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New iPhone 5C seen as too costly for most Chinese

$700 budget model pricier than in U.S. as market share slides

AFP-JIJI

Apple’s lower-cost iPhone 5C will retail for more than $700 in China, putting it out of reach of most consumers and raising questions over the firm’s ability to build sales in the world’s biggest mobile market.

The iPhone 5C is seen as part of the U.S. tech giant’s bid to counter cheaper handsets from rivals, particularly in China, where it has only a 5 percent market share.

But the new phone will retail in China for 4,488 yuan ($733) for the 16GB version, according to Apple’s China online store, making it only marginally cheaper than the previous model, the iPhone 5. It is also well above the $549 that an unlocked iPhone 5C will sell for in the U.S.

The top-line iPhone 5S starts at 5,288 yuan ($864) in China, whereas the unlocked U.S. equivalent is $649.

After months of speculation that Apple would release a budget model aimed at attracting customers in emerging markets, Chinese web users were quick to dismiss the iPhone 5C as too expensive.

“I thought the cheap 5C version would be priced at 1,000 or 2,000 (yuan). . . . I can’t sell my kidney for this much,” said one poster on Sina Weibo, China’s hugely popular Twitter equivalent, referring to a teenager who sold a kidney to buy an iPhone and iPad last year.

With a network contract in the U.S., the iPhone 5C can cost as little as $99. But unlike in North America or Europe, Chinese networks do not offer contract customers deep discounts on handsets, instead requiring a substantial up-front payment, which is then refunded over the course of the agreement.

Analysts said the launch of the new models was “disappointing.”

“It’s not worth the price,” said Wang Ying, a Beijing-based analyst, adding that other smartphone makers, including South Korea’s Samsung and China’s ZTE and Huawei, are now well established as rivals of Apple.

Many domestically made smartphones are priced as low as $100.

“It will be increasingly difficult for Apple to improve its market share or compete with other producers at this stage under the current market environment,” said Wang.

Samsung, which has phones in a wider range of price points than Apple, is favored by consumers for its bigger screen, and some buyers say the inclusion of a stylus with certain models makes them more user friendly for character-based Asian languages.

It is also often comparatively cheaper. The Samsung S4, which is comparable to the iPhone 5, sells at around $670 on Amazon’s China site.

Samsung sold 15.3 million smartphones in the country in the second quarter, up from 12.5 million in the January-March period and accounting for 19.4 percent of the market, reports said.

China remains one of Apple’s largest markets due to the popularity of its various products, but its total Chinese sales in the most recent quarter slipped 14 percent from a year ago to $4.6 billion.

While iPhones are popular among the better-off, analysts believe current prices would need to drop substantially for Apple to seriously penetrate China’s middle-income market. The iPhone is currently offered in China only by smaller telecommunications companies.

The new iPhones were launched globally at Apple’s California headquarters Tuesday.

Apple also held a media event in Beijing on Wednesday, fueling speculation that a deal with China Mobile, the country’s biggest carrier, was to be revealed.

But there were no major announcements at the launch event. Media invitations were limited and dozens of overseas and Chinese reporters were blocked from the venue, at one point surrounding Apple’s press officers to voice a barrage of complaints.

“Apple talks a lot that it highly values the China market, but look at the way they handle the briefing,” said one uninvited Chinese journalist.