"Only A Dozen Customers Showed Up To Buy iPhones" - Apple's China Expansion Already A Flop?

Tyler Durden's picture




 

In an age with no earnings growth, the most important thing is the "story", primarily applicable to early-stage tech stocks, where the only thing that matters is growth potential if not present or near-term revenues, and certainly not earnings. Unfortunately for some more mature companies like Apple, that have lost their innovative flair and creative genius (with the passing of Steve Jobs), they too have no choice but to revert to the "story" meme, such as the one that Apple's recent and much delayed foray into China with the help of China Mobile, and its 750 million users, would result in a surge in revenue: after all just think of the millions of potential customers - so easy a 5 year old can visualize it. Unfortunately for Apple, even though its stock has gotten a recent boost as a result of the pick up in hopes of what China's addressable market may mean for the company's top line, the story is a bust.

The NYT reports that if judging by the initial response to Apple's expansion into China, then this too latest Apple "rollout" is set to be a major flop. To wit:  " Apple has been counting on a long-awaited agreement with China Mobile, the world’s largest cellular operator, to reverse its fortunes in China. If the muted reception Friday, when customers were finally able to buy iPhones from China Mobile, is any indication, the companies may have to work harder to whip up enthusiasm. Instead of the round-the-block lines that have greeted Apple product introductions in China and other countries in the past, only about a dozen customers showed up to buy iPhones at the opening of a store in Beijing — despite the presence of a special guest, the Apple chief executive, Timothy D. Cook."

Why the dramatic cooling toward what was once the, pardon the pun, coolest brand around? Simple: Apple missed its window of opportunity.

Apple was once an iconic brand in China, where its phones have been sold for years by the second- and third-largest mobile operators, China Unicom and China Telecom. But it has lost ground to the market leader in smartphones, Samsung Electronics, and cut-price domestic rivals.

 

Its market share has fallen into the single digits.

A testament to how much the company is betting on its China expansion was Tim Cook’s trip to Beijing. Unfortunately not even his presence did anything to stir spirits and drum up any interest in Apple's latest (NSA-endorsed) creation.

“Apple used to be the must-have, aspirational brand for all wealthy and middle-class Chinese consumers,” said Shaun Rein, the managing director of CMR, a market research firm, and the author of “The End of Cheap China.” “But over the last year, there has been a real deterioration of the Apple brand.”

 

Apple is just the latest of a number of American technology companies to fall on harder times in China. Google was once a leading search engine in China, but then lost ground to a local rival, Baidu. Motorola was once a power in mobile phones in China, but then lost ground to Nokia of Finland — which, in turn, yielded leadership to Apple, Samsung and others. More recently, Cisco Systems, the maker of telecommunications network equipment, said that sales in China had been hurt by disclosures of surveillance by the United States National Security Agency.

Well if you must blame Big Brother go for it. After all  there is a "story" to defend.

And then there is the whole pricing issue.

On Sina Weibo, a microblogging service, some users complained about the pricing of the iPhone 5S by China Mobile, saying they could get smuggled versions for less money.

 

“The model is the same,” one contributor wrote on Weibo. “I want the cheaper one.”

Even if enthusiasm picks up, the reality is that the bulk of the new user pick up will not be incremental growth but switchover from other networks:

in addition to the agreement with Apple, China Mobile has another big advantage over its two rivals — the fast new network it is building, using so-called 4G technology. China Unicom and China Telecom are still relying on the slower, previous generation technology.

 

But this is a mixed blessing for Apple, because analysts say some China Mobile iPhone sales will come from customers switching from China Unicom or China Telecom. As a result, estimates of iPhone sales by China Mobile, which have ranged from less than 10 million annually to more than 30 million, might overstate the overall benefit to Apple.

 

Over all, including the effect of customers switching from rival networks, Mr. Zhang said he expected Apple to sell about one million more phones a month in China as a result of the deal, on top of the roughly three million it has been selling.

In conclusion, "An Apple spokeswoman, Carolyn Wu, said the company did not plan to report first-day sales figures." One can see why.

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Fri, 01/17/2014 - 08:59 | 4340398 Racer
Racer's picture

They rather buy gold than iCrapple products

Fri, 01/17/2014 - 09:16 | 4340429 zerozulu
zerozulu's picture

Apparently no apple cult in china

Fri, 01/17/2014 - 09:21 | 4340439 max2205
max2205's picture

No worries it was at one one those Best Buys that's closing soon..  :)

Fri, 01/17/2014 - 09:26 | 4340455 NoDebt
NoDebt's picture

We no like you NSA phone.  Go home, lound eye.

Fri, 01/17/2014 - 09:37 | 4340490 eclectic syncretist
eclectic syncretist's picture

Apple should focus more on making a better product than Samsung and less on marketing to and depending upon a Kardashian culture.

Fri, 01/17/2014 - 10:13 | 4340612 old naughty
old naughty's picture

Perhaps they don't like back-dooring much?

Fri, 01/17/2014 - 10:25 | 4340656 Handful of Dust
Handful of Dust's picture

The 'special' guest should have been Jason Beeper or Trim Karbashian...the little people would have showed up in droves to take a peek and get an autograph.

Fri, 01/17/2014 - 11:22 | 4340862 666
666's picture

Perhaps potential customers couldn't find their way to the Apple Store due to the smog.

It's the weather, stupid!

Fri, 01/17/2014 - 21:45 | 4342967 mjcOH1
mjcOH1's picture

But the line was around the block next door to buy the jPhone, product of 'liberated' IP.

Fri, 01/17/2014 - 10:27 | 4340660 DOT
DOT's picture

Dammit! I told Tim to avoid Retail- it's a fuckin' dead end.

Fri, 01/17/2014 - 11:16 | 4340830 geminiRX
geminiRX's picture

The IPhone 5 has the crappiest battery life ever (apple confirmed that 8hr is normal when I complained) and cartoonish iOS7 is the most retarded phone OS ever.... Next phone is not an apple - they lost my business

Fri, 01/17/2014 - 09:46 | 4340513 Xibalba
Xibalba's picture

iSpy device is no longer welcome 

Fri, 01/17/2014 - 09:26 | 4340456 Occident Mortal
Occident Mortal's picture

"Apple missed its window of opportunity."

 

Hitting the nail where it hurts.

Fri, 01/17/2014 - 12:28 | 4341184 Kirk2NCC1701
Kirk2NCC1701's picture

Thus creating a "Window of Opportunity" for the Microsoft.  Bill Gates must be smiling today.

Reminds me of the recent TV add: http://www.youtube.com/watch?v=wE7AQY5Xk9w

Where the woman's cool voice is the same as for the Buy The Dip clip on YT.

Fri, 01/17/2014 - 10:23 | 4340651 jerry_theking_lawler
jerry_theking_lawler's picture

1, They already have Apple 'knockoff' iPhones.

2. There is a better product out there.

3. They don't have the cash to buy the overly expensive iPhone.

Fri, 01/17/2014 - 14:57 | 4341740 TheReplacement
TheReplacement's picture

Perhaps the Chinese read the news.  'NSA spies using Apple products to read your data and peep on your underage kids undressing'

Good for them.  Here's to Apple and the rest of the traitors spontaniously combusting.

Fri, 01/17/2014 - 14:59 | 4341752 Exponere Mendaces
Exponere Mendaces's picture

Fuck Apple.

https://www.blackphone.ch/

About Blackphone:

Blackphone is unlocked and works with any GSM carrier. Performance benchmarks put it among the top performers from any manufacturer.

It has the features necessary to do all the things you need, as well as all the things you want, while maintaining your privacy and security and giving you the freedom to choose your carrier, your apps, and your location.

The tools installed on Blackphone give you everything you need to take ownership of your mobile presence and digital footprints, and ensure nobody else can watch you without your knowledge.

You can make and receive secure phone calls; exchange secure texts; exchange and store secure files; have secure video chat; browse privately; and anonymize your activity through a VPN.

No word on how they deal with the baseband OS issue, although the core OS will be a security-toughened Android variant.

Fri, 01/17/2014 - 08:59 | 4340399 Temporalist
Temporalist's picture

Obama promised them all free phones so why buy one?

Fri, 01/17/2014 - 09:00 | 4340403 starfcker
starfcker's picture

off topic. anybody notice all the trolls that used to pop up out of nowhere (with a 3 week ZH history) now pop up out of nowhere with a 3 year ZH history?

Fri, 01/17/2014 - 09:02 | 4340410 Headbanger
Headbanger's picture

Yeah,  I notice there's been a big drop in the number of comments overall here in the past week.

 

Fri, 01/17/2014 - 09:05 | 4340413 new game
new game's picture

nsa roundup underway - see ya, got to answer the door...

Fri, 01/17/2014 - 10:08 | 4340589 Almost Solvent
Almost Solvent's picture

I still miss the rantings of Master Bates and Johnny Bravo.

 

Of course Francis is somewhere looking at this with Leo K and Robotrader.

Fri, 01/17/2014 - 10:32 | 4340683 DOT
DOT's picture

I too miss the rants. So in the nature of a substitute:

 

WOW!!! LOOK AT THOSE SOLARS!!!!!  JKS is on a tear, and there's more .....

Fri, 01/17/2014 - 11:03 | 4340785 overexposed
overexposed's picture

Harry Wanger was still my fave, that confounded and irrepressible Bull.

Fri, 01/17/2014 - 11:48 | 4341001 earnyermoney
earnyermoney's picture

Or Spalding Smailes, the CAT truck driver with all the latest trading strategies...

Fri, 01/17/2014 - 10:25 | 4340654 jerry_theking_lawler
jerry_theking_lawler's picture

bad economy so the 'funding' has dried up....you stop paying, they stop posting....

Fri, 01/17/2014 - 09:16 | 4340432 jballz
jballz's picture

 

Yeah just got tired of your ignorant bullshit and decided to speak up.

Fuckin retards overran gthe site about a year ago (yes I mean you) and been driving it into the toilet ever since.

Try not to be such a douche and we won't have to troll so much.

Thanks. Bitchez.

Fri, 01/17/2014 - 09:38 | 4340496 eclectic syncretist
eclectic syncretist's picture

Well aren't you a fuckin' rainbow in the morning??!!!

Fri, 01/17/2014 - 10:10 | 4340602 Almost Solvent
Almost Solvent's picture

Lighten up Francis

Fri, 01/17/2014 - 10:36 | 4340699 DOT
DOT's picture

A day without "juice" is a good day for FS

Fri, 01/17/2014 - 09:22 | 4340445 Harry Dong
Harry Dong's picture

Not sure about that, but I can say the shill quota is gettin' pretty high on the night shift.

Gives me something to look forward to the am coffee...reading comments from ppl smarter than me.

Fri, 01/17/2014 - 10:04 | 4340574 HedgeCock
HedgeCock's picture

Yes, it's called troling your own blog for clicks.

Fri, 01/17/2014 - 09:01 | 4340405 Max Damage
Max Damage's picture

The big line was at the store selling copy iphones for a tenth of the price!!!

Fri, 01/17/2014 - 09:01 | 4340406 Headbanger
Headbanger's picture

NSA spying technology killing Apple and Cisco sales abroad?  What a shock, huh!

Fri, 01/17/2014 - 09:03 | 4340411 doomandbloom
doomandbloom's picture

Not to worry....there is a new anti-NSA phone...called "blackphone"

http://rt.com/news/security-encrypted-smartphone-nsa-667/

Fri, 01/17/2014 - 11:15 | 4340823 sleigher
sleigher's picture

When it and Android are completely audited by third parties, then it may be a solution.  Until then it is from the frying pan to the fire.  Although, Zimmerman is a good guy and has given us some great tools in the past.  Still doesn't mean that hardware isn't owned by NSA.  

Fri, 01/17/2014 - 09:14 | 4340427 Skin666
Skin666's picture

Fuck you Apple, Verizon, Google, IBM, NSA and GCHQ

 

Whatever thou sow, thou shalt reap - The Bible

Fri, 01/17/2014 - 09:42 | 4340502 eclectic syncretist
eclectic syncretist's picture

You forgot to include MSFT in your list.

Fri, 01/17/2014 - 09:51 | 4340529 Skin666
Skin666's picture

Yep.

 

Fuck you Microsoft

Fri, 01/17/2014 - 10:33 | 4340685 sunnyside
sunnyside's picture

And you forgot AOL too, just for old time sakes.  Give them an FU too please.

Fri, 01/17/2014 - 10:37 | 4340702 Skin666
Skin666's picture

Fuck you AOL

 

 

Fri, 01/17/2014 - 10:42 | 4340724 Forward History
Forward History's picture

Surely RIM belongs on this list.

Fri, 01/17/2014 - 11:15 | 4340825 Not_Sure
Not_Sure's picture

That would be "RIM job". Different category.

Fri, 01/17/2014 - 09:10 | 4340418 Ban KKiller
Ban KKiller's picture

No mention of Android systems by name. Hmmmm....shrinking margins are a bitch. 

Fri, 01/17/2014 - 09:11 | 4340419 Paper CRUSHer
Paper CRUSHer's picture

.......could be due to the early release of ismog.

Fri, 01/17/2014 - 09:11 | 4340420 Rehab Willie
Rehab Willie's picture

Why buy the real thing when I can get the knockoff at 1/2 price next door.

Mon, 01/20/2014 - 22:21 | 4350216 Abbie Normal
Abbie Normal's picture

Not even half off, try one-tenth of the $800 price for a look-alike android phone that has a memory card slot and a swapable battery.

Fri, 01/17/2014 - 09:13 | 4340422 Dr. Engali
Dr. Engali's picture

Maybe... Just maybe... The people working in the factories making a few bucks a day can't afford the product they make.

Fri, 01/17/2014 - 09:17 | 4340435 Oldwood
Oldwood's picture

Or just can't stand to look at the crap anymore.

Fri, 01/17/2014 - 12:40 | 4341267 Chaos_Theory
Chaos_Theory's picture

Probably made a few on the side and kept that inventory off the books. 

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