China Mobile Ready to sell iPhones Right out of the Gate but Pricing and Subsidies remain Unknown Factors
Apple will be releasing the iPhone 6 in two models covering both 4.7 inch and 5.5 inch displays tomorrow. According to a new report out of China, it will be the first time that Mobile China will be able to compete with China Unicom and China Telecom out of the gate with new Apple products. Analysts believe that the iPhone 6 will bring more 4G subscribers to the operators, but it also makes the competition more intense among the three major operators by the synchronous sales. The report further revealed selling prices and more.
A leading Information and communications technology (ICT) website in China states that "Apple has recently issued an invitation, the iPhone 6 will be released in America on 9th September, which will also announce the specifications, price and pre-sale, launching time and available market of the new device. However, according to the estimation of media in Hong Kong, the official price of iPhone 6 will roughly be" as follows: For the 4.7 inch iPhone model: US$799, $899 and $999. For the 5.5" model: US$949, $1049 and $1149.
The prices would seem to be a little high and so there's likely to be a positive surprise to the downside tomorrow. In light of Apple's competition, especially in China, it would be hard to believe that Apple would sell their new iPhones at such stiff price levels. Xiaomi has rocketed to the number one position in China for four consecutive months and is holding at 31% market share. Samsung and Huawei currently hold second and third spots in the smartphone race. If Apple is to remain competitive in China, expect sharper prices than those assumed by the Hong Kong press.
Yet beyond pricing, the one key factor that all will be watching for over the coming days and/or weeks ahead in China is whether or not subsidies will be dramatically curtailed. We reported on this issue in late August in a post titled "The Issue of Smartphone Subsidy Cuts is heating up in China." Yet the new report from China today states that "subsidies for Apple will not shrink sharply."
That would be great news for Apple in order to boost sales in China for 2014. Yet the subsidy issue isn't going away and in fact the Wall Street Journal has a report on this very issue this morning titled "New iPhone Faces Risk as Carriers Phase out Subsidies."
There's no doubt that cutting subsidies will hurt all of the major smartphone players (especially Samsung). Yet dropping subsidies for premium smartphones isn't going to be good news for the carries either if all they sell is bargain basement smartphones. If just a single carrier decides to keep the subsidies alive, they'd gain all the premium smartphone business which carries through to the enterprise. That's really playing Russian Roulette in my view and I'm not sure they'll cut the subsidies as drastically as some believe. So while cutting subsidies could be an issue for 2015, for now we're likely to see subsidies remain alive and well for this holiday season - at least in the US and Canada. Yet as far as China goes, it remains an unknown factor.