China Unicom Sells Only 5,000 iPhone in 1st Week

For those of you who took an economics course at some point in life, I am happy to report “price elasticity” is still alive and kicking. It appears the $1000 price point for Apple’s (AAPL) iPhone is a bit of an issue for the “middle class” of China, and this is for a phone without a service contract!

The price tag for a 32GB iPhone 3GS in mainland China: 6,999 yuan, or $1,024, which doesn’t include the service contract.

This data will surely strike at the hearts of those who use 1st grade logic… “1.3 billion Chinese x 2 iPhones per household = nirvana”.

Via Bloomberg:

Apple’s Chinese partner sold 5,000 iPhones in the country since last week’s debut, raising concern the handset’s price is undermining the U.S. company’s ability to gain customers in the world’s biggest phone market.

China Unicom (CHU) (Hong Kong) Ltd. President Lu Yimin told reporters in Hong Kong today demand has been “quite good” since the Chinese carrier began selling the iPhone, stripped of broadband-Internet capability, in stores on Oct. 30.

Unicom’s iPhone plan “will be an interesting exercise in how to sell an inferior product at a higher price,” said Duncan Clark, chairman of BDA China, a Beijing-based consultant.

Apple, based in Cupertino, California, had been expected to sell about 500,000 iPhones initially in China via Unicom, Barclays Plc analyst Ben Reitzes wrote in a report today.

China had 719.8 million mobile-phone users at the end of September, after adding 9.3 million in the month, according to government data.

Unlike iPhones available outside of mainland China, Unicom sells the handsets without so-called Wi-fi capability.

“It is selling a ‘castrated’ version of iPhone at a higher-than-market price,” BOC International analyst Allan Ng, wrote in an Oct. 23 report. The carrier’s marketing was “incompetent,” according to Ng, who said demand was “lackluster.”

The number of units sold in China is disappointing compared with other markets, according to Paul Wuh, a Hong Kong-based analyst at Samsung Securities Co. By comparison, Apple said it sold 270,000 iPhones in the 30 hours after the first model went on sale in the U.S. back in 2007. (emphasis added)

But there is always a way around issues such as this… the black market:

Chinese consumers may buy 1 million iPhones from unofficial distributors this year, according to BDA estimates. IPhones sold through these outlets will have Wi-fi and cost less than those distributed by Unicom, according BDA. (emphasis added)

Disclosure: No position

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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