Those encouraging Apple to introduce a less-pricey iPhone to compete against Android in places such as China have even more ammunition.
In a David and Goliath tale, a tiny Chinese company armed with a sub-$100 smartphone is outselling Apple’s iPhone, prompting some local observers to wonder whether the California-based gadget maker can ever overcome inexpensive rivals.
From analysts to former Apple CEOs come recommendations that the company do more to attract China’s middle class, now drawn to Android devices. While Apple reportedly considers offering a cheaper iPhone starting at $99 later this year, the Android-based Coolpad is already outselling the iPhone in China and at one-fifth the price of current iPhones…
According to Bloomberg, the Coolpad sells for less than $99. Its maker, China Wireless Technologies Ltd., is expecting 28 million sales, a 40 percent increase over 2012.
Meanwhile, Apple searches for an answer to the Chinese puzzle, the company’s standing dropping to six from fourth-place.
Coolpad has “had strong sales volume and revenue because our company is focused on the low end of the Chinese market,” China Wireless finance chief Jiang Chao told Bloomberg.
Apple is “unlikely to rank high as long as the general level of affluence in China is low,” Singapore-based analyst Magdalene Choong of Phillip Securities, told Blomberg.
And this is Verizon finance boss Fran Shammo and his take on why 50 percent of iPhone activations on the Verizon network during Q4 2012 were older iPhone 4/4S models (via WSJ):
You had a very low entry point for people to come in on an iPhone that quite honestly never had that ability on the Verizon Wireless network before.
It is a price-point issue for consumers.
And Piper Jaffray’s resident Apple analyst Gene Munster:
Perhaps we’re getting to the last third of people who are buying smartphones, and they’re more price-sensitive.
Earlier this month, former Apple CEO John Sculley said the company needs to price products “that the emerging middle class in Asia, for example, can afford”.
Sounds good.
Another excuse for a more affordable iPhone: while overall smartphone shipments are expected to increase by 28 percent this year, in China, smartphone sales are predicted to increase by 44 percent.
As we reported in November, the market for inexpensive phones could double by 2016, according to NPD. According to Gartner, as the number of cheap smartphones increase, the room for high-end products, such as the iPhone, could decrease.
Even more reason to tune in when Apple releases its fourth-quarter results later today.
If the company does make an announcement about its plans for China, including a possible inexpensive iPhone, “it will change a lot of market dynamics,” one Hong Kong trader said.
Do you think Apple needs a sub-$200 no-contract iPhone that doesn’t use 2010 components in order to curb the rumored growth slowdown on the high-end?