Despite iPhone launch, China Unicom struggles to grow 3G subscribers
China Unicom net profits fell 73 percent last quarter after the company failed to significantly increase its 3G subscriber base, despite the fact that it is the sole carrier of Apple's iPhone in the world's most populous nation.
China Unicom's surprise losses were announced Wednesday, with the massive year-over-year decline attributed to costs associated with creating its fledgling 3G network, according to The Wall Street Journal. Though China Unicom is the second-largest wireless provider in China, the carrier had just 4.1 million 3G users by the end of February, giving it the fewest 3G subscribers behind China Mobile and China Telecom.
China Unicom hopes to add more than 10 million 3G subscribers this year, and many believe the company's success hinges upon its ability to expand its 3G network. Playing an integral role in the growth of 3G is the company's agreement with Apple to carry the iPhone.
The iPhone 3GS debuted last October on the China Unicom network as part of a non-exclusive deal. But a high price when compared to the nation's gray market, along with a lack of Wi-Fi in the current model, led to a soft launch with just 5,000 units sold.
But sales have since picked up, as Apple revealed that more than 200,000 handsets were purchased as of early January. But 3G adoption at China Unicom has also slowed: According to the Journal, the carrier added 920,000 3G subscribers in December, 853,000 in January, and just 470,000 in February.
Apple and China Unicom's fortunes in China could improve with the expected release of an iPhone with Wi-Fi soon. The Cupertino, Calif., company is also said to have been in talks with rival carrier China Mobile on an agreement to carry the iPhone. China Mobile is the world's largest wireless carrier, with an estimated 475 million subscribers as of last year.
Analyst Katy Huberty with Morgan Stanley has predicted that Apple will introduce a new iPhone this year with a lower total cost of ownership. The total cost of ownership, including hardware and subscriptions, has been the greatest barrier to success in countries like China, she said.
In particular, Apple could sell 10 million units per year if the company were to introduce a prepaid iPhone model. But even without that option, Huberty expects Apple's smartphone presence in China to grow to 5 million per year.
Apple also plans to build 25 new retail stores in the nation, which will expand its presence and potentially boost sales. Apple has an estimated 2 million iPhones already in China, though most are from the gray market.
China Unicom's surprise losses were announced Wednesday, with the massive year-over-year decline attributed to costs associated with creating its fledgling 3G network, according to The Wall Street Journal. Though China Unicom is the second-largest wireless provider in China, the carrier had just 4.1 million 3G users by the end of February, giving it the fewest 3G subscribers behind China Mobile and China Telecom.
China Unicom hopes to add more than 10 million 3G subscribers this year, and many believe the company's success hinges upon its ability to expand its 3G network. Playing an integral role in the growth of 3G is the company's agreement with Apple to carry the iPhone.
The iPhone 3GS debuted last October on the China Unicom network as part of a non-exclusive deal. But a high price when compared to the nation's gray market, along with a lack of Wi-Fi in the current model, led to a soft launch with just 5,000 units sold.
But sales have since picked up, as Apple revealed that more than 200,000 handsets were purchased as of early January. But 3G adoption at China Unicom has also slowed: According to the Journal, the carrier added 920,000 3G subscribers in December, 853,000 in January, and just 470,000 in February.
Apple and China Unicom's fortunes in China could improve with the expected release of an iPhone with Wi-Fi soon. The Cupertino, Calif., company is also said to have been in talks with rival carrier China Mobile on an agreement to carry the iPhone. China Mobile is the world's largest wireless carrier, with an estimated 475 million subscribers as of last year.
Analyst Katy Huberty with Morgan Stanley has predicted that Apple will introduce a new iPhone this year with a lower total cost of ownership. The total cost of ownership, including hardware and subscriptions, has been the greatest barrier to success in countries like China, she said.
In particular, Apple could sell 10 million units per year if the company were to introduce a prepaid iPhone model. But even without that option, Huberty expects Apple's smartphone presence in China to grow to 5 million per year.
Apple also plans to build 25 new retail stores in the nation, which will expand its presence and potentially boost sales. Apple has an estimated 2 million iPhones already in China, though most are from the gray market.
Comments
What? No Sprint 4G phone article? Something to beat the iPhone in almost every way and no article to say its not that good? This is your chance for balanced reporting AppleInsider. Bring it on!
L0l. Just another jealous person you are. I honestly had to read your post several times to understand... Gf.
And for those upon whom sarcasm and irony are completely lost,
This is a JOKE!
What? No Sprint 4G phone article? Something to beat the iPhone in almost every way and no article to say its not that good? This is your chance for balanced reporting AppleInsider. Bring it on!
Oh give it a rest. The Sprint 4G phone is a nice PR move but is all but meaningless. First, its Sprint fool. Second, the 4G will only work in a handful of markets. And last, its not an iPhone - it doesn't have an ecosystem with it that blows every other mobile handset out of the water. Further, the new v4 of the iPhone, also with a new version of the OS, will be out in just a couple of months to put this Sprint phone to shame.
China Mobile is the world's largest wireless carrier, with an estimated 475 million subscribers as of last year.
China Mobile lists their subscriber numbers right on their website. In February they generated 5,518,000 subs, bringing their total to 532,916,000.
But even without that option, Huberty expects Apple's smartphone presence in China to grow to 5 million per year.
That isn't bad at all, but I think the wording or the logic is off. Perhaps 5 million this year, but I don't it will maintain at 5 million for following years. There are just too many growth factors in China that say otherwise. China offers Apple a great potential for longterm growth, they'd have to be Palm not to see it.
...a high price when compared to the nation's gray market, along with a lack of Wi-Fi in the current model..
That's the Chinese Government screwing Apple just like they did Google.
3G adoption at China Unicom has also slowed: According to the Journal, the carrier added 920,000 3G subscribers in December, 853,000 in January, and just 470,000 in February.
Saddle up the foreign company Apple with the second rate phone carrier and outlaw wifi capable iPhones.
Apple and China Unicom's fortunes in China could improve with the expected release of an iPhone with Wi-Fi soon.
That will be delayed somehow or some kind of other condition will be required for Apple to bow too.
The Cupertino, Calif., company is also said to have been in talks with rival carrier China Mobile on an agreement to carry the iPhone. China Mobile is the world's largest wireless carrier, with an estimated 475 million subscribers as of last year.
And they will keep on talking, forever. The government won't allow Apple in there.
Apple could sell 10 million units per year if the company were to introduce a prepaid iPhone model.
The Chinese especially are very frugal, like to control costs and looking to get a bargain. Apple has to play upon the economies of scale. If they take the prepaid concept to the rest of the world, it will do well too.
Apple also plans to build 25 new retail stores in the nation, which will expand its presence and potentially boost sales. Apple has an estimated 2 million iPhones already in China, though most are from the gray market.
Good luck with all those Apple stores, the Chinese government will not allow a foreign company from gaining significant market share, especially for a platform resistant to hacking like the Mac is.
Apple recently started to allow up to 10 iPhones to be sold without contracts, so they see the only way to sell a lot is through the grey market, the Chinese government is going to be their worst competitor.
Cheap unlocked Chinese GSM phones like the Sciphone i68 will always vastly outsell luxury items like iPhones in China.
Struggling Chinese workers worry more about getting roughed up by factory thugs than whether then can run iFart.
"Very first light, Chief, snarks come cruisin', so we formed ourselves into tight groups. You know, it was kinda like old squares in the battle like you see in the calendar named "The Battle of Waterloo" and the idea was: snark comes to the nearest thread, a regular poster he starts poundin' and hollerin' and screamin' and sometimes the snark go away... but sometimes he wouldn't go away."
Further, the new v4 of the iPhone, also with a new version of the OS, will be out in just a couple of months to put this Sprint phone to shame.
So without having seen a single shred of official news from Apple, how can you possibly be so amazingly confident that a new iPhone will put the Evo to "shame"? How about waiting until they actually announce something, Jesus. Spoken like a true sheep.
I totally read that as "China Unicorn."
Something like this?