'Material' market gains expected from Apple's 25 new China stores

Posted:
in General Discussion edited January 2014
With Apple's retail presence delivering growth in Mac and iPhone marketshare elsewhere in the world, the company's plans to build 25 new stores in China is expected to have a significant impact on sales.



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.
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Comments

  • Reply 1 of 37
    molochmoloch Posts: 46member
    Apple prices its phones too high for most Americans, let alone Chinese. Asia in general does not accept the concept of a contract, which means fancy foreign phones are too expensive for locals. They use Sciphones and Miphones, which smartly pair a big screen with "just enough" processing power.
  • Reply 2 of 37
    asciiascii Posts: 5,941member
    I predict the Apple stores in China will be smashed in anti-foreigner riots in a year or two.
  • Reply 3 of 37
    motleemotlee Posts: 122member
    Quote:
    Originally Posted by Moloch View Post


    Apple prices its phones too high for most Americans, let alone Chinese. Asia in general does not accept the concept of a contract, which means fancy foreign phones are too expensive for locals. They use Sciphones and Miphones, which smartly pair a big screen with "just enough" processing power.



    $99, $199 and $299 is expensive for a smartphone with all the capabilities of the iPhone in the U.S?

    Compared to what?
  • Reply 4 of 37
    finetunesfinetunes Posts: 2,065member
    This might make sense if the stores are in Hong Kong, Beijing, Shanghai and Taiwan, but 25 stores?
  • Reply 5 of 37
    zindakozindako Posts: 468member
    Quote:
    Originally Posted by Moloch View Post


    Apple prices its phones too high for most Americans, let alone Chinese. Asia in general does not accept the concept of a contract, which means fancy foreign phones are too expensive for locals. They use Sciphones and Miphones, which smartly pair a big screen with "just enough" processing power.



    Give us all a quick rundown of these countries system of smart phones and how they handle their billing system.
  • Reply 6 of 37
    Quote:
    Originally Posted by ascii View Post


    I predict the Apple stores in China will be smashed in anti-foreigner riots in a year or two.



    Yeah, and the country's economy will collapse too. Right. Wow. You must work for Kissinger Associates.



    Come back in two years and tell us how your prediction panned out.
  • Reply 7 of 37
    Quote:
    Originally Posted by Moloch View Post


    Apple prices its phones too high for most Americans, let alone Chinese.



    Yes... the iPhone is doing so poorly in the States because it's overpriced...
  • Reply 8 of 37
    Quote:
    Originally Posted by anantksundaram View Post


    Yeah, and the country's economy will collapse too. Right. Wow. You must work for Kissinger Associates.



    Come back in two years and tell us how your prediction panned out.



    The way the US keeps going China may own us in two years.
  • Reply 9 of 37
    finetunesfinetunes Posts: 2,065member
    Quote:
    Originally Posted by extremeskater View Post


    The way the US keeps going China may own us in two years.



    This in a small way may help with the balance of trade between the US and China.
  • Reply 10 of 37
    solipsismsolipsism Posts: 25,726member
    If Apple is planning 25 stores in China they are expecting substantial growth. China's middle class is growing fast and with 1.3 billion residents any company has a potentially huge market even if the percentage of buyers is low.



    This would also make a China Mobile TD-SCDMA phone even more likely since they do have 530 million subscribers and are growing by 5.5M subs each month.Even a fraction of the China Unicom iPhone subs would be a huge win for Apple financially.
  • Reply 11 of 37
    onhkaonhka Posts: 1,025member
    Quote:
    Originally Posted by FineTunes View Post


    This might make sense if the stores are in Hong Kong, Beijing, Shanghai and Taiwan, but 25 stores?



    You really need to do some due diligence before you comment about China. A significant number of cities have populations over 10 million. Talk about modern, most put American cities to shame.



    http://en.wikipedia.org/wiki/List_of..._by_population
  • Reply 12 of 37
    Quote:
    Originally Posted by Onhka View Post


    You really need to do some due diligence before you comment about China. A significant number of cities have populations over 10 million. Talk about modern, most put American cities to shame.



    http://en.wikipedia.org/wiki/List_of..._by_population



    I just want at least one or two stores in Hong Kong.

    The official service representatives are bad here.

    I just want to rock up to buy products in an Apple store or talk to the guys at the Genius Bar.



    You would think a city like Hong Kong having all the best brands in the world would have Apple soon?
  • Reply 13 of 37
    docno42docno42 Posts: 3,270member
    Quote:
    Originally Posted by AppleInsider View Post


    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.



    The cost isn't the iPhone but the data and voice plans.... the monthly costs are pretty steep!
  • Reply 14 of 37
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:
    Originally Posted by ascii View Post


    I predict the Apple stores in China will be smashed in anti-foreigner riots in a year or two.



    I doubt it.
  • Reply 15 of 37
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:
    Originally Posted by Moloch View Post


    Apple prices its phones too high for most Americans, let alone Chinese. Asia in general does not accept the concept of a contract, which means fancy foreign phones are too expensive for locals. They use Sciphones and Miphones, which smartly pair a big screen with "just enough" processing power.



    Apple does not pour money into Apple Store locations without doing their homework first. I am certain the stake they put in the ground now will result in tremendous growth later.
  • Reply 16 of 37
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:
    Originally Posted by Onhka View Post


    You really need to do some due diligence before you comment about China. A significant number of cities have populations over 10 million. Talk about modern, most put American cities to shame.



    http://en.wikipedia.org/wiki/List_of..._by_population



    You're absolutely right. The large cities in China are on par or better than many large modern cities. Well worth the trip if you get the chance, and a real eye-opener.
  • Reply 17 of 37
    i already know the locations in Shanghai,
  • Reply 18 of 37
    pegspegs Posts: 1member
    Wonder what search engine Apple will use as default in China. Google?
  • Reply 19 of 37
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:
    Originally Posted by pegs View Post


    Wonder what search engine Apple will use as default in China. Google?



    You are referring to the default search engine on the iPhone? Probably Bing or Yahoo. Google says they will probably pull out very soon.
  • Reply 20 of 37
    onhkaonhka Posts: 1,025member
    Quote:
    Originally Posted by SpamSandwich View Post


    You're absolutely right. The large cities in China are on par or better than many large modern cities. Well worth the trip if you get the chance, and a real eye-opener.



    Right on. Hong Kong, Shanghai, Guangzhou and Beijing a few times. You could put Harvard in the corner of some of their universities. Hope to get back to Beijing in as couple of months.



    Finally got to Xi'an this trip and was that a real surprise. Would never have known of its existence except that it was a near the site of the Terra Cotta Warriors. Have to get back. Amazing place.
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