Cheap iPhone looks too pricey in worlds biggest market

Written by Reuters | Beijing/Singapore | Updated: Sep 13 2013, 02:02am hrs
The worlds biggest public company and the worlds biggest country are at loggerheads over the price of a phone. Apples new plastic-backed iPhone 5C will sell for 4,488 yuan ($730) China, almost $200 more than the US retail price of $549 and only 800 yuan ($130) less than its top-of-the-line sibling, the 5S.

The pricing of what was expected to be a cheap model aimed at growth markets such as China and India has not only stumped investors, but also Apple aficionados in China, a country of 1.4 billion people and the worlds largest smartphone market.

My original estimate of the 5C price was around 3,000 yuan, but more than 4,000 I think for a budget version the price may be a little expensive. I dont think I can buy one, said Liu Donghai, a 25-year-old chemical engineer.

If the 5S is around 5,000, then its similar to the already-released 5 and 4S. I would accept this, Donghai added.

Apple, whose market capitalisation of $449 billion makes it the worlds most valuable publicly traded company, unveiled the two new handsets at an event at the companys headquarters in Cupertino, California, on Tuesday.

For the first time, it held a launch event in Beijing hours later on Wednesday, a move seen as underscoring the importance of the Chinese market.

New Apple product releases tend to generate a great deal of buzz, but the 5Cs reception in China, where fans have been known to queue for days for new products, was lukewarm at best.

The iPhone 5C is so expensive. Originally I absolutely planned to buy it, now the price makes me uncomfortable. Isnt it just an iPhone 5 with a plastic back said Sina Weibo user Shangzhiruixin.

The phrase iPhone 5S was the most popular search term on Sina Weibo, Chinas most widely used microblogging service, on Wednesday, while iPhone 5C did not appear on the top searches list.

Other users questioned why anyone willing to fork out well over 4,000 yuan for a smartphone would not just pay a bit more for the premium 5S model. But others believe that the 5C makes sense in an increasingly competitive smartphone market, where the cheaper the handsets the more bitter the fight for dominance.

Apples share of the China smartphone market slipped to 5% in the second quarter, according to research firm Canalys, trailing not just Samsung but also the

likes of Lenovo Group, ZTE, Huawei Technologies and Xiaomi Technology. Even though Apple has a lower-end iPhone now, its price is still considered mid-end in China and not low-end, said Sandy Shen, a Shanghai-based analyst for Gartner.

Around half of Chinas smartphone shipments are in the 700-1,500 yuan range, said Shen, but competing on those prices isnt an attractive prospect for Apple.

Considering Apples old rival Samsung and domestic players such as Huawei, Lenovo and Coolpad all have phones in that category, Apple will still lose out in market share in these key segments, she said.