Looking beyond China's record-breaking iPhone 5 sales

Looking beyond China's record-breaking iPhone 5 sales

Summary: iPhone 5 sales in China hit 2 million over the first weekend, but the glamorous result is also accompanied with huge unprecedented trade-in from retailers and price hike from telecommunication carriers.

TOPICS: iPhone, Apple, iPad, China

Apple's iPhone 5 sales in China hit 2 million over the first weekend, but this result came with huge unprecedented trade-in offers from smartphone retailers and price hikes from telecommunication carriers.

The trade-in allowance
Retailers in China have never been willing to purchase back old models of Apple products in exchange for the sale of new iPhone units. However, for the iPhone 5, the trade-in allowance has been so generous.

The country's biggest electronics retailer, Suning Appliance, announced it would offer discounts on the purchase of the new iPhone for customers who sell their old iPhone 4S, iPhone 4, iPhone 3GS, iPad 2 and iPad 1 to the store. Subsidies for the iPhone 4S went as high as 2,400 yuan (USUS$380), and even used iPad 2 units could see rebates of some 1,500 yuan (USUS$240).

Considering the huge popularity of iPhone 4 sales in China and many of these 12- and 24-month instalments on these old iPhones are ending, many Chinese will not miss the opportunity to trade in their old handset for a new one, particularly when the trade-in policy is a new offering for these customers.

Telcos reduce subsidy on iPhone 5
China Unicom and China Telecom, two of the three largest telecommunication carriers in China, launched the iPhone 5 on the same day last week, but offering a lower subsidy over previous models.

Chinese telcos are no longer willing to become the "sucker" to pay huge amount of subsidies for iPhone 5 sales this time, as previous launches of iPhones in China--though helping to bring in customers for the carriers--had led to the loss of tremendous profits for the carriers, according to a Sina New report.

In the two-year iPhone 4 contract offered by China Unicom years ago, customers only needed to pay a total of 6,864 yuan (US$1,080) to enjoy a substantial nunber of free phone calls and traffic services in addition to the new handset. But the total cost for a similar plan of the iPhone 5 now has been increased to 8,779 yuan (US$1,390)--a climb of nearly 30 percent.

The change in sales tactic is due to the choice of smartphones in China, which was still small years ago. With the various new launches of products these days by companies like Samsung, Huawei and Nokia, telcos prefer to offer a lower subsidy for iPhone 5 so they can subsidize the cost of five other cheaper smartphones to attract new customers, an industry expert said in the report.

Topics: iPhone, Apple, iPad, China

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  • wait, what?

    So they sold 2 Million Phones but likely took a giant number of iOS devices odd the market. And this is a good thing?

    Sorry but, 2 Million is considered a disappointment.
    • Spin Zone

      What do you expect? Typical trying to make Apple seem so much better despite the facts. I guess this is why their stock dropped after the China release cause they had "record breaking" numbers in China? Then why did they reduce production of iPhone 5's just recently as well? Make any sense? There are some 200 million+ cellphones in China, the iPhone 5 has been out for 3 months although just released in China and only 2 million sold the first weekend?
      Dave Heller
    • This is the shadow market for low cost Apple product

      Not everyone can buy an Apple product in China. There is a market for second hand Apple products. That is why there is generous trade-in offer for the used phones. When someone pulls out an iPhone, no one asks him/her if it is new or used. An old iPhone still has the prestige vs a local brand. A pre-owned iPhone is essentially a low cost entry to Apple product in emerging markets.
      Rsdofny Us
      • The distribution model is not that much different from the US

        In the US, carrier subsidizes $400 of the new iPhone cost to allow the phone to be sold at $200. In China, it appears that the iPhone sells for $600 and has trade-in for $400. The net cost for new iPhone purchaser is about $200. But the carrier will take your old phone and sell them in the secondary market to coup part of the costs. What is the difference?
        Rsdofny Us
  • Fake Sales Numbers Never Lie

    ok so lets tell all the facts. Apple is in trouble in china, they clearly have been losing ground there, so they cooked up a plan to make sales look better....how....by offering a buyback program ...T,hey know that the 2 year contracts are about to expire and they need some good press so they offer to buy back iphones ipads whatever and give huge money back like 400.00 if you purchase a new iphone.. so now they can claim 2 million units sold. HUMMM
  • Record breaking ??????

    Are you for real.... Record breaking China has 4x the population as the US? Than mean to match the US reception 5 Mil (in opening weekend) they should have sold 20 mil. They sold a tenth of that. Very bad sales numbers. Also this is from they country were they are being produced. To bad apple China doesn't like you very much.