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Smartphone growth slowing in China as Apple expands iPhone presence

post #1 of 35
Thread Starter 
Though the Chinese market remains a major focus for Apple, particularly with the upcoming launch of the iPhone on China Mobile, new data suggests that overall smartphone sales growth has been slowing from its previous red-hot pace.

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Average 3G user growth was at a booming rate of around 18 million new users per month in the third quarter of calendar 2013, according to data from investment firm Wedge Partners. But 3G user growth fell to around 13 million new users per month in the fourth quarter of the year, analyst Jun Zhang said.

Zhang believes that sales of Apple's iPhone in China were affected by slowing smartphone sell-through in the market. Both the iPhone 5s and iPhone 5c, Apple's two latest smartphone models, launched there in September on carriers China Unicom and China Telecom.

In addition, data from Wedge Partners suggests that the popularity of Apple's latest iPhones has been slipping in China in favor of handsets from local manufacturers. Specifically, the iPhone 5s was previously the country's No. 2 selling handset, but slipped to No. 3 in October after it was replaced by Xiaomi.

Apple's mid-range handset, the iPhone 5c, didn't even crack the top 20 smartphones tracked by Wedge Partners in October. The data is the latest in a number of reports that have suggested sales of the iPhone 5c may be weaker than some had anticipated they would be in China.

Word of potentially slowing growth in the Chinese smartphone market comes as Apple announced a much anticipated deal with China Mobile, the world's largest wireless provider. Both the iPhone 5s and iPhone 5c will become officially available to its 760 million subscribers in January.

Market watchers have high hopes for Apple's agreement with China Mobile, seeing it adding as much as 5 percent to the company's revenue in calendar 2014. Analysts generally expect that China Mobile will move 17 million iPhones, or 10 percent of the carrier's current 170 million 3G subscribers, over the next year.
post #2 of 35

OMG! this means, Apple is doomed! again! Heeeeelp! save all your children, pack your things!

move out to the closest assigned security area!...

post #3 of 35
There it is... The expected analyst pissing on the fire. The truth is that Apple is eating up Android market in the US right now. Android is the appetizer.
post #4 of 35
Quote:
Originally Posted by jkichline View Post

There it is... The expected analyst pissing on the fire.

Wait 'til they realize that masses of Chinese are hoarding their money to buy the iPhone when it's finally available
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #5 of 35
But which market is slowing? Is it the premium segment or the cheap segment? Lots of companies including Chinese brands have been flooding the market with cheap phones. I have a hard time believing that the premium segment in China is fully saturated.
post #6 of 35

I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

post #7 of 35
Quote:
Originally Posted by lkrupp View Post

I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

It was the hard work of a team of dedicated stock manipulation specialists.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #8 of 35
Quote:
Originally Posted by lkrupp View Post
 

I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

 

Oh, bs.

 

A small amount of money is being taken off the table over the holidays. By the 3rd of January AAPL will be over $600.

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post #9 of 35
Quote:
Originally Posted by lkrupp View Post
 

I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

buying opportunity 

post #10 of 35
This is either disingenuous or idiotic, take your pick.

The Chinese market for iPhones all all kinds is growing, growing, growing.

Period. Bookmark and come back to tell me how wildly right I am lol.
post #11 of 35
Mr. Zhang happens to be the same analyst who said just a few days ago that apple won't reach agreement with china mobile until late 2014.
post #12 of 35
The article does not state if the market saturation is of the high or low end, yet I suspect it is the cheaper smartphone market that is super-saturated. I believe that as China increases in personal disposal income, there will be a corresponding increase in disposable income to higher-end luxury products and this means Apple products are poised for a breakout in China.

I also contend that the Apple-China naysayers are not 'analysts' at all, but merely dilettante uniformed 'critics'. The amazing thing is that so many supposed 'intelligent' people listen to this muck, they should know better.
post #13 of 35
Quote:
Originally Posted by Macky the Macky View Post

Wait 'til they realize that masses of Chinese are hoarding their money to buy the iPhone when it's finally available

That was my thinking. The same thing happens in the US a couple of months prior to the release of new iPhone models. How many months and numerous rumor articles have there been written about Apple signing a deal with this large China carrier? They have been waiting to pounce.
post #14 of 35

An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

 

I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

 

The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

 

I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

post #15 of 35
Quote:
Originally Posted by cnocbui View Post

An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

1) Everything everywhere is only available to a fraction of the people, even if that fraction is 99/100.

2) There are how many millions of iPhones on China Mobile's network using only GSM for voice and EDGE for data? 10 million was it? Now it's officially offered and at prices lower than the grey market for new iPhones.

3) Let's remember China is a country with over 1 billion people, with over 3/4 of a billion subscribers on China Mobile alone, a growing market, and shitload of wealthy customers that makes this deal important to Apple and their shareholders. China doesn't (yet) have as many millionaires as the US but you don't need to be a millionaire to own an iPhone.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #16 of 35
Quote:
Originally Posted by cnocbui View Post

An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

China is still a hugely attractive market for Apple.

And guess what... if a person doesn't make a lot of money now... they might next year. Or the year after that. (or they'll just save longer)

It's not like Apple will be selling iPhones in China for one year and then vanish. No... Apple will be selling iPhones in China from now on.

Apple being on more carriers in more countries is a good thing... especially in countries with over a billion people.


EDIT for my huge math fail...
Edited by Michael Scrip - 12/24/13 at 3:21pm
post #17 of 35

Apple is exactly keeping up with the smartphone market in terms of the constant of its exponential growth (see recent articles at asymco.com about penetration ratio).  The only difference is that Apple's exponential growth started a little after the market as a whole.  That's not a cause for alarm, it's just a fact.

post #18 of 35
Quote:
Originally Posted by Michael Scrip View Post


1% of China's population is 135 million. That's still a hugely attractive market even if that's all Apple could ever get (don't worry... Apple will get MUCH more than that)
 

 

Seriously? China has a population of 13.5 billion people?  And here I was thinking we hadn't quite reached 7 billion on earth.

post #19 of 35
Quote:
Originally Posted by GregInPrague View Post

Seriously? China has a population of 13.5 billion people?  And here I was thinking we hadn't quite reached 7 billion on earth.

Damn decimal...

Thanks!

(the point still stands though... Apple will gain new customers in China)
post #20 of 35
Quote:
Originally Posted by george li View Post

Mr. Zhang happens to be the same analyst who said just a few days ago that apple won't reach agreement with china mobile until late 2014.

So he's 0 for 2.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #21 of 35
Of course demand is down. They were waiting for the iPhone to be available. That happens in the USA every time a new iPhone is about to be announced!
post #22 of 35
Right, because tons of Chinese people already have Android phones and the fact iPhone was coming to China Mobile was the most anticlimactic worst kept dragged out secret in the world.
post #23 of 35

Just as many of us predicted the analysts will find some way to down play the china mobile deal and bag on Apple again.  Analysts are not worth much in my opinion any more other than being comedic relief, and honestly there not really funny at all.  More pathetic when you think about it.

post #24 of 35
Quote:
Originally Posted by SpamSandwich View Post
 
Quote:
Originally Posted by george li View Post

Mr. Zhang happens to be the same analyst who said just a few days ago that apple won't reach agreement with china mobile until late 2014.

So he's 0 for 2.

I’ve seen guys from Wedge Partners spout off on CNBC and Bloomberg a couple of times. They’re absolutely off-the-wall nonsensical, rarely make sense, and when they occasionally do, appear to reveal a strong anti-Apple bias.

post #25 of 35
Quote:
Originally Posted by lkrupp View Post

I’m surprised it took this long for an analyst to put a negative spin on the deal. AAPL down $2.44 today.

That was 'profit taking'.
People are correct that this is just 'pissing on the fire' in order to fit the 'Android is the winner' meme.
Kinda like the 'Both sides are to blame' meme out of Washington press corps.
post #26 of 35
Quote:
Originally Posted by cnocbui View Post

An iPhone 5s costs an American about 1.15% of the average per-capita GDP to purchase.  It costs about 9% in China.

I think the demand in the US for the iPhone 5s would be rather muted if it cost $6,740 to buy one.

The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

The ones in China who can afford an iPhone is growing every year. In a few years, that number will surpass the entire US pop.
post #27 of 35
Quote:
Originally Posted by cnocbui View Post

The Average income in China in 2012 was $2,100 while in a prosperous city such as Shanghai it was $4,700.

I know there are a lot of people in China but the iPhone will be affordable to only a tiny fraction of the population.  Some people seem to be expecting runaway sales.  Maybe that will happen.  It will certainly be interesting to to see what transpires.

Quote:
Originally Posted by jungmark View Post

The ones in China who can afford an iPhone is growing every year. In a few years, that number will surpass the entire US pop.

Exactly!

Plus... I think people are forgetting that the iPhone has already been on sale in China for the last 4 years.

I never understood the "iPhone is too expensive for China" argument when Apple has obviously been selling there for a while.
post #28 of 35
Quote:
Originally Posted by anantksundaram View Post
 

I’ve seen guys from Wedge Partners spout off on CNBC and Bloomberg a couple of times. They’re absolutely off-the-wall nonsensical, rarely make sense, and when they occasionally do, appear to reveal a strong anti-Apple bias.

 

Kicking the shins of the frontrunner is the only way to get attention.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #29 of 35
Can't believe the number of analysts help WS to game the system against Apple.
post #30 of 35
Quote:
Originally Posted by AppleInsider View Post

... data from Wedge Partners suggests that the popularity of Apple's latest iPhones has been slipping in China in favor of handsets from local manufacturers...

 

last time I looked, iPhones were still made in Shenzhen by Foxconn...

Ask me about.... The 80's!
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Ask me about.... The 80's!
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post #31 of 35

Android has reached the peak this year. There are practically no feature phones in the use that are supposed to be replaced with smartphones and even those will most probably run some kind of an Android. User experience bars are therefore raising for the smartphone users, which means only one thing: iPhone gaining share.

post #32 of 35
Quote:
Originally Posted by vaporland View Post
 

 

last time I looked, iPhones were still made in Shenzhen by Foxconn...

Exactly, and the Chinese are very proud of the iPhone being made there.  

post #33 of 35
Quote:
Originally Posted by MJ Web View Post

Right, because tons of Chinese people already have Android phones and the fact iPhone was coming to China Mobile was the most anticlimactic worst kept dragged out secret in the world.

Yeah, they said the same thing about Verizon getting the iPhone. Just because you settled for less doesn't mean you won't step up to an iPhone when the opportunity arises in the future. And based on the stats on switchers, I'd say I'm right.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #34 of 35
iPhone growth is not slowing in China.

Imagine when Apple releases a bigger screen iPhone 6.

Wow. What can Sammy release to create that level if excitement and drive new sales and upgrades?
post #35 of 35
Quote:
Originally Posted by 512ke View Post

iPhone growth is not slowing in China.

Imagine when Apple releases a bigger screen iPhone 6.

Wow. What can Sammy release to create that level if excitement and drive new sales and upgrades?

 

In my opinion, Apple doesn't need to make a cheaper phone for China, it needs to make a more expensive phone and it needs to differentiate the line-up. If the phone has 64 gigs (or, hopefully, 128) with all the bells and whistles, make it gold, 32 gig... make it silver, 16 gig... well, you get the idea... and, the phone would need a larger screen.

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