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Apple has completely mis-gudged the situation in China.
Feb 10 10:56 am
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All Comments by Feng »Apple's Chinese iPhone Torture [View article]
1) They missed the boat in a big way. Even if they sell iPhone at the un-subsidized prcie, say $700, iPhone would still be a big sell in China if they launched it early, possibly bigger than in the US. Yes Chinese consumers are on average much poorer, but the urban people have decent income. More importantly, average Chinese consumer are much more trend conscious than US consumers, it's very common for them to spend a month's salary on a phone. That's what I did when I was a graduate student in China 8 years ago. Now I live in the US, I don't even want to spend 1/10 of my salary on any new cell phone. A key difference is peer pressure.
2) They hold no card in negotiation with China Mobile. China Mobie has such a strong market position, why would they want to give Apple money just to get their users to use this phone? And anyway user can buy the unlocked phone in China as the other comments reveals. Additionally, consumers in China are not used to have a subscription plan.
My suggestion to Apple: stop negotiation with any carriers in China, just start sell your iPhone in China directly. You've missed the boat this time because iPhone is not as hot as it was 2 years ago. But next time, when you come up with new things. Set the price 2X what an unsubsidized price would be in the US in China. It will sell.