Apple Inc. (AAPL) iPhone 5 Not Popular In China: Beijing Firm

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Apple Inc. (AAPL) iPhone 5 Not Popular In China: Beijing Firm

Apple Inc. (NASDAQ:AAPL)’s iPhone 5 will be launched in China on Dec. 14, 2012. Based on a survey conducted by T.H. Capital, LLC, a Beijing based firm, sales should be low. The senior analyst at the firm, Tian X. Hou, believes the sale of iPhone 5 is unlikely to be successful in China due to the following reasons:

1) Users are showing less interest in iPhone 5 compared with iPhone 4/4S and only 14% of those surveyed said “yes” for potential purchase.

2) Apple’s sales channel in China has room for better optimization of sales and service.

3) High price of iPhone 5 turns people away. The initial pre-order sales and open market sales are weaker than that for iPhone 4/4S. Based on their calculation, Tian believes that the sales volume could reach 12.2M, vs. iPhone 4/4S at 17.7M.

Lack of enthusiasm about iPhone 5 –

IPhone 5 is a high profile and well known product. However, compared with the launch of iPhone 4/4S, iPhone 5’s upcoming launch has received less attention and interest from the China market. Based on Tian’s monitoring and analysis of 16,700 Weibo users’ comments, he believes that the enthusiasm level towards Apple Inc. (NASDAQ:AAPL)’s iPhone 5 is much lower than that for iPhone 4/4S . IPhone 4/4S was more welcomed by Chinese users.

The survey showed that users’ attention level toward iPhone 4/4S was 4X that for the iPhone 5 three months before the launch of the products in the US, and 3.5X two months before, 3X a month before, 1.5X one month after the launch and 1.8X two months after.
The overall weakness in users’ enthusiasm level could be a leading indicator that the iPhone 5 may not sell as well as iPhone 4S in China.

Limited number of people showed willingness to buy iPhone 5

In addition to a low level of enthusiasm, the level of willingness to buy the new phone is also low. Only 14% of surveyed said “Yes” to purchasing an iPhone 5, vs. a majority of people who said “No” or “Not Sure” when asked whether they will buy the iPhone 5,
based on their survey.

The majority of the potential buyers may not be existing iPhone users, but rather users of declining brands such as Motorola and Nokia Corporation (NYSE:NOK). Among the current Apple Inc. (NASDAQ:AAPL) iPhone 4/4S users, only 12% said they will buy the iPhone 5, while Motorola is at 28% and Nokia at 17% and other brand users at 20%. For the popular Samsung phone users, they showed less interest in switching their phones.

The major reason for existing iPhone users not planning to buy the iPhone 5 is that the appearance and functionalities of the new iPhone are too similar to the iPhone 4/4S to feel the difference.

Pre-sale / pre-order of iPhone 5 is sluggish compared with iPhone 4/4S

Finally, the firm has interviewed both mobile operators and sales vendors, and the feedback for initial sales of the iPhone 5 in both channels were weak compared with that of the iPhone 4/4S sales in the same phase of product launch.

Their main feedback was that the volume of pre-sale reservations is weak for iPhone 5 compared with the iPhone 4S. According to open market vendor interviews, sales in China’s open market are also lukewarm and merchants have no incentive to stock up inventory of the iPhone 5 for future sales.

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