Wed, Dec 17, 2014, 6:27 PM EST - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Apple Inc. Message Board

  • fp718591 fp718591 Jan 23, 2013 12:15 AM Flag

    Bloomberg, the smallest Chinese Phone maker out sold Apple, you have to read this

    Need for Cheap IPhone: Tech

    By Bloomberg News - Jan 22, 2013 6:01 PM ET.
    .

    Facebook Share

    LinkedIn
    Google +1
    9 Comments

    Print

    QUEUE

    Q

    ..



    Apple Inc. (AAPL) is being outsold in China, the world’s largest handset market, by a company less than 1 percent its size, highlighting how the lack of low-cost products limits the iPhone-maker in emerging nations.

    China Wireless Technologies Ltd. (2369) is one of four domestic suppliers outselling Apple in China with smartphones tailored to the budget of the nation’s budding middle class. Its Coolpad 8060 retails for 619 yuan -- or just under $100 -- less than 20 percent the price of the cheapest iPhone.

    China Wireless expects sales to rise 40 percent this year to 28 million phones, helped by low prices and new products such as fourth-generation handsets. Apple, whose smartphone has made it the world’s most profitable company, slipped to sixth place in China from fourth as it struggled to lure consumers earning an average of $577 a month.

    “Apple, with its current stable of products, is unlikely to rank high as long as the general level of affluence in China is low,” said Magdalene Choong, a Phillip Securities analyst in Singapore who rates the Cupertino, California-based company’s shares neutral.

    Apple, which reports earnings later today in the U.S., is trying to boost sales by opening more stores, adding an installment payment plan and seeking a handset deal with China Mobile Ltd. (941), the world’s largest phone company by subscribers.

    The company is also planning a smaller, cheaper version of the iPhone aimed at developing markets. The handset, costing somewhere between $99 and $149, would be introduced late this year at the earliest, a person familiar with the matter told Bloomberg News this month.

    Middle Class

    IPhones made up about 15 percent of all smartphones sold in the third quarter of 2012, down from 23 percent in the first three months, according to data compiled by Bloomberg Industries, citing market researcher IDC. Smartphone shipments may grow 28 percent this year, led by emerging markets.

    Apple “needs to adapt to where the growth is,” former Apple Chief Executive Officer John Sculley said in a Jan. 15 interview with Bloomberg TV. “It’s got to learn how to sell products that are priced for the price point that the emerging middle class in Asia, for example, can afford.”

    China smartphone shipments will rise 44 percent to 300 million units this year, driven by handsets costing about 700 yuan, IDC forecast on Dec. 17. The 619-yuan Coolpad runs on Google Inc. (GOOG)’s Android operating system and has a four-inch touchscreen display.

    “The low-end will get cheaper and better,” said Sandy Shen, a Gartner Inc. analyst in Shanghai. “If you talk about market share, then the high-end will get smaller and smaller as the market expands.”

    Declining Share

    The cheapest iPhone on Apple’s China website, an 8-gigabyte iPhone 4, costs 3,088 yuan. The latest iPhone 5 starts at 5,288 yuan. Carolyn Wu, a spokeswoman for Apple in Beijing, declined to comment on the company’s China strategy.

    As Apple’s share of China’s smartphone market declined, China Wireless surged to third place in the three months ended September, up from sixth in the preceding quarter, according to IDC. That was the first time the company entered the top five.

    Samsung Electronics Co. (005930) headed the list, helped by tie-ups with all three wireless carriers and sales of cheaper phones. The Samsung 7568 Galaxy smartphone costs as little as 1,299 yuan through China Mobile.

    The top five was rounded out by three other local vendors that have also overtaken Apple handset sales in China by offering devices at a fraction of the iPhone’s cost, according to IDC. Beijing-based Lenovo Group Ltd. (992) was in second place, while ZTE Corp. (000063) and Huawei Technologies Co., both based in the southern city of Shenzhen, ranked fourth and fifth.

    Unique Network

    “We’ve had strong growth in sales volume and revenue because our company is focused on the low end of the Chinese market,” China Wireless CFO Jiang Chao said in an interview at the company’s headquarters, also in Shenzhen. “Only Chinese companies like ours, ZTE, Huawei and Lenovo can develop these low-end smartphones.”

    Apple CEO Tim Cook visited China for the second time in a year earlier this month, meeting officials including China Mobile Chairman Xi Guohua. The carrier has 710 million wireless subscribers, or about 64 percent of the market. IPhones are only sold by China’s second- and third-biggest operators -- China Unicom (762) (Hong Kong) Ltd. and China Telecom Corp. (728) -- because China Mobile’s network doesn’t support the Apple products.

    China Mobile’s unique, domestically developed third- generation network would require changes to the iPhone. Samsung, based in Suwon, South Korea, stole a march on its U.S. rival by adapting its handsets for the carrier’s system.

    Old Ties

    China Mobile is testing a fourth-generation network that may enter commercial service later this year. The company said in September 2011 that Apple would produce an iPhone for the new 4G network. The two also need to agree on issues such as benefit-sharing, Chief Executive Officer Li Yue said last month.

    China Wireless, which was formed in 1993, has sold phones through China Mobile and the nation’s two other carriers for at least a decade. Those ties and experience give the company an edge over Apple, which entered the market in 2009.

    “We have cooperated with the operators for many years,” CFO Jiang said.

    Liu Ruju, a 27-year-old lawyer in Heilongjiang province, has been using a Coolpad Cheer for six months. He said the device doesn’t browse the Web as fast as he’d like, though at 658 yuan it offers features Apple can’t match, including the ability to use more than one SIM card.

    Two Lines

    “I have one line for work and one line for personal use,” Liu said. “The special things about this phone are that it’s cheap and dual SIM.”

    China Wireless shares jumped 74 percent in Hong Kong over the past year, four times the 18 percent gain in the benchmark Hang Seng Index. The company, called “kupai,” or “cool” in Chinese, has a market value of $675 million compared with Apple’s $470 billion, according to data compiled by Bloomberg.

    The shares are rated hold or sell by nine analysts tracked by Bloomberg, while two rate it buy. In the next 12 months, the shares are projected to decline to HK$2.40 from yesterday’s closing price of HK$2.50, based on analyst estimates compiled by Bloomberg.

    Share Sustainability

    “I still have some questions on the sustainability of those market-share gains, and whether they can turn those gains into profits,” said Lisa Soh, an analyst with Macquarie Group Ltd. in Hong Kong who rates the shares “underperform.”

    Apple’s earnings report tomorrow may show that fiscal first-quarter net income slipped 2 percent to $12.8 billion, according to analysts’ estimates compiled by Bloomberg. China Wireless by comparison is projected to report $39 million in net income for the full year 2012.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
 
AAPL
109.41+2.67(+2.50%)Dec 17 4:00 PMEST

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.