An Epic Fail: Only 5 iPhones Sold in Two Weeks by China's Largest E-Tailer
December 3, 2009 1:45 PM
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China Unicom's e-commerce partner Taobao.com has only been able to sell 5 iPhones since launch.
(Source: China Unicom)
To say that the iPhone is a flop in China is to put it mildly
China is arguably the world's biggest potential electronics market. If you can make a product that's a big hit with Chinese consumers it's almost as big a deal as a hit product in the U.S. -- and China's buying power is expected to only grow even more in the near future. Thus optimism was high when the
iPhone finally launched in China
However, in the time since, the iPhone has proved an epic flop in China even as Chinese telecoms try to defend their weak sales. China Unicom, the phone's carrier
only managed to sell 5,000 handsets
in the phone's first few days, far less than at equivalent launches in the U.S., UK, France, and Germany. While the telecom says it is satisfied with the phone's sales performance, the numbers are disappointing for a phone that has burned up international sales charts.
One major problem is price. The phone is available in China for 6,999 yuan, or $1,024 without a contract, but can be purchased much cheaper in Hong Kong's so-called "grey market". The grey market cost in Hong Kong is approximately $800. Sales were also hindered by the
exclusion of Wi-Fi from the phone
, following China's ban on the standard, which it was trying to replace with its own standard. Since May China has begun reallowing Wi-Fi, but new Wi-Fi-ready models still aren't available yet in China.
The epic failure of the phone in terms of sales is epitomized by the
sales figures just released
by Taobao.com, the nation's leading e-tailer and only firm besides China Unicom authorized to sell iPhones inside China. According to
IDG News Service
, since the phone launched on the site on November 22, only two 8 GB models were sold, three 16 GB, and no 32 GB models. That's right -- in an increasingly prosperous and tech-hungry nation of over 1 billion, the country's largest E-Tailer has only been able to sell
In its report
says that difficulties with the app store may also be partially to blame for the phone's dismal sales. Explains the report, "Credit cards are increasingly common in China, but their holders rarely use them to make small payments via mobile phone, local consultancy Analysys International said in a research note. Credit card penetration also remains low among young people of the sort that would like the App Store, it said. Many Chinese make payments via mobile phone but do so with prepaid cards sold by local carriers. The App Store will need to add new payment options and more localized content to win more users in China."
China Unicom still hasn't given up on the struggling phone. The company just launched 3G services last month and currently has around 1 million total subscribers. The company hopes that the iPhone will help drive over
1 million new subscribers per month
to the next-generation network service. Currently the company has over 150 million subscribers on its older networks. The company is aiming for 10 percent of its 3G subscriptions to be iPhones by three years from now.
In South Korea the iPhone enjoyed a much more enthusiastic launch last week with 60,000 online orders. That number looks especially pretty when compared to the Chinese total of 5 orders.
Earlier this year, before the launch of the phone, the iPhone made headlines in China for a far different reason. An employee at Foxconn, a hardware partner of Apple's, reportedly was
beaten and tormented
by company security officers after loosing a prototype of a next-generation iPhone. After the ordeal the employee committed suicide. The company has since
paid the family of the victim $52,000
and dismissed several employees.
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An Epic Fail?
12/3/2009 5:15:28 PM
Don't place too much stock in the new Unicom store site on Taobao >
The real iPhone sales action on Taobao.com is in secondary market. 100Xs the iPhone sales volume versus the Unicom site >
China Unicom will almost certainly adjust their iPhone marketing and price/plans. They have no choice. China Unicom has already taken delivery of a large number of iPhones and the rumor is that they've made a contractual commitment to buy 5 million units ($1.46 billion) over the next 3 years.
The iPhone price drop may come when the
(who really knows?) WAPI/WiFi iPhone model for China Unicom is introduced. This may not happen for 3 to 6 months. At around the same time (Spring/Summer 2010) Apple and China Mobile may finally reach a deal on a low-price 2G (EDGE) iPhone. This "2G" model won't compete
against China Mobile's TD-SCDMA 3G and nor against Chna Unicom's WCDMA 3G (Apple does have a
exclusive w China Unicom).
China Unicom should take a look at Hong Kong Planet 3's new DBS Visa payment plan for iPhone - No deposit required and very modest monthly payments to buy the iPhone. Not all will qualify, but it makes iPhone very affordable and eliminates the high upfront deposit required by China Unicom.
Regarding credit cards (lack thereof) in China. I agree with the point made in the article. China Unicom and Apple need to come up with alternative means to pay for apps/games on the App Store. This may already be in the works. China Uincom recently contracted with Tencent and Alibaba to develop e-payments systems (Alipay and Tenpay) for mobile subscribers. A new payment mode somehow needs to be incorporated into iTunes to enable those w/o credit cards to buy apps/games. Music via iTunes in China is likely a lost cause.
~ Dan Butterfield
RE: An Epic Fail?
12/9/2009 5:09:39 PM
Confusion reigns. There are two conflicting reports out today focusing on iPhone sales in China after the first 40 days (launch-to-date). Marbridge Consulting claims that sales were 10,000. The second report on Sohu (reposted on many tech sites) states that China Unicom sold 100,000 iPhones in the first 40 days. Both reports point to China Unicom as the source of data. One of them is obviously wrong (missed a zero). Readers? Anyone know which source has the correct numbers? I’ve sent e-mails to Marbridge and China Unicom requesting clarification.
Here’s the essence of the story from Sohu using the 100,000 number:
China Unicom Chairman and CEO, Chang Xiaobing was in Hong Kong yesterday, and sat down for an interview with the media. The subject of iPhone came up and Chang Xiaobing gave an upbeat account that countered previous press reports. full post >
"Folks that want porn can buy an Android phone." -- Steve Jobs
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