Why There Are Small Lines For The iPhone 5 Launch In China

Business Insider

Apple's stock has been slammed today.

Early on, many people attributed the drop to a tepid turnout for the launch of the iPhone 5 in China.

The weak turnout for the iPhone is probably being misinterpreted, says Gene Munster at Piper Jaffray.

There are three reasons for small lines:

  1. Apple is using an online reservation system to prevent chaos. When it launched the iPhone 4S, so many people showed up to buy the phone there were riots. It forces people to register online to buy the iPhone, which is muting the frenzy.
  2. Apple is selling the phone in more places. Apple has twice as many distribution points for the iPhone 5 in comparison to the iPhone 4S. It's also on two carriers instead of one.
  3. Pre-orders were strong. There were 300,000 pre-orders compared to 200,000 for the iPhone 4S, which limits turnout.

All that said, there is another reason for concern for Apple. It has reportedly cut its iPhone orders for the first quarter of next year. This suggests iPhone demand is weaker than the company expected.

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