Seeking Alpha

Apple slides following China Unicom reservation data

  • China Unicom (CHU +0.6%) says its iPhone 5S/5C (AAPL -2.6%) reservations have topped 100K since it began taking them last week. Last year, Unicom took 200K+ iPhone 5 reservations in the phone's first two days of availability.
  • Meanwhile, China Telecom (CHA +2.5%) has cut its iPhone subsidies. A subscriber signing up for an RMB289/month ($47/month) plan will get an iPhone 5S subsidy of RMB2890, 15% less than the RMB3400 subsidy it provided for the iPhone 5. It's worth noting CHA's ARPU is below $10.
  • The Chinese figures come amidst sharp criticism of the 5C's unsubsidized pricing, which starts at $735 in China. For reference, upstart Xiaomi's new Mi3 flagship Android phone (5" 1080p display, 13MP camera) starts at $327 in the Middle Kingdom.
  • On the other hand, Japanese carriers are aggressively subsidizing the 5S in the wake of NTT DoCoMo's (DCM +0.7%) iPhone deal. DoCoMo, SoftBank (SFTBF.PK), and KDDI are each providing the 5S for free with 2-year contracts for certain plans.
  • Kantar Japan recently estimated 2/3 of DoCoMo subs who have been leaving the carrier ended up buying an iPhone.
  • Also: Bernstein thinks Apple could still come out with a cheaper iPhone in the form of a sub-$400 iPhone 4C that puts the iPhone 4's components inside a 5C body.
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Comments (45)
  • User7766461
    , contributor
    Comments (156) | Send Message
     
    Is China Unicom taking pre-orders on both the 5s and the 5c? This comparison is misleading if the 100K is only 5C pre-orders.
    16 Sep 2013, 11:15 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (988) | Send Message
     
    They're taking both 5S and 5C reservations.

     

    http://bloom.bg/150kQQ0
    16 Sep 2013, 11:18 AM Reply Like
  • pagreen1966
    , contributor
    Comments (647) | Send Message
     
    Just what I was thinking! Need to wait for the sales figures for next weekend when actual shop sales are known.

     

    People need to buy (AAPL) on weakness!
    16 Sep 2013, 11:19 AM Reply Like
  • smart_investoor
    , contributor
    Comments (229) | Send Message
     
    iphone 5s is not available for pre-orders yet
    16 Sep 2013, 11:24 AM Reply Like
  • Bobhawk
    , contributor
    Comments (44) | Send Message
     
    http://bit.ly/1diK7dN

     

    Unless something has changed, pre orders in china start the 17th for the 5S.
    16 Sep 2013, 11:37 AM Reply Like
  • cshoxie
    , contributor
    Comments (298) | Send Message
     
    You are correct. Buy on weakness. The weakness will be when the actual sales figures are a disappointment and more analysts jump on the downgrade bandwagon. I'm thinking the low 400's as a real possibility without a CHL announcement.
    16 Sep 2013, 11:53 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (988) | Send Message
     
    To be precise, Unicom is taking reservations for the 5S/5C, which are a little different from traditional pre-orders in that a user doesn't have to pay anything up-front, but is guaranteed the phone he/she ordered when it goes on sale in stores.
    16 Sep 2013, 11:57 AM Reply Like
  • rocback
    , contributor
    Comments (1157) | Send Message
     
    If you read the article this is the number of people who signed up, not knowing what they were committing to. Would you do that? I wouldn't. When they actually make an official offer then I would expect more people to commit.
    16 Sep 2013, 12:25 PM Reply Like
  • Jack Baker
    , contributor
    Comments (964) | Send Message
     
    However, the iphone 5 was made available two months later last year. I think there should be some adjustment made for seasonality.
    16 Sep 2013, 01:31 PM Reply Like
  • frankfantasy
    , contributor
    Comments (4) | Send Message
     
    I assume that the 5s doesn't have preorders. Even the China-only "pre-reservation" of 5s scheduled to start on Sep. 17 hasn't kicked off yet.
    16 Sep 2013, 02:00 PM Reply Like
  • imac007
    , contributor
    Comments (606) | Send Message
     
    Using Xiaomi as a frame of reference for pricing is bogus, as the business models are different. They are trying to play catchup in the eco-system game with a break even strategy at this point.

     

    "I feel that we're a very different company from Apple," Xiaomi CEO Lei Jun told Bloomberg. "We're probably more like Amazon's Kindle – to sell hardware at cost and then to stack services and content on top of the hardware."
    http://bit.ly/1gpycdI
    16 Sep 2013, 04:05 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    that is what us and common folk don't get the prestige and status of the IPhone in Cn!
    16 Sep 2013, 10:42 PM Reply Like
  • MajorDude
    , contributor
    Comments (256) | Send Message
     
    Low 400s is a real possibility. Another possibility is much higher. Apple sold truckloads of iPhone 4S's after the launch of the 5 - with a slow chip and a (relatively) bulky design.

     

    The 5c is light, small, colorful - they obviously feel the color is going to be a big selling point.

     

    But more than that - are we talking about the latest Samsung phone here? No. Or the latest HTC? No. Or Moto x? No.

     

    We're talking about APPLE.

     

    Why? Because nobody cares about those other guys. The devices they make are generic. If you buy them it's because they're cheap and you're poor. A customer the networks don't want because you're going to bleed them for free talk and cheap text. The dough is in long term big data plans.

     

    Meanwhile, Apple is using cheap money to buy back shares at a 20% to 30% discount - insuring EPS soar in the next two or three years.
    17 Sep 2013, 03:04 AM Reply Like
  • Bobhawk
    , contributor
    Comments (44) | Send Message
     
    So the 5S becomes available for pre order in China on the 17th so CHU is only talking about 5C pre orders with their 100K number. These are apples and oranges comparisons since the flagship phone is not even available yet. When Apple releases their first weekend numbers next Monday, that will be the real test to see how these things are selling. Until then, just noise.
    16 Sep 2013, 11:16 AM Reply Like
  • User7766461
    , contributor
    Comments (156) | Send Message
     
    my point exactly.
    16 Sep 2013, 11:19 AM Reply Like
  • Keep It Simple
    , contributor
    Comments (487) | Send Message
     
    100K pre-orders for the iPhone 5C is phenominal, especially when China Unicom has yet to announce its plans for device subsidies.
    16 Sep 2013, 11:46 AM Reply Like
  • User7766461
    , contributor
    Comments (156) | Send Message
     
    Sounds like some, myself included, are getting "reservations" confused with "Pre-orders".

     

    CHU is reporting "reservations" of 100K for iphones 5s/5c. This is before the company has announced final pricing for those devices. Which, compared with 200K in reservations LY, is disappointing. But with pricing not finalized, I'm not exactly sure how accurately this really compares to the 200K LY.

     

    Pre-Sales, on the other hand, for both devices appear to be starting 9/17 at 6am.
    16 Sep 2013, 11:57 AM Reply Like
  • name999
    , contributor
    Comments (175) | Send Message
     
    Pre-order is open for both 5C and 5S. As far as I can tell, 8 out of 10 people ordered 5S.
    16 Sep 2013, 11:59 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    China Unicom's LTE is not available in Cn yet.
    16 Sep 2013, 10:40 PM Reply Like
  • name999
    , contributor
    Comments (175) | Send Message
     
    China Unicom and China Telecom should cherish their opportunities to attract more customers rather than scare them off. Once China Mobile is in the game, they would regret what they have done now.
    16 Sep 2013, 11:56 AM Reply Like
  • tiger8896
    , contributor
    Comments (643) | Send Message
     
    Just another misstep by Apple. They should have produced a phone designed strictly for the Asian market, plenty of companies produce products for different markets. Bunch of boneheads are running this company since Jobs died.
    16 Sep 2013, 12:20 PM Reply Like
  • User7766461
    , contributor
    Comments (156) | Send Message
     
    They do. its the iphone 4
    16 Sep 2013, 12:37 PM Reply Like
  • Keyser Smith Jones Soze
    , contributor
    Comments (101) | Send Message
     
    Dude, the strategy Apple is following is exactly the same as the strategy that Jobs adhered to religously, with one exception. Jobs likely would not even have bothered with the 5C at all. The 5C will eventually come down in price, and I doubt if it will even be six months before that happens. China Mobile will be on board very soon, and Apple's earnings will increase substantially. The Apple naysayers will end up in same place where they have always ended up, time and time again. The conclusions that people are jumping to are unfounded. The only thing that Apple needed to do was make a version of their latest phone without the excessive manufacturing cost, so that margins can increase. This is exactly what the 5C was intended to do, and will do. Seven months and a few days from now, all the naysayers will be running for cover and driving up the price of Apple stock in an attempt to cover the short. Just wait and see.
    16 Sep 2013, 03:54 PM Reply Like
  • heloise8
    , contributor
    Comments (439) | Send Message
     
    I don't get Apple. I mean they can make an ipod of 8G for 199, and an ipad mini for 399 but can't make a phone that is really 99 $?
    16 Sep 2013, 12:43 PM Reply Like
  • User7766461
    , contributor
    Comments (156) | Send Message
     
    sarcasm?
    16 Sep 2013, 01:10 PM Reply Like
  • u01bsb0
    , contributor
    Comments (709) | Send Message
     
    timely news that stops apple making any gains on the news that Summers will not be going for the fed job.
    16 Sep 2013, 01:05 PM Reply Like
  • Trkarim
    , contributor
    Comments (4) | Send Message
     
    Quietly confident that the 5S is going to blow through numbers next weekend. China and Japan selling starting the 20th folks!
    I for one can't wait to get my 5s. I have loved my 4s but am tired of punching 4digit codes all day especially while driving.
    Also the size is perfect for its a phone folks! I have my mini iPad when I need a bigger screen.
    Don't need or want a brick against my ear. I am sure there are many folks like me and next weekend we will find out.
    16 Sep 2013, 02:01 PM Reply Like
  • Stan Sutfin
    , contributor
    Comments (120) | Send Message
     
    USER 11274721--You might follow the law and not use your phone
    while driving.
    16 Sep 2013, 02:45 PM Reply Like
  • harrison1988
    , contributor
    Comments (28) | Send Message
     
    But the fingerprint scanner is so convenient! USER 11274721 can purchase apps while he's driving now!
    16 Sep 2013, 03:47 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4474) | Send Message
     
    is apple doing everything it can to get its share price down, so it can get more bang for its buck during its buyback process?
    16 Sep 2013, 05:10 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1474) | Send Message
     
    Visualize yourself, a customer in India or China. You & your signficant other can each get a 5" flagship Android phone with much better specs, that's right TWO phones, for the price of one plastic last year's apple phone.

     

    Two beats one every day, esp. when $733 in India and China is the equivalent of $5000 here expressed as percentage of monthly salary.

     

    This is a huge error by Apple. Greed for margins overcame concerns for volume. I think someone in Apple doesn't understand Volume X Gross Margin = Gross Profit. Someone doesn't understand there is something called a demand curve and and it is not a vertical line. That particular Apple Genius thinks Volume is a constant, hence gross profit depends only on gross margin.

     

    Timmy is done, its now only a matter of weeks before he is canned.
    16 Sep 2013, 07:33 PM Reply Like
  • criticalbear
    , contributor
    Comments (84) | Send Message
     
    This is a confusing statement. Volume X Gross margin = Gross Profit. And you're correct in saying the demand curve is not a vertical line and probably a curve.

     

    Guess what, Gross margin is a curve too, anot a line. There's also something to be said about apple's ecosystem and fixed costs. Why would apple want cheap users to come in if the additional revenue they bring in is probably close to nothing (see android users) and they're not making a lot of revenue off the devices?
    16 Sep 2013, 09:29 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Deja Vu,

     

    You are missing the point on Samsung value vs. Apple status.

     

    Personally, I will never buy another Samsung product from the lack of quality and cheapness of the notebook I bought of it, at a middle market price. Furthermore I am so fed up with Windows and lack of vendor after-sales support that I am going over more fully to the other side.

     

    Long: Msft
    16 Sep 2013, 10:31 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Deja Vu:

     

    And that is why I got stuck buying my first notebook from Best Buy as an Acer, then a Toshiba, next an HP, and now a Samsung frustratingly since 2009.

     

    Whereas I bought a 2008-refurb 17" Mac in 2009 and use it fully and happily since.
    16 Sep 2013, 10:35 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Deja Vu:

     

    Another note, after getting such lousy and even provocative Nokia Customer Care in 2011, I even wrote letters to Nokia Bjg ,Nokia Cn, Nokia Sg, Nokia HK and even HQ and Microsoft stating my case.

     

    I swore off buying another Nokia, but since I have bought 2 Nokia phones because that is all I need a phone that makes calls, short messages and is easy to use and cheap!
    16 Sep 2013, 10:39 PM Reply Like
  • u01bsb0
    , contributor
    Comments (709) | Send Message
     
    i don't think you could lecture apple about profit margins....
    16 Sep 2013, 11:13 PM Reply Like
  • MajorDude
    , contributor
    Comments (256) | Send Message
     
    So Apple should hire a CEO who chases customers who can't afford to buy apps, download software and is seduced by a screen to big to fit in a suit coat pocket?

     

    Let's get a lot of poor people on our network who text and talk and don't buy anything because they haven't got any money. That's a winning strategy to succeed with the big networks.
    17 Sep 2013, 03:14 AM Reply Like
  • lakeartemesia2
    , contributor
    Comments (513) | Send Message
     
    People have to understand China Unicom taking iphone 5s/5c pre order at same time. In US and other countries only 5c can be pre-ordered. Lot of people get excited without knowing this.
    16 Sep 2013, 07:58 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11564) | Send Message
     
    They can't use iPhone 4 components anymore after cutting off Samsung. The parts aren't available to them. Also prior iPhones now violate Samsung's patents.
    16 Sep 2013, 09:31 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Frankly, I don't care what Bernstein thinks. Certainly Tim Cook and Apple's board don't either. Do you ...
    16 Sep 2013, 10:25 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Since China Telecom knows the Cn market, by lowering the subsidies, even they think that Apple doesn't need to lower its price to generate enough interest from the consumer class.
    16 Sep 2013, 10:28 PM Reply Like
  • Hope128
    , contributor
    Comments (111) | Send Message
     
    Good points,who care how much is subsidies if people are still going to buy it any way. The key is still upcoming 5s sales data, are they greatly impacted by lowering subsidies?
    16 Sep 2013, 11:22 PM Reply Like
  • Hope128
    , contributor
    Comments (111) | Send Message
     
    Any one knows if CHU are doing subsidies for phones other than iphone? If yes, are they lowering their subsidies as well?
    16 Sep 2013, 11:26 PM Reply Like
  • dalzim
    , contributor
    Comments (7) | Send Message
     
    very few people use subsidies in china anyway.
    17 Sep 2013, 02:03 AM Reply Like
  • andrewavitan
    , contributor
    Comments (26) | Send Message
     
    What is better: one customer who buys your expensive phone, pads your margin, and subsequently buys a load more apps? Or four customers who buy your cheap phone, get you a quarter of the margin, and buys far less apps? That seems to be the argument with respect to the 5C's pricing. However, even though the 5C won't pick up much of the cheap market at all, that doesn't mean the cheap market need be ignored. In fact, whose to say Apple isn't still planning on going the cheap route too? It is simply logical to penetrate new markets from the top down, thereby milking the high margins as much as possible and still leaving the opportunity to lower prices OR produce the cheap phone.
    17 Sep 2013, 08:29 AM Reply Like
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