Rather than celebrating, though, the Chinese were raising their eyebrows over the cost of the new models — especially one that had been billed as a cut-price iPhone.
While many analysts had expected Apple to price the iPhone 5C at about $400 in an effort to attract new customers in mainland China, where the company has been struggling, it will actually go for significantly more.
Apple said on its Web site that the iPhone 5C would start at 4,488 renminbi, or $733, without subsidies from mobile operators. That is not far below the price of the new flagship Apple iPhone 5S, which starts at 5,288 renminbi. Both phones were officially announced in California on Tuesday.
“If you look at the price, it’s clearly a high-end phone, not a low- or even midrange phone,” said Jenny Lai, an analyst at HSBC in Taipei, referring to the iPhone 5C.
The price is about 33 percent higher in China than the full, unsubsidized $549 cost in the United States. Chinese carriers don’t generally subsidize the handset price for consumers but they often discount their monthly bills. So the eventual cost to consumers has plenty of room to come down.
But given that Apple has been losing ground to lower-cost rivals in China, some of which make smartphones that sell for less than $100, will the 5C be able to turn around the company’s fortunes there?
After the announcement, the stock prices of several Apple suppliers fell sharply, including that of Pegatron, a company based in Taiwan that is the main assembler of the iPhone 5C. Analysts said sales might fall short of expectations in China unless Apple lowered prices.
“If they had been able to get down in the $350 to $400 range, we would have seen a big bump in the fourth quarter,” said Francis Sideco, an analyst at IHS, a research firm. “They’ll still get a bump, but this would have accelerated it.”
Investors may also have been disappointed by the absence of an agreement to sell the phones through China Mobile, the biggest network operator in China, and the world, with 745 million customers.
Although China Mobile has been the biggest iPhone holdout, expectations of a deal have been fueled by the fact that the new iPhones are compatible with a technology called TD-LTE, which is employed in the next-generation wireless network that China Mobile is building. But that network is not yet operating.
The Telecommunications Equipment and Certification Center, an arm of China’s Ministry of Industry and Information Technology, posted a notice on its Web site certifying that it has approved iPhones for use on TD-LTE networks, a necessary regulatory step.
With sales of phones from Chinese companies like Huawei, Lenovo, Xiaomi, Yulong Coolpad and ZTE growing rapidly, Apple’s share of the Chinese smartphone market fell to 5 percent in the second quarter, according to Canalys, a research firm.
Chinese phone buyers are especially price-sensitive because of the way the market is structured. Although carriers in the United States and Europe generally provide upfront subsidies, disguising the true cost of the phone, Chinese network operators typically sell phones at full cost and then, in some cases, provide discounts on monthly bills.
The lower-price iPhone 5C will cost more than twice as much as rival devices like the Xiaomi Mi3, which starts at $327.
“By any standards, it’s a premium price,” Mr. Sideco said. “When you really look at it, they didn’t make a cheaper phone. They made a more expensive phone so that they could call the other one a cheaper phone.”
The iPhone 5C comes in a plastic case, and its hardware is nearly identical to that of the iPhone 5. The iPhone 5S has an aluminum body, a faster processor and a fingerprint scanner, as well as other features.
Article source: http://www.nytimes.com/2013/09/12/technology/the-surprise-in-apples-cheaper-iphone-in-china-its-expensive.html?partner=rss&emc=rss