New Apple iPhones not sweet to Chinese market

Apple Inc's new iPhone devices are unlikely to stall the company's falling sales in China in the short term after many Chinese expressed disappointment with the newly unveiled products and dropped plans to buy one.

Apple launched its long-awaited new devices iPhone 5S and iPhone 5C on Tuesday in Cupertino, California, where its headquarters are located. The iPhone 5S is equipped with a faster processor, a better camera and features fingerprint scanning. The starting price for the iPhone 5S is 5,288 yuan ($858) without a contract.

The iPhone 5C, which is described as a cheaper version, retains the same basic technology as the previous iPhone 5 handsets but has a colorful polycarbonate case. The device is believed to be a major move by Apple to gain back its momentum in emerging markets such as China. However, the starting price for the iPhone 5C is 4,488 yuan, far beyond the prices of lower-end smartphones in China, which can cost as little as 1,000 yuan each.

For the first time, China has become one of the first markets to have the new iPhones. China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd said on Wednesday they are ready to ship the iPhone 5S and iPhone 5C on Sept 20. Chinese people can reserve a new iPhone on online and offline outlets from Wednesday.

The new iPhone handsets did not create waves in the Chinese market as people previously expected, largely because there were few surprises in the products and they are expensive, analysts said.

"Priced at 4,488 yuan for off-contract devices, Apple cannot target cost-conscious buyers in China with the iPhone 5C," Wang Jingwen, an analyst with research firm Canalys, said. She pointed out if Apple wants to be aggressive in China, it has to come up with additional announcements such as special subsidies from operators to lower the phone's upfront cost.

Wang said Apple was right for holding a Beijing event hours after the US unveiling of its latest iPhone, but the event "was small and there were not any highlights". For the first time, a small group of journalists were invited to Apple's Beijing offices on Wednesday to report the latest devices. However, Apple did not hand out any new content except for a video rebroadcast of the US event.

Some Apple-related Chinese listed companies experienced a major slump on Wednesday. Shares of Shenzhen Sunway Communication Co Ltd, Shenzhen Desay Battery Technology Co Ltd and Wuhu Token Sciences Co Ltd dropped the 10 percent limit on Wednesday trading.

In a survey on Sina.com.cn, the No 1 Web portal in China, more than half of respondents said they will choose neither of the new iPhone devices.

Apple ranked as the sixth biggest smartphone vendor in China in the second quarter of this year, occupying about a 4.9 percent market share, according to research firm IDC. Its share price slid significantly from 8.6 percent in the first quarter, IDC said.

Samsung Electronics Co Ltd and Lenovo Group took the top two positions during the period, with market shares of 18.3 percent and 12.6 percent, respectively.

Kevin Wang, a senior analyst at research firm IHS iSuppli, said the iPhone 5C's price is too expensive and it will not act as a driver for improving Apple's performance in the country.

"Apple's pricing strategy for new products is good news for domestic mobile phone companies, such as Huawei and Xiaomi. Many Chinese people are price sensitive and they will turn to cost effective, high quality smartphones rather than choose an iPhone," Wang said.

Apple can make a turnaround only by cooperating with China Mobile Ltd, the nation's biggest telecom carrier by subscriber numbers, said James Yan, a telecoms analyst with IDC China. "Apple is likely to introduce its TD-LTE iPhone in the fourth quarter this year or early next year. The company will benefit from the cooperation based on China Mobile's vast user base," he said.

Yan added he expected the share of China's iOS platform users to double next year, thanks to China Mobile's contribution. Currently, 8 percent of Chinese smartphones are running on Apple's iOS platform, while Google Inc's Android operating system has an 88 percent market share, according to IDC.