Apple iPhone falls flat in China on opening weekend: Lost in translation?

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apple-iphone-falls-flat-in-china-on-opening-weekend-lost-in-traIt's a concept that Apple (AAPL) is not that familiar with of late: failure. China Unicom, the service carrier that launched Apple's iPhone in China last week, reported it had signed up an anemic 5,000 new users over the weekend, a marked departure for a product that has enjoyed blockbuster launches in the United States.

Broadpoint AMTech analyst Brain Marshall wondered whether there might have been a translation error, but both Bloomberg and Reuters were reporting the same numbers from China Unicom.

"If it's true, it's pretty disappointing," Marshall told DailyFinance. "I would have expected a bigger splash over the weekend."
"There is a gray market of unauthorized handsets there as well, which may have contributed to it," Marshall added. "But I don't have any doubt about the iPhone being successful in China."

The lackluster sales demonstrate that vast swaths of China's 710 million-strong mobile-phone base cannot afford the device, launched last week at some 1,000 "points of sale."

Nevertheless, after a Unicom shareholders meeting in Hong Kong today, China Unicom President Lu Yimin told reporters that the prices of the handset are not expensive.

Apple could try aiming lower ... but probably won't

As previously noted, the cost of the phone is prohibitive for many in a country where the the per capita GDP is about $5,400. The state-owned China Unicom's non-service bundled iPhone is going to start at $732. Meanwhile, the most expensive data plan is going to cost over $3000 per year.

"At the end of the day, Apple is a high-end consumer products company," Marshall said. "The average person in China isn't as wealthy as a person in a developed country." He added that it would make sense for Apple to try to market a lower-priced product in the Middle Kingdom, but he doubts it will, because it hasn't been the company's strategy in the past.

In another problem, the Chinese iPhone can't take advantage of Wi-Fi hotspots, despite the fact that China's quasi-communist central government lifted restrictions on Wi-Fi in May.

PC World had reported that iPhone sales got off to a slow start on Friday night, the first day they were available. "Smog hung in the Beijing air as buyers filled about two-thirds of an outdoor sales queue set up at a shopping mall. Beijing's first rain in weeks fell on an overhead canopy during the event," the website reported.

Still, Marshall believes the iPhone will eventually be a hit in China. "It will take a little bit of time," Marshall said, "but they'll get there."
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