Apple sells 5 million iPhones to China Unicom

Posted:
in iPhone edited January 2014
China Unicom intends to sell it first iPhones in September, and has purchased $1.46 billion worth of the devices from Apple, according to new reports.



Citing local media's claims this week, the International Business Times states that Apple sold 5 million iPhones to the company at a cost of 10 billion yuan. That means the custom WCDMA phones without Wi-Fi sold for 2,000 yuan, or $293 each.



"The price of the 8G standard iPhone is set at about 2,400 yuan and the 16G may be sold at 4,800 yuan," said Yu Zaonan, general manager of the customer development department of China Unicom in Guangzhou.



To put the 5 million total in perspective, the iPhone maker sold 5.2 million total iPhones worldwide in the last financial quarter.



Apple has reportedly changed its methods and given up dividends on the phone. In other markets, Apple is reported to take 20 percent to 30 percent of profit dividends. But in the nation of over one billion, Apple was allegedly prepared to make concessions: the Cupertino, Calif.-based company will make profits of 1,000 yuan to 1,100 yuan for each device sold.



The iPhone-maker will be forced to compete with China's black market. Smuggled iPhones are common in China, and fetch prices of 400 yuan ($59) to 1,000 yuan ($146), much lower than the asking price Apple will reportedly sell at.



As for China Unicom, the deal is expected to propel the carrier's profits to potentially equal that of rival China Mobile.



Apple's global expansion of the iPhone, particularly in China, is expected to drive the company's profits even higher. While a deal with China Unicom has not been formally announced yet, the WCDMA phone has already received regulatory approval for use for the next five years in the country.



Some reports have alleged that Apple and China Unicom have already agreed to a three-year deal, but representatives from the wireless carrier have been quick to deny those claims.
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Comments

  • Reply 1 of 29
    Welcome to the real social!

  • Reply 2 of 29
    I'm confused as to the black market paragraph. So, are the black market iPhones real iPhones that can be adapted to use for Chinese carriers? Or are they illegally manufactured? So if its a legit iPhone, hasn't Apple made some kind of profit at least? Someone had to buy the iPhone in order to "smuggle" it into China, right?
  • Reply 3 of 29
    I thought the production cost of an iPhone was above $59 ... so the black market note seems a bit confusing ... but maybe we are talking of stolen goods?
  • Reply 4 of 29
    801801 Posts: 271member
    An older article



    China's New 'Love Craze' ? Black Market iPhones

    By Aventurina King

    Advertisement for an iPhone, in Chinese.

    Chinese technology vendors sell unlocked iPhones directly to Chinese consumers, online and in consumer electronics stores.





    Despite rampant rumors of a deal between Apple and China's largest cellphone carrier, no one knows when the iPhone is supposed to hit China officially. But that hasn't stopped Apple's popular smartphone, known in China as "Ai Feng" ("Love Craze"), from becoming a bona fide black-market hit.



    In one Chinese netizen's words: "It's like the whole country has gone iPhone, all my friends have become iPhoners."



    The iPhone is readily available in computer superstores in most large Chinese cities. In Beijing's Zhong Guancun, a 15-story mall filled with technology vendors, almost all the stalls are stocked. Two weeks ago, the blogger of Too Many Resources for the iPhone asked several of these vendors whether they could sell him 100 iPhones. They all answered "No problem."



    Chinese websites have iPhone fever, too. A search through blog-hosting site Sina returns more than 63,000 posts mentioning the iPhone. There are forums providing instantaneous updates of cracking software (to keep up with Apple's twitchy defense mechanisms) and large support communities -- the largest, bbs.iphone.com, has 170,000 members. Zhong Guancun's homepage gives visitors the Amazon treatment, providing price quotes from various vendors (the cheapest stall, number 1601 B, is selling the unlocked 8-GB model for 3,799 yuan, or $474), starred reviews, Q&As, delivery terms and after-purchase services.



    Although these services may look legitimate, the Chinese iPhone market is completely unauthorized. All of the iPhones sold in China are unlocked, and not a single one has Apple insurance or warranty coverage. Although the iPhone is manufactured in China, the device has to sneak around commercial gatekeepers to reach Chinese consumers, taking a circuitous route back to its birthplace.



    Most iPhones bound for the Chinese market are first illegally imported into Hong Kong, according to local media reports. From there, workers carry them a short way across the border to Shenzhen (one person can bring in as many as a thousand a day). They are then shipped to all of China's major cities. An alternate, more-direct route is by eBay and international shipping.



    Despite Apple's attempts to stem the flow of black-market iPhones by requiring credit cards for purchase and limiting buyers to two iPhones per person, the illegal trade continues. Indeed, Chinese prices for iPhones are at an all-time low, proof of how efficiently these channels provide stock.



    The black-market trade started shortly after the iPhone's June 29 U.S. launch. On Aug. 3, a user going by the handle "n000b" first uploaded iPhone unlocking directions in Chinese under the subject "My iPhone can make phone calls." The unlocking method was incomplete, and the phone couldn't receive calls but, as he wrote, "it's better than just having a Wi-Fi iPod."



    N000b didn't receive much publicity, and the first wave of iPhones that washed over Shenzhen in the beginning of August still comprised unlocked phones. Stripped of communications capabilities and lacking support for Chinese characters, these devices were glorified, nearly useless PDAs. They sold for $1,200 to $2,400 apiece and weren't much of a hit with Chinese consumers.



    New Jersey student George Hotz's highly publicized unlocking feat of Aug. 21 injected some supply into the Chinese iPhone market, and the prices quickly dropped to $700. But by the end of the month, local iPhones still couldn't send text messages in Chinese. And most available iPhones were still not completely unlocked. They could only make calls, not receive any.



    The tipping point came Oct. 6, when someone uploaded a text-messaging program to a Chinese iPhone forum. (Text messaging is more important to Chinese than to American cellphone users, partly because mobile phones in China don't have automated voicemail.) The price of an 8-GB iPhone dropped below $500, and Sina blog entries on the subject climbed from one per month to 20 posts per day, covering everything from cracking manuals to love letters. (One forlorn post reads, "More beautiful than a beautiful woman, iPhone I want you, quickly get on the market.")



    Although most Chinese iPhones can now make and receive calls, surf the internet by Wi-Fi and download songs, the device still disappoints a good portion of Chinese customers. Blogger Ke Suowo summarizes the shortcomings: Even though local iPhones have a Chinese operating system, sending Chinese text messages is still a hassle. Incoming text messages appear on the iPhone's SMS application, but to send a message, you have to switch to a separate, third-party text-messaging app. To reply to a text message, you have to memorize the sender's number, open the text-messaging program, plug in the number and the Chinese text, and then send the message. There is no text-message forwarding.



    Ouch.



    Yet these practical concerns haven't cooled China's iPhone fervor. Chinese netizens still douse their posts' praise in exclamation marks and spend hours shopping for iPhone accessories. According to one blogger, the iPhone has become the Chinese elite's way of showing off. Ke Suowo concludes: "All of Apple's products make me both love and hate them, but I still deeply love Apple, because it stands out the most."





    http://www.wired.com/gadgets/miscell...1/iphone_china
  • Reply 5 of 29
    maestro64maestro64 Posts: 5,035member
    China's market of 1 Billion is not really that larger, most of the country can barely put food on the table each week, only about 10% of that markets has the means to buy a luxury like a cell phone.



    On the black market thing, there are knock off being made as well as the real thing, China has GSM service providers in the country not just the big Unicom so you can use the current iphone.





    Apple will not get the entire market since knock off will get some since most people will not want to pay for the real thing, and China as a large population of people with new found money who want to have the real thing verse the knock offs, that is Apple market.
  • Reply 6 of 29
    rokkenrokken Posts: 236member
    What? Are they selling the old 3G instead of 3GS and it's without Wi-Fi? As far as I am aware of, most Chinese buy unlocked iPhones from HK and Australia for well over 5,000 yuan so the fetched price in the article seems to be referring to stolen iPhones.
  • Reply 7 of 29
    Would be nice to be the guy that picks up the commission on *that* deal!

  • Reply 8 of 29
    ajitmdajitmd Posts: 365member
    Quote:
    Originally Posted by Maestro64 View Post


    China's market of 1 Billion is not really that larger, most of the country can barely put food on the table each week, only about 10% of that markets has the means to buy a luxury like a cell phone.



    On the black market thing, there are knock off being made as well as the real thing, China has GSM service providers in the country not just the big Unicom so you can use the current iphone.





    Apple will not get the entire market since knock off will get some since most people will not want to pay for the real thing, and China as a large population of people with new found money who want to have the real thing verse the knock offs, that is Apple market.



    I always felt it was a strategic mistake for hi tech companies (or any US company) to transfer so much tech and outsource manufacturing in China. It creates entire supply chains that can feed legal and illegal competitors. The short term gains of low labor could have been overcome with investments in automated production in the US. The tax laws favor outsourcing, and that has to change too.



    However, over time, Apple can stop some of the piracy by incorporating proprietary chips, SoC, using tech from PA Semi, etc... and manufacturing critical chips here. Or even outsourcing to domestic fabs in the US.



    No doubt that most of the Chinese population is dirt poor... still the addressable market is money in the bank on an incremental basis.
  • Reply 9 of 29
    MacProMacPro Posts: 19,471member
    Apple may be our last best hope to dent the US-Chinese trade gap!
  • Reply 10 of 29
    ted13ted13 Posts: 65member
    Quote:

    The iPhone-maker will be forced to compete with China's black market. Smuggled iPhones are common in China, and fetch prices of 400 yuan ($59) to 1,000 yuan ($146), much lower than the asking price Apple will reportedly sell at.



    Bullshit. Where would they be getting *real* iPhones at that price? Look a like fakes, maybe, but the real deal, coming from HK, etc. cost 5X to 10X that on the black market.
  • Reply 11 of 29
    petermacpetermac Posts: 115member
    Stunning (if true), now to watch the stock price, I can't afford to buy anymore
  • Reply 12 of 29
    Quote:
    Originally Posted by Ted13 View Post


    Bullshit. Where would they be getting *real* iPhones at that price? Look a like fakes, maybe, but the real deal, coming from HK, etc. cost 5X to 10X that on the black market.



    Yeah - I'd say those black market prices are out by a factor of 10x

    - the blackmarket price is hardly likely to be lower than the normal RRP
  • Reply 13 of 29
    samabsamab Posts: 1,953member
    You can smell the BS a mile away.



    As soon as you read about such specifics as wholesale unit cost --- you know that's pure BS.
  • Reply 14 of 29
    asciiascii Posts: 5,941member
    Quote:
    Originally Posted by AppleInsider View Post


    To put the 5 million total in perspective, the iPhone maker sold 5.2 million total iPhones worldwide in the last financial quarter.



    Me thinks they have bought too many. What are they going to do if the economy tanks.
  • Reply 15 of 29
    brucepbrucep Posts: 2,823member
    Quote:
    Originally Posted by petermac View Post


    Stunning (if true), now to watch the stock price, I can't afford to buy anymore



    WOW

    apple will sell 20 million this year

    i hope
  • Reply 16 of 29
    gqbgqb Posts: 1,934member
    Quote:
    Originally Posted by petermac View Post


    Stunning (if true), now to watch the stock price, I can't afford to buy anymore



    So frustrating... I was playing the moves for the past 6 months and sold half my positions at 150 expecting more ups and downs. Boy did I miss that one. \

    But I got bit buying at this level last year, so I'm gun shy on buying more at this point.

    Oh well...
  • Reply 17 of 29
    iPhone 3G's (with WiFi) will run you about 6,000 Yuan (roughly 700$ U.S.) if you can find one.

    Of course you can always opt. For the fabulous "Skyworth", a 998¥ piece of finely reverse engineered crap. Of course it's ALL made in China.
  • Reply 18 of 29
    Quote:
    Originally Posted by Ted13 View Post


    Bullshit. Where would they be getting *real* iPhones at that price? Look a like fakes, maybe, but the real deal, coming from HK, etc. cost 5X to 10X that on the black market.



    I think it's just a mistake in the Appleinsider article. If it is that cheap, I'm sure eBay will have it, too.
  • Reply 19 of 29
    successsuccess Posts: 1,039member
    Quote:
    Originally Posted by Drow_Swordsman View Post


    I'm confused as to the black market paragraph. So, are the black market iPhones real iPhones that can be adapted to use for Chinese carriers? Or are they illegally manufactured? So if its a legit iPhone, hasn't Apple made some kind of profit at least? Someone had to buy the iPhone in order to "smuggle" it into China, right?



    They're not real. As black market suggests. They're knockoffs that look great but are so cheap. The screens are cheap thin plastic, the app functionality isn't the same...you can find them on youtube quite easily and judge for yourself.
  • Reply 20 of 29
    Quote:
    Originally Posted by Maestro64 View Post


    China's market of 1 Billion is not really that larger, most of the country can barely put food on the table each week, only about 10% of that markets has the means to buy a luxury like a cell phone. .



    You are correct - maybe for 1998.



    The population of China today is 1.3 Billion, of which 300,000,000 are by Western standards in the middle class. That's the equivalent of every single American making $75,000/year. If 2% of that middle class buys an iPhone, that's SIX MILLION iPhones.



    And even if your figures are correct, 10% of 1B is 100,000,000 potential customers. Nothing to disregard at all.



    The biggest news is that Apple CAN and WILL make a non-GSM unit if the numbers are right. And they will cave to Chinese paranoia and remove wi-fi. Can't have a big customer like China nervous about rebellion via social networking, now can we?
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