Cheaper iPhone could give Apple control of China's smartphone market
A new survey shows that Apple is poised to capitalize on an explosion in sales of 3G smartphones in China, with the iPhone the most popular option, though lower prices could give it the lion's share of sales.
The survey results revealed this week by Morgan Stanley and AlphaWise show 3G handsets and smartphones are taking off in China in 2011. Nearly 90 percent of respondents said they have "high interest" in buying a 3G handset or smartphone as their next phone.
Of those who plan to buy a smartphone, the most popular option is Apple's iPhone. A total of 30 percent of respondents with 3G handset purchase intentions said they will most likely purchase an iPhone, followed by 25 percent for a Nokia device, 7 percent for HTC, 5 percent for Samsung, and 4 percent for Motorola.
The iPhone would be an even more popular option, the survey found, if Apple were to lower the price of its smartphone. With a cheaper option, Apple would command a 53 percent share of 3G phone buyers, leaving Nokia with 20 percent and Research in Motion's BlackBery with 5 percent.
Apple did fall behind Nokia when respondents were asked to share what they believe to be the "leading smartphone brands." Of those surveyed, 78 percent indicated Nokia is a market leader, while Apple was cited by 72 percent.
Both Nokia and Apple are well ahead of their competitors in terms of Chinese consumers' perception of "leading" brands. Motorola and Samsung trailed well behind, being named as top brands by 44 percent of respondents each, while RIM's BlackBerry accounted for 40 percent.
The survey polled 2,029 Chinese mobile phone owners during February and March of 2011. The margin of error for the total sample is plus or minus 1.7 percent.
Morgan Stanley has long maintained that the price of the iPhone has been the greatest barrier to adoption in China. The results of the latest survey lend support for this conclusion, as Apple's share of likely shares increased significantly when cost was not a part of the equation.
There has been evidence that Apple is looking to reduce the cost of the iPhone, with rumors of a smaller handset that would be sold contract-free surfacing earlier this year from both The Wall Street Journal and Bloomberg. Those reports of a new, smaller iPhone were disputed by The New York Times, though it was said that Apple continues to look for ways to reduce the cost of its handset.
The survey results revealed this week by Morgan Stanley and AlphaWise show 3G handsets and smartphones are taking off in China in 2011. Nearly 90 percent of respondents said they have "high interest" in buying a 3G handset or smartphone as their next phone.
Of those who plan to buy a smartphone, the most popular option is Apple's iPhone. A total of 30 percent of respondents with 3G handset purchase intentions said they will most likely purchase an iPhone, followed by 25 percent for a Nokia device, 7 percent for HTC, 5 percent for Samsung, and 4 percent for Motorola.
The iPhone would be an even more popular option, the survey found, if Apple were to lower the price of its smartphone. With a cheaper option, Apple would command a 53 percent share of 3G phone buyers, leaving Nokia with 20 percent and Research in Motion's BlackBery with 5 percent.
Apple did fall behind Nokia when respondents were asked to share what they believe to be the "leading smartphone brands." Of those surveyed, 78 percent indicated Nokia is a market leader, while Apple was cited by 72 percent.
Both Nokia and Apple are well ahead of their competitors in terms of Chinese consumers' perception of "leading" brands. Motorola and Samsung trailed well behind, being named as top brands by 44 percent of respondents each, while RIM's BlackBerry accounted for 40 percent.
The survey polled 2,029 Chinese mobile phone owners during February and March of 2011. The margin of error for the total sample is plus or minus 1.7 percent.
Morgan Stanley has long maintained that the price of the iPhone has been the greatest barrier to adoption in China. The results of the latest survey lend support for this conclusion, as Apple's share of likely shares increased significantly when cost was not a part of the equation.
There has been evidence that Apple is looking to reduce the cost of the iPhone, with rumors of a smaller handset that would be sold contract-free surfacing earlier this year from both The Wall Street Journal and Bloomberg. Those reports of a new, smaller iPhone were disputed by The New York Times, though it was said that Apple continues to look for ways to reduce the cost of its handset.
Comments
It's interesting to note Windows 7 phones don't seem to be making much impact there!
But in all seriousness, when they asked that question, was the Nokia option also stated to be cheaper? It's not really a good question if a theoretically cheaper iPhone was pitted against a regularly priced Nokia (and other brands) rather than an equivalently theoretically lower priced Nokia.
And more importantly, would Apple make a cheaper iPhone for the Chinese market only and not make it available elsewhere? Sort of like some companies offer their prodcuts for a reduced price in China because if they don't they know it will just get pirated anyway (I think MS does this).
So, given that the majority of the cost of owning a smartphone is in the data plan, I'm not sure how much the cost of the phone is going to change overall appetite.
Are the plans cheaper in China, such that the phone truly is the overriding financial burden?
... The iPhone would be an even more popular option, the survey found, if Apple were to lower the price of its smartphone. ...
Breaking news! People would buy more iPhones if they were cheaper. Shocker!
Most smart phones have limited functionality. Just what would be acceptable for Apple to create a 'lite' model? And why would Apple want to do so just to boast about market share?
One of the reasons why Apple does so well with their 'limited' product lines, is that they provide every one of them with virtually the same level of support no matter what their price. And I don't see them compromising just to be on the leader board. They'll be there by doing what they do best.
I'm not sure what to make of a report like this. My monthly subscription fee costs me around $1K a year, or $2K over the lifetime of the plan. The phone is $600, or $200 subsidized.
So, given that the majority of the cost of owning a smartphone is in the data plan, I'm not sure how much the cost of the phone is going to change overall appetite.
Are the plans cheaper in China, such that the phone truly is the overriding financial burden?
I think they are referring to a pre-paid or pay-as-you-go iPhone. Apparently PAYG is very popular in China and India, but the current iPhone is just too expensive unsubsidised to seriously address this market.
I'm not sure what to make of a report like this. My monthly subscription fee costs me around $1K a year, or $2K over the lifetime of the plan. The phone is $600, or $200 subsidized.
So, given that the majority of the cost of owning a smartphone is in the data plan, I'm not sure how much the cost of the phone is going to change overall appetite.
Are the plans cheaper in China, such that the phone truly is the overriding financial burden?
Most people there use post-paid service with no contract, or shorter term and lower cost contracts. Also, most phones are sold unsubsidized or with small subsidy. Piracy/firmware cracking is the main reason for low subsidies.
I'm not sure what to make of a report like this. My monthly subscription fee costs me around $1K a year, or $2K over the lifetime of the plan. The phone is $600, or $200 subsidized.
So, given that the majority of the cost of owning a smartphone is in the data plan, I'm not sure how much the cost of the phone is going to change overall appetite.
Are the plans cheaper in China, such that the phone truly is the overriding financial burden?
The rest of the world is not organised like the US. In the UK a friend of mine has a data and voice plan for £15 per month, on her (unlocked) iPhone which she got from her husband.
So her iPhone cost is £15 over 2 years, which she would be paying anyway. The incremental cost is therefore zero. For people who want to buy a phone, the unsubsidised cost matters.
They don't let foreign companies dominate markets over there. If they get too close a law will suddenly and mysteriously be passed giving a local company a monopoly.
They probably would then get an irate call from FoxConn. That said it would make sense for Apple to open some kind of R&D there too.
And I don't see them compromising just to be on the leader board. They'll be there by doing what they do best.
Well you would be wrong. All they have to do is produce a cheap phone, could well be the 3GS massively reduced in price. As markets mature they become commodified, if Apple can get 50+% of China, it would be crazy not to do it. And Tim Cook said they were going after a poorer market.
You can still have bragging rights to the iP5.
Well you would be wrong. All they have to do is produce a cheap phone, could well be the 3GS massively reduced in price. As markets mature they become commodified, if Apple can get 50+% of China, it would be crazy not to do it. And Tim Cook said they were going after a poorer market.
You can still have bragging rights to the iP5.
Could you describe your 'cheap' phone?
And provide a reference re your Tim Cook statement?
Could you describe your 'cheap' phone?
I thought I did.
And provide a reference re your Tim Cook statement?
http://www.t3.com/news/apple-boss-hi...-iphone?=53923
I didnt source that, and I normally add sources, because it is common knowledge on this forum.
Most people there use post-paid service with no contract, or shorter term and lower cost contracts. Also, most phones are sold unsubsidized or with small subsidy. Piracy/firmware cracking is the main reason for low subsidies.
Really? Can you cite the source of your info? China Unicom, China Mobile and China Telecom all subsidize smart phones. China Unicom, for example, offers a subsidized iPhone if you sign up for 2 years.
It is also important to note that Apple sells its phones for higher prices in China than in the US (before subsidies). This is perhaps what the article is referring to.
I thought I did.
http://www.t3.com/news/apple-boss-hi...-iphone?=53923
I didnt source that, and I normally add sources, because it is common knowledge on this forum.
I can't remember now but wasn't that prior to the 3GS dropping to $49.99 with contract? I wonder if so, if that was the cheap iPhone Tim was alluding to?
I can't remember now but wasn't that prior to the 3GS dropping to $49.99 with contract? I wonder if so, if that was the cheap iPhone Tim was alluding to?
no it wasnt. The iphone dropped in price because the Verizon phone was announced. AT&T led that charge - and Apple followed suit. It happened in January and applied to the American market only.
http://www.allvoices.com/contributed...-reduced-to-49
A reduction in an un-subsidised phone of $50 is not much to write home about, in any case. Cook specifically mentions China and PAYG in the report I previously linked to.
Hell! Even homeless people in the US have iPhones now. Guess they make more money milking the .gov tit than working Chinese. Only iPhone I considered over priced was the 1st gen beta model. Skipped that P.O.S.
Sad. Very sad.
Well you would be wrong. All they have to do is produce a cheap phone, could well be the 3GS massively reduced in price. As markets mature they become commodified, if Apple can get 50+% of China, it would be crazy not to do it. And Tim Cook said they were going after a poorer market.
You can still have bragging rights to the iP5.
We are approaching the 5th year the iPhone has been out. It?s expected that they?d diversify the brand a bit at some point. Personally, I want the display size option to be added, but going with a cheaper version of the 3.5? version might be smarter. Maybe the 3GS HW with the iPod Touch?s Retina Display.