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junko.yoshida
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It's the plastic!
junko.yoshida   9/12/2013 5:52:05 PM
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Yes, we've all heard that Chinese consumers are not happy about Apple's pricing of iPhone 5c. But it's not for the reasons we thought it was. 

Miya Kong
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Re: Add more information
Miya Kong   9/12/2013 10:30:11 PM
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Add more information:

Today, China operators announced very attractive subsidy policy for iPhone 5c, especially China Mobile will join in soon for the first time, whom has the biggest customers base. So, it's hard to say whether the market of 5c in China will be good or bad.

By the way, Chinese people can buy cheaper iPhone from HK, it happens often, but the volume wasn't calculated into apple's harvest in China market. And, don't underestimate this part.

junko.yoshida
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Re: Add more information
junko.yoshida   9/13/2013 9:49:07 AM
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Thanks, Miya, for additional info.

Can you elaborate, or explain what "the very attractive subsidy policy for iPhone 5c" announced in China looks like? 

Presumably this policy for now applies to China Telecom and China Unicom for now, but you are saying that China Mobile will join the program soon?

Roswell
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Re: Add more information
Roswell   9/13/2013 11:43:09 AM
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This is the details about "the very attractive subsidy policy for iPhone 5c" I heard. Two year contract with $60/month for a iPhone5s, and two year contract with $50/month for a iPhone5c. It is very attractive policy, but....hold on a second...the difference between 5c and 5s is only $10/month.  Who will buy iPhone5c???? Everyone in China will buy iPhone5s. As I said early, iPhone5c strategy is super confusing...

junko.yoshida
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Re: Add more information
junko.yoshida   9/13/2013 11:58:55 AM
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@Roswell, Thanks for your quick response, Roswell. Much appreciated. 

Yes, 5c is puzzling. It reminds me back in old days -- when I was still living in Japan, some Japanese companies launch products specifically tailored to "women and children" and they say so publicly. (Obviously, they couldn't imagine how bad it sounds!)

And those products usually went nowhere. Literally nowhere.

It's the same thing here. Once 5c was viewed as "a cheap product for China" (obviously, in this case, Apple would never dream of saying that), it's hard to imagine how attractive it sounds to Chinese...

Roswell
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Re: Add more information
Roswell   9/13/2013 8:00:59 PM
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Please check the spec comparison between iPhone5c and iPhone5s.

http://reviews.cnet.com/8301-6452_7-57602215/iphone-5s-vs-iphone-5c-vs-iphone-5-specs-compared/

2LED, A7 64bit processor, and 1080p front facing these features cost Chinese only extra $10/month for iPhone5s instead of iPhone5c. If I were them, I would definitely go for iPhone5s. Do you think that people who can afford a high-end phone really cares about this $10? There's no doubt in my mind that some people will go for iPhone5c because of color, but I don't see that how they can help on increasing Apple's current market share in China, which is only 5% now.

 

My concluson: Apple's current strategy of iPhone5c in China is becoming failure...

 

pseudoid
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No exception to the "fickle" consumer
pseudoid   9/13/2013 12:03:56 PM
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Just out of curiosity, I sure would like to see the picture of what the UserInterface looks like in the Chinese version of the iPhone, especially the Chinese character set that is displayed on the iPhone for that market.
I am also somewhat perplexed about this "iPhones sold in China are subject to a 17 percent value-added tax."  >> I was inclined to think [stupid me!] that since this product is manufactured in China, the VAT would not have applied for products made/sold in the same country for their own citizens.

junko.yoshida
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Re: No exception to the "fickle" consumer
junko.yoshida   9/13/2013 12:16:55 PM
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@pseudoid, you wrote:

 I was inclined to think [stupid me!] that since this product is manufactured in China, the VAT would not have applied for products made/sold in the same country for their own citizens.


It is a head scratcher, isn't it?

While Taiwan-based FoxConn has plants in China, where they manufacture iPhones for Apple, most of the profits generated from iPhones go to Apple, not to Foxconn. iPhone is Apple's products, not that of Foxconn. I suppose that's the logic.

 

 

pseudoid
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Re: No exception to the "fickle" consumer
pseudoid   9/13/2013 1:10:09 PM
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For the answer to the 1st part of my question; this is the only image for the Chinese iPhone5C UI  I could find (via both Google/Bing images)  >>

http://tinyurl.com/mwwh2c3

junko.yoshida
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Re: No exception to the "fickle" consumer
junko.yoshida   9/13/2013 1:29:39 PM
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@pseudoid, um, this doesn't look like the actual user interface...it looks more like an app.

xingfenzhen
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Re: No exception to the "fickle" consumer
xingfenzhen   9/14/2013 12:48:28 AM
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that's neither a UI or iphone5c. It's a advertizing for a dream explantion app on what appears to be iphone 4s

gdharmraj
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Re: No exception to the "fickle" consumer
gdharmraj   9/15/2013 5:58:26 AM
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That mean iPhone C is flop in China market, Then same things may be true for other asia contries, 

xingfenzhen
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Re: No exception to the "fickle" consumer
xingfenzhen   9/13/2013 3:29:33 PM
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VAT is basically a sales tax applied to vendors. it applies to all products, both imported or and domestically made. en.wikipedia.org/wiki/Value_added_tax

pseudoid
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Re: No exception to the "fickle" consumer
pseudoid   9/13/2013 4:30:28 PM
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@xingfenzhen >> Thank you for the correction!
It appears that they have a similar tax structure to most European countries and actually cheaper than those in UK.
China Income Tax Rate=45% (max.)
China Corporate Tax Rate=25%
China Sales Tax / VAT Rate=17%
http://www.taxrates.cc/html/china-tax-rates.html

 

Roswell
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Apple's time in China is counting down
Roswell   9/12/2013 6:59:41 PM
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"High-end customers don't care about price. They care about brand." Besides, "Apple's software platform and quality deserves the price," she added. 

If this statement is true, Apple's iPhone5c stratgy is more confusing, because People in China will definitely go for iPhone5s instead of iPhone5c. Personally I think Apple's time in China is gone due to no innovation in recent products. Let's look at some numbers. Apple has 9% share in Chinese smartphone market in 2012, but this number dropped to 5% in 2013. In the meanwhile Samsung has 17.6% and Lenovo has 12.3%. Even a startup company Xiaomi (Hugo Barra joined recently) has already took 5% of the market this year. There's nothing wrong with "High-end customers" strategy, but Apple does need some change/innovations.

 

 

 

_hm
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Re: Apple's time in China is counting down
_hm   9/12/2013 8:16:12 PM
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@Roswell: Yes, I agree with you. iPhone 5C needs to be lower in cost for mass Chinese market. May be Apple will offer special sale offer time to time and attract more customers.

junko.yoshida
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Re: Apple's time in China is counting down
junko.yoshida   9/13/2013 9:58:57 AM
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@Roswell, you wrote:

Personally I think Apple's time in China is gone due to no innovation in recent products


Having covered the mobile market for a while, I can only predict that nothing is constant in this industry. Things could change at the drop of a hat. I don't even have to point out where Nokia and Blackberry are now today.

So, in that regards, I don't particularly agree with your statement that "Apple's time in China is gone." However, I do agree with you that the lack of innovation in Apple's recent products is hurting Apple in the [high-end] segment where Apple has been traditionally strong. 5s could help but 5c doesn't count as "an innovative product."

 

Charles.Desassure
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Too high...
Charles.Desassure   9/13/2013 3:20:05 AM
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I agree, this phone price is too high.  I expect for the price to drop within the next few months after slow sales. 

eewiz
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assumption
eewiz   9/13/2013 6:00:03 AM
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IMO Apple is just testing the waters about its brand leverage. If they find less people buying the 5c, they will probably drop the price. Atleast they have done it when the original iPhone was released . First at 599, then to 399 and later to 199.

Another assumption that everyone is making here is that the subsdized price of iPhone 5C in the west will remain same as in China and other markets.  People in Asia dont want some cheap products. They want the same high quality products the west use, but at a cheaper price. My hunch is that Apple priced the 5C much higher , that when given a huge subsidy via the carriers, people will find it more attractive to pick one up compared to other products. Ofcourse we need to wait for subsidized pricing of china mobile to verify this hypothesis. 

 

 

 

 

junko.yoshida
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Re: assumption
junko.yoshida   9/13/2013 9:51:46 AM
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@eewiz, I tend to agree. The higher pricing for 5c for now is to give enough room for Apple and operators to come down with prices over time.

rick merritt
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Re: assumption
rick merritt   9/13/2013 8:04:39 PM
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Maybe it will take Apple until a 6d or 7e to get the ROW market right. By that time Microkia might be a force there

Caleb Kraft
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wait and see
Caleb Kraft   9/13/2013 9:16:14 AM
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I think we'll really need to wait and see how this turns out. The folks at apple aren't idiots. The know their phone isn't necessarily competitively priced with others in that market.

 

However, we've seen time and time again that when they announce a new product it is ridiculed and claimed to be overpriced. Maybe they'll sell well, who knows.

xingfenzhen
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4488 for iphone
xingfenzhen   9/14/2013 12:25:37 AM
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I just can't believe Apple can sell iphone 5c for 4,488RMB with a straight face, if you read Chinese blogs they all think it's kinda stupid. Price wise, there is really no difference between iphone 5c and 5s. It's like LV all of a sudden made a "value oriented" handdbag that used inferior materials but it's still more expensive than every other handbags you see in the shop. If Apple is serious about Chinese market, they should price something at 2500RMB with no contract, that's is the sweet spot for high end smart phones in China right now. (1 - 2 month salary) And guess what, that's how much Xiaomi Mi3 cost. (Real Values phone in China cost only ~700RMB with no subsidy such as Xiaomi's Red Rice) 

In the longterm, having only 5% market share can really hurt apple, the Chinese app eco-system is fairly isolated with it's own social net app, games, camera, music apps etc. If market share remain this low, it's may not make sense for popular apps to keep updating their iOS version, and instead it will get lower performance ported versions or even no more update.. As Chinese app eco-system is isolated, the appstore can benifit from the large number of English language apps, and it will fall behind. This will make iOS a burden rather than an advange, thus goes any premium Apple is able to charge. In the end, only rich folk who don't really use technology but need a status symbol will buy iphones. I bet Apple don't want to end up like that.

 

tektonikshift
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The "C" in 5C does not stand for China
tektonikshift   9/17/2013 7:26:56 PM
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The iPhone 5C is not a cheap iPhone, and its irrelavent what "China" thinks about it. 

To date, there plus 40 million iPhones on China Mobile's network. These are the same "expensive" iPhones we buy in the west.  More shocking .... they access China Mobile via 2G radio access!  

People don't buy iPhones because of the specs -- Samsung wins that game. People in the west (Us) and the east (Chinese) buy iPhones for more other reasons. Some tangible, some not tangible reaons. 

Q. What is the purpose of the iPhone 5C?  

A. Make the 1 year old iPhone 5 cool .... add colors and drop $100. 

Brilliant marketing once again from Apple. 

junko.yoshida
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Re: The "C" in 5C does not stand for China
junko.yoshida   9/19/2013 7:06:47 AM
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@tektonikshift, there is certain truth and wisdom in what you are saying here. 

However, for Apple to get over the hump with the company's currently stagnant smarketpone market share in China, Apple needs to turn iPhone 5C into a different kind of "hit" product with the Chinese audience.

tektonikshift
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Re: The "C" in 5C does not stand for China
tektonikshift   9/19/2013 12:58:05 PM
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Hi Junko, 

China Mobile is expected to officially launch (support) the iPhone later this year. This will spike iPhone sales.

Lenovo is the largest supplier to China Mobile. I wonder what Lenovo think about the impending launch of iPhone?  In your position, maybe you can ask them ;-)

 

 

You are right, China iPhone sales are NOT surging as in the past.  However, with little direct promotion, and little to no 3G coverage, China coounts  ~ 50 million iPhone subscribers.  Outstanding result for any handset maker. 

In perspective, of the ccompanines driving internet mobile (Google, Amazon, Facebook and Apple), only Apple has meaningful revenues from China market. (again, with little formal promotion and no support from China Mobile)

Microsoft enjoys rich marketshare in China, but little revenues due to rampant bootleg software. 

I expect Apple will complement China Mobile's launch with relavent iTunes/App store support. And don't be surprised if China Mobile offers progressive 'financiing' programs, thereby making the iPhone much easier to acquire. 

Anyway, more to come in a few months. 

-Tek

junko.yoshida
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Re: The "C" in 5C does not stand for China
junko.yoshida   9/19/2013 7:01:13 PM
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@tektoniskshift, thanks for your response. 

How Lenovo will be positioned against Apple in China Mobile would be an interesting question to ask. In fact, what I am hearing from Japan is the following. Now that NTT Docomo supports iPhone, Apple is asking NTT Docomo to ensure that iPhones "make up roughly 40% of NTT Docomo's all new contracts. This figure is seen as the quota that Apple and DoCoMo agreed on."

This is according was reported by Nikkei report. http://e.nikkei.com/e/ac/20130916/TNW/Nni20130916BB0DOCO0.htm?NS-query=NTT%20Docomo%2C%20Apple

I wonder if such a hardware "quota" deal is in the making between China Mobile and Apple.

tektonikshift
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Re: The "C" in 5C does not stand for China
tektonikshift   9/19/2013 7:26:51 PM
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Hi Junko, 

These contract guarantees are de rigueur for Apple. Apple demands the carrier commit a substantial portion of their sales to iPhones, 40% in the case of Docomo.  

Based on this contract, Apple can commit to long lead time supply line (specialized manufacturing equipment needed for iPhones and sourcing of key or custom components).

The large size of these commitments is why Verizon was late to sign on and why Docomo singed up recently.  

China Mobile has been holding back.  The size of the financial commitment is staggering in China Mobile's case.

Yes, there will be some 'quota' for China Mobile.  The size and terms ....I bet they are both getting creative about working something out.

The question to ask – how motivated is China Mobile to sign up millions of TD LTE subscribers?  If very motivated, then China Mobile needs the new iPhone.

-Tek



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