200,000 and Growing: China and the New iPhone Market

It is quite possible the China has just announced itself as the next major player in the iPhone market with the possibility to outconsume the U.S.'s demand for the smart phone in the ear future.  As the numbers begin to be solidified from the sales arond the recently released iPhone 4 in China there looks as though the anticipation as to how the iPhone would be received has exceeded even the more liberal estimates.

The pre-orders in China for the iPhone 4 have pushed past the 200,000 mark, forcing China Unicorn to actually put a hold on many of the internet orders.  This number is a major jump from last year's release of the iPhone 3Gs where only a 100,00 units were sold in the span of six weeks.  Right now 60,000 users have received their iPhone and the number only expect to rise.

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The contracting for the iPhone 4 in China is modeled after the single provider character of the Apple / AT&T relationship in the U.S.  China Unicorn stands as the only distributor of the iPhone and is now coming up against other companies in what is going to emerge in China as a new form of the 3G wars.  In response to previous versions, amongst other technological developments, the Chinese government had banned Wi-Fi.  This bar on wireless internet brought a new focus on 3G networks and allowed China Unicorn to actually shrink the data rates.  Now that Wi-Fi is going to be made available this may indicate an increase in data costs, but this is debatable.

The huge surge in iPhone purchasing around China is likely because of the price differential between this new release of the iPhone 4 and last year's iPhone 3Gs.  The iPhone 3Gs held a gigantic price of 6,999 yuan, which can work out to about $1,044.43 in the most recent currency conversion.  After the conversion the 16 GB iPhone would cost about $739, while the 32 GB counterpart hits at around $887.  This is significantly more than the U.S. models with or without AT&T subsidies, and so is the service plan, but it is still a major improvement for Chinese consumers.

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The success of the iPhone 4 in China may also indicate a general shift in the patterns of standard consumption as more people are willing, and able, to shell out money on non-essential luxuries like expensive smart phones.  If this pattern continues then it will begin to look as though the iPhone consumption of the U.S. will no longer be the driving force for Apple policy.

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