It's a Large World After All

Nov.16.09 | About: Apple Inc. (AAPL)

Ultimi Barbarorum’s little-known other author, “Bento”, has a great blog entry up about the iPhone in China. Bento lives in Shanghai, and explains very simply why official Chinese iPhone sales are low: official Chinese iPhones are artificially crippled, thanks to a law banning phones with wifi capability. So the tech-savvy Chinese simply buy unlocked (and cheaper) iPhones from Hong Kong instead, which don’t show up in the official sales numbers.

This dynamic is well-known in Shanghai and across much of the rest of China:

The distribution model is extensive and robust, and in fact most Chinese buy their mobile phones from stalls like this. There are no iPhone shortages, as prices fluctuate to meet demand.

Yet somehow, in this age of universal connectivity, none of the Apple-watchers seems to have known anything about it. Instead they took the official statistics at face value, trying to read all manner of implications into them about Chinese demand for iPhones or the lack thereof.

I’m curiously reassured by this episode: It goes to show that markets really aren’t all that efficient after all, and that information flows in unpredictable ways. And that good bloggers and journalists can still be very helpful in telling the markets something they didn’t know, even if it’s common knowledge in Shanghai.