Morgan Stanley analyst Katy Huberty released a new note to investors Monday in which she said Apple's plans to build 25 new retail stores in the world's most populous country will be a great benefit for the sale of products in China. Currently, Apple has less than a 1 percent marketshare in Mac sales, but in the last quarter of calendar 2009, unit sales were up 100 percent year-over-year.
The addition of 123 Apple stores in the U.S. between 2004 and 2009 led to a 4.3 percent mac unit share increase over the same span. Another 33 new stores in Western Europe led to a 2.8 percent increase in total Mac market. If those trends play out in China, Apple could be poised for "material" gains in the nation of over 1 billion.
"While a specific timeline wasn't provided, we expect Apple to execute on this strategy over a multi-year period, carefully establishing a presence and building the brand," Huberty wrote.
Morgan Stanley's research has found that Chinese Apple product owners are twice as likely to purchase future Apple products. Apple has an estimated 2 million iPhones already in China, though most are from the grey market, thanks in part to the official China Unicom model lacking Wi-Fi.
Morgan Stanley has closely tracked Apple's progress in China, with a December 2009 survey of 1,050 high-end Chinese consumers showing a "strong underlying demand within the addressable market" for Apple products.
Huberty has previously predicted that Apple will introduce an iPhone with a lower total cost of ownership in June. A new model could be economically friendly to even more consumers, and would help the iPhone platform expand in emerging markets such as China.
In particular, Huberty believes that a pre-paid iPhone in China could sell 10 million units per year. Even without a pre-paid model, Huberty expects Apple's smartphone presence in China to grow to 5 million iPhone sales per year. Morgan Stanley believes Apple has a total addressable market of 50 million Chinese consumers.