Julian Ivan-Alexander

How Apple and iPhone Blew It in China

So let me see... 3.5M chinese have bought an iPhone since it was launched (irrespective of whether those were grey market imports or not) and those would have been bought at full price from US Apple stores unsubsidised by a network, and then unlocked.
In addition, some stupid Chinese laws stopped Apple from including WiFi - which were only recently repealed. This caused manufacturing to go ahead - presumably at the networks', not Apple's, request, without WiFi included.
This, coupled with the equal stupidity of the local network providers who tried to get Apple to cripple the phone's software to only work with their own app stores and bickering over revenue sharing arrangements meant the phone's official roll-out in China was delayed by 2 years.
And this is how "Apple and the iPhone" blew it? Lol! What a "whoring for hits" headline. Its the networks who blew it, and the Chinese government who up until just a few months ago wouldn't allow the phone to include WiFi. The networks commited to purchasing millions of devices, and Apple is no better or worse off irrespective of how many - 5000 or 500,000 - of these crippled devices they can sell on to end users. By now manufacturing lines will have switched over to producing WiFi-enabled versions, and normality will return to the Chinese market once they do and grey market, unofficially-supported units no longer seem so attractive.
But to say Apple blew it? Please, Apple already has almost 4M iPhone users in China from grey imports - all potential upgrade candidates for its next official release there. I think that's a pretty outstanding success story especially as all those units will have been sold at full price, from Apple Stores, and with resultingly higher margins.
Offiicial iPhone sales may be off to a rocky start in China, but blame the Chinese government and the networks' stupidity for that. Apple has played them both like a violin, and reaped the benefit of almost 4M full-cost sales booked in US dollars from their own stores WITH NO SUPPORT OR WARRANTY REQUIREMENTS as a result.
Put that in your spreadsheet and eat it. Blown it? In the UK we have a different expression for when you manage to hit on something which brings in unbelievable amounts of cash: "coining it."
Apple played the Chinese to perfection, probably the only Western company to have ever done so in modern times. While seemingly intrasigent in the face of official negotiations, it ensured it looked the other way and actually encouraged Chinese unlocking (the phone fully support Chinese character sets and has done for years) so that grey market importers could saturate the Chinese market with its devices sold at full price, giving the carriers no choice but to eventually capitulate.
Now Apple has grown a user base so huge that the upgrade sales into the official sales channels for the next-gen devices is all but guaranteed to be one of the biggest roll-outs in the company's history.
The guys with egg-fried rice on their faces are the Chinese networks. Apple is laughing all the way to is non-GAAP accounting revenue bank account.