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Apple's new iPhone 5C struggles to satisfy in China, but bright spots remain

Michael Kan | Sept. 12, 2013
Some Chinese are complaining about the phone's high price

Before Apple announced its lower cost iPhone 5C, some had speculated the C could stand for China, a vital market for the company's future growth. But on Wednesday, consumers in the country appeared less than thrilled with the new smartphone amid expectations it would be far more affordable than the standard iPhone.

"Its much more expensive than what the previous information suggested, a big difference from what I thought," said 27-year-old Wang Qian, who was disappointed by the phone's lack of innovation. "All they've mainly done is provided more colors and raised the phone's performance."

Its caused some to question whether Apple needs to be more aggressive in China at a time when its rivals are fiercely competing in the market with their own affordable handsets.

The iPhone 5C will start at 4488 yuan ($728) in China when bought without a contract, making it only 800 yuan cheaper than its cousin, the iPhone 5S. The high price point surprised many, especially as it was almost double what some analysts had estimated the much-rumored handset could end up costing buyers.

Apple clearly wants to reach out to more customers, who are demanding a cheaper iPhone, said Teck Zhung Wong, an analyst with research firm IDC. But on Tuesday, Apple decided to only respond with a half measure in the form of a still pricey iPhone 5C, perhaps as a way to preserve the company's high profit margins and brand equity, he added.

"I think Apple could have landed a strong punch if they had priced it at $350 to $450, but they decided to hold back," Wong said. "It seems to me like a lost opportunity."

In China, Apple is already losing market share, with competitors including Samsung Electronics, Lenovo and Huawei Technologies selling a full range of Android handsets including lower-end models. Some of the nation's best-selling smartphones are much cheaper than the iPhone 5C, and can go for $80 to $150.

"The true cheap phone is going to be the iPhone 4S," Wong said. The new 8GB version of the iPhone 4S is priced at 3288 yuan in China.

The new lower-cost iPhone 5 will still draw its share of customers in China, who want an Apple device, and like the phone's different colors, Wong said. But some Chinese consumers will probably buy the marginally more expensive iPhone 5S instead, or look at Android alternatives, he added.

"I think it [the iPhone 5C] will give Apple's shipments a little bump, but not as much as previously expected," Wong said. "I'm not too impressed with the 5C to be honest."

The iPhone 5C's price, however, is not necessarily set in stone, and Apple could end up cutting its price in the future, according to analysts. In addition, the country's mobile operators are expected to help pad consumers' costs for the phone with carrier subsidies. So far, Apple partners China Unicom and China Telecom have yet to announce subscription plans for the phone.

 

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