Apple CEO Tim Cook boasts of record iPhone sales in China

Gregg Keizer
16 January, 2014
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Apple CEO Tim Cook’s claim today that the company broke iPhone sales records in China during 2013′s fourth quarter meant that the firm sold in excess of 10.4 million smartphones in the region, an IDC analyst said today.

“Although we haven’t released our total results, we sold more iPhone units last quarter in Greater China than ever before,” Cook said during an interview with CNBC earlier today.

In the interview from Beijing that also featured China Mobile’s chairman, Xi Guohua, Cook praised his new partner and commented on the importance of finally nailing down the carrier in a deal.

“This is a watershed day,” Cook said. “I see this announcement today as being one of those very key milestone in doing great stuff over the long-term for our customers, shareholders and employees.”

Cook was in China ahead of Friday’s launch of the iPhone on the country’s largest mobile carrier, which boasts an estimated 740 million subscribers. Apple and China Mobile announced their partnership late last year.

By saying that fourth-quarter sales in Greater China – a region Apple defines as Hong Kong, the People’s Republic of China and Taiwan – set a record, Cook acknowledged that the company moved more than 10.4 million iPhones before the China Mobile deal had much impact, said Kevin Restivo, an analyst with IDC.

“That’s our number for the previous high for iPhones in Greater China,” said Restivo, naming the first quarter of 2012 as the old record.

During that quarter, Apple said it sold 35 million iPhones worldwide, a number that since then has been beaten twice, first in the fourth quarter of 2012 (with 47.8 million iPhones) and then again in the first quarter of 2013 (37.4 million).

China Mobile started taking pre-orders of the iPhone on 25 December 2013. It’s likely those 2013 pre-orders were counted by Apple for the fourth quarter; the company has done the same before when it’s accepted pre-orders.

“China is by itself helping the world market grow, so to be a global player you have to succeed in China,” said Restivo about the importance of that market to Apple. “As a handset maker, it’s incredibly hard to succeed unless you fare well in China.”

In Apple’s most recently-reported quarter, which ended on 20 September 2013, Greater China accounted for 15.3 percent of the company’s total revenue, up from 8.8 percent in the first quarter of 2012, when Restivo said Apple had done the best until recently as far as iPhone sales.

Cook declined to elaborate on how well he expected the iPhone to sell with the China Mobile deal now in place. “I’ll let others predict the numbers,” he said during the interview.

Apple’s iPhone 5s is priced at 5288 yuan ($980 at Wednesday’s exchange rate), while the less expensive iPhone 5c costs 4488 yuan ($831), making them among the highest priced smartphones in China.

China Mobile’s Xi declined to get specific about what subsidies the carrier will offer customers, but acknowledged that his firm’s pricing will be higher than rivals’ like China Unicom and China Telecom, which have sold the iPhone 5s and 5c since their introduction last September.

“The prices are acceptable to the richest, the elite in China, but the country is a good example of, where there’s a rising middle class, as the country overall gets wealthier, that benefits Apple,” said Restivo.

Apple remains an “aspirational” brand there as well as throughout the world, Restivo said, and although its wares, particularly the iPhone, may be out of reach of billions, those goods will continue to be desirable by people who one day hope they can afford them.

That gibes with the record influxes of used iPhones and iPads reported by buyback vendors such as Gazelle and NextWorth, which snap up Americans’ unwanted devices and then resell them, always at a profit, in developing markets.

But with China Mobile now in the fold, the Cupertino California company will need to grow sales in different ways than signing up new distributors, Restivo said.

In China, that means offering iPhones in more than one screen size and resolution, Restivo contended, referring to the larger-screen smartphones popular in Asia often labelled with the clumsy mash-up of ‘phablets’.

“It would help,” Restivo said, when asked whether Apple needs an iPhone with a larger display than the current 4in found on the iPhone 5s and 5c. “The Chinese have a propensity to buy larger devices, and Apple needs to tweak its one-model business model and offer a greater variety.”

by Gregg Keizer, Computerworld

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