish design standards.
covers look garish. It will take people back to 10 years ago," said Gu,
the Shanghai bank employee. "I would rather wait for the iPhone 6 and
if there still is not much change, I will think about switching to
iPhone 5c and iPhone 5s launch in pictures