New iPhone 5C 'too costly for China': analysts, users (Update)

Sep 11, 2013 by Fran Wang
The new iPhone 5C pictured at Apple's headquarters in Cupertino, California's Silicon Valley on September 10, 2013. Apple's lower-cost iPhone 5C will retail for more than $700 in China, according to Apple's China online store, putting it out of reach of most consumers and raising questions over the firm's ability to build sales in the world's biggest mobile market.

Apple's lower-cost iPhone 5C will retail for more than $700 in China, putting it out of reach of most consumers and raising questions over the firm's ability to build sales in the world's biggest mobile market.

The iPhone 5C is seen as part of the US tech giant's bid to counter cheaper handsets from rivals, particularly in China where it has only a five percent share of the smartphone market.

But the new phone will retail in China for 4,488 yuan ($733) for the 16GB version, according to Apple's China online store, making it only marginally cheaper than the previous model, the iPhone 5.

It is also well above the $549 that an unlocked iPhone 5C will sell for in the United States.

The top-line iPhone 5S starts at 5,288 yuan ($864) in China, whereas the unlocked US equivalent is $649.

After months of speculation that Apple would release a budget model aimed at attracting customers in emerging markets, Chinese web users were quick to dismiss the iPhone 5C as too expensive.

"I thought the cheap 5C version would be priced at one thousand or two (yuan)... I can't sell my kidney for this much," said one poster on Sina Weibo, China's hugely popular Twitter equivalent, referring to a teenager who sold a kidney to buy an iPhone and iPad last year.

"So this is the so-called cheap version? The 5C starts at 4,488 yuan in China. Haha, they treat the Chinese as peasants," said another.

With a network contract in the US, the iPhone 5C can cost as little as $99.

But unlike in North America or Europe, Chinese networks do not offer contract customers deep discounts on handsets, instead requiring a substantial upfront payment which is then refunded over the course of the agreement.

Analysts said that the launch of the two new models was "disappointing".

"It's not worth the price," said Wang Ying, a Beijing-based analyst with consultant firm iResearch, adding that other smartphone makers including South Korea's Samsung and China's ZTE and Huawei were now well-established as rivals of Apple.

Many domestically made smartphones are priced as low as $100.

Apple chief executive Tim Cook introduces the new iPhone 5S on September 10, 2013 in Cupertino, California. The starting price for a 5S in China is set to be 5,288 yuan ($864).

"It will be increasingly difficult for Apple to improve its market share or compete with other producers at this stage under the current market environment," said Wang.

Samsung—which has phones in a wider range of price points than Apple—is favoured by consumers for its bigger screen, and some buyers say the inclusion of a stylus with certain models makes them more user-friendly for character-based Asian languages.

It is also often comparatively cheaper. The Samsung S4, which is comparable to the iPhone 5, sells at around $670 on Amazon's China site.

Samsung sold 15.3 million smartphones in the country in the second quarter, up from 12.5 million in the January-March period and accounting for 19.4 percent of the market, reports said.

China remains one of Apple's largest markets due to the popularity of its various products, but its total Chinese sales in the most recent quarter slipped 14 percent from a year ago to $4.6 billion.

While iPhones are popular among China's better off, analysts believe current prices would need to drop substantially for Apple to seriously penetrate the middle-income market.

The new iPhones were launched globally at Apple's California headquarters on Tuesday.

Apple also held a media event in Beijing on Wednesday, fuelling speculation that a deal with China Mobile, the country's biggest carrier, was to be revealed.

The iPhone is currently offered in China only by smaller telcos, while according to Barclays Equity Research China Mobile has more than 700 million subscribers.

Chinese authorities have issued technical licences for iPhones to be used with the standards operated by China Mobile as well as other networks, according to the website of the Telecom Equipment Certification Center.

But there were no major announcements at the launch event, where a film of the California event was shown with Chinese translation.

Media invitations were limited and dozens of overseas and Chinese reporters were blocked from the venue, at one point surrounding Apple's press officers to voice a barrage of complaints.

"Apple talks a lot that it highly values the China market, but look at the way they handle the briefing," said one uninvited Chinese journalist, declining to be named.

Explore further: Samsung to release Note 4 'phablet' on October 17

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