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iPhone Launches in China

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china_iphone_posterSixty years ago this month, Mao Zedong declared the birth of the People’s Republic of China, but it was Apple VP Greg Joswiak who said this was “an extraordinary day” for China. The iPhone has (officially) arrived.

The most sought-after smartphone in the world has entered the most sought after market. More than 700 million cell phone users now have access to the iPhone without a trip to the gray market, if they can afford it.

According to the Wall Street Journal, China Unicom is selling the iPhone 3GS for 6,999 yuan, or $1,024 without a contract. AT&T (s t) charges $699 for the same model without a contract in the U.S. Add in the cost of a service contract, and over two years a Chinese subscriber will pay around $3,000, approximately the yearly average salary. Not surprisingly, the Wall Street Journal trots out that tired bromide about Apple products: price.

“It’s too expensive,” says Marco Bai, a teacher in Beijing. He currently uses a smart phone–a handset with souped-up functions like email and video–made by a Chinese domestic brand that cost him about $205. “There are many smart phones with similar functions” to the iPhone in China, he says. “And they are all cheaper.”

How many earnings reports and ever-increasing market share graphs will it take to convince skeptics that people are willing to pay more for a better product? More than 100 million Chinese use their mobile phones to access the Internet. Considering the iPhone’s superior web browsing experience, it’s easy to imagine millions of iPhones sold in China. In fact, it’s already happened.

The gray market of around 2 million iPhones is possibly the biggest competitor to the official model. All of those imported units have Wi-Fi, too, unlike the iPhones currently being sold by China Unicom due to government restrictions. However, the ban on Wi-Fi has been lifted, so future iPhones in China will have Wi-Fi.

Setting aside doom and gloom from the Wall Street Journal, the Chinese market arguably will become second in importance only to the U.S. market. Remember when Steve Jobs predicted that Apple would get one percent of the cell phone market in 2008? In China for 2010, one percent would be seven million iPhones, a third of what the company sold last year worldwide.

Clearly, the revolution is at hand.

15 Responses to “iPhone Launches in China”

  1. While it is true that people are willing to pay more for a better product, the two year subscription will cost about $3,000, approximately the yearly average salary. Would you pay half your yearly income to have an iPhone or would you settle for an alternative?

    In China, the iPhone will be reserved to the elite chinese that have a far bigger income than the average chinese.

    Furthermore, such exorbitant pricing only gives a strong incentive to local companies to come up with cheaper alternatives. Android, an open platform considered a viable competitive platform to Apple’s, combined with much lower cost hardware from resourceful chinese manufacturers will give our admired Apple very strong competition. In the medium turn, China is capable of outrunning Apple on its home turf. Apple needs to come up with a very competitive offering for China.

    • And yet iPhones have been selling in China already for a couple of years now.

      The ‘average salary’ is different from the millions of families in China who can afford the iPhone.