How Will the iPhone 5 Do in China?

One of the questions that came out of the unveiling of the Apple Inc. (NASDAQ: AAPL) iPhone 5 is whether it can help the company's flagging fortunes in China, the largest wireless subscriber market in the world. Apple's share of the smartphone market in the People's Republic stands well behind Samsung, Lenovo and several others, based on a research report from IDC that covered the second quarter of this year.

The fabulous features of the iPhone 5 are not what will make Apple a success in China, although the new model might spur consumer demand. Apple has had trouble, off and on, with the largest carriers in China, led by China Mobile Ltd. (NYSE: CHL). Carriers in most other nations are willing to pay large sums for each iPhone - sometimes several hundreds of dollars per phone - and hope to make up that money and more through multiyear subscription plans. China's mobile carriers have resisted these fees in the past.

Apple must decide whether it will accept a margin reduction on the iPhone 5, if it wants a significant position in what may its most important market in the future.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, China, Consumer Electronics, Telecom & Wireless Tagged: AAPL, CHL