I just read the article, Two Weeks, 5 IPhones Sold in Chinese Online Store in PCWorld by Owen Fletcher which Kit Eaton of Fast Company regurgitate in his own post on FastCompany.com.
The article in PCWorld appear to contain misleading facts. For one thing the list prices for the Apple iPhone 3GS in Hong Kong are: HKD4488.00, HKD5388.00 and HKD6288.00 for the iPhone 3G 8GB, iPhone 3GS 16GB and iPhone 3GS 32GB versions respectively. At these Manufactured Suggested Price the USD equivalent are USD579.09, USD695.22 and USD811.34 respectively. I do not think Fletcher should focus only on the top of the line iPhone 3GS and not report all prices of iPhones sold in Hong Kong; through official channels, unless his intention is to give the impression of exorbitant iPhone prices to his readers.
Note that all iPhones sold in Hong Kong through Apple authorized channels are officially unlocked by Apple, meaning they can be used on any GSM mobile carriers in the world.
The one thing I do agree with Eaton, is that Apple does not really care that the sales of iPhones through official channels are low. As gray market iPhones had been entering mainland China and the countries in the region since the first iPhone released late 2007. Apple are making money as long as these gray market iPhones are purchased through legitimate channels.
When the iPhone 3G arrived in Hong Kong in 2008 the iPhone gray market became even more prevalent in the region, because officially unlocked iPhones are available directly from Apple Hong Kong through its online store and authorized resellers. In mid 2008 China Mobile reports that there are over 500,000 iPhones activated on its mobile network.
These gray market new and second hand iPhones (3G and 3GS) are full featured including all 3G (tethering) and WiFi capabilities. So even with the mark up the gray market sellers charge, the prices of these iPhones are still cheaper than the ones found at Apple Store – Beijing and China Unicom.
I believe that Apple [Steve Jobs] are quite aware of the lucrative gray market in China and as long as Apple are selling iPhones some where they really do not care where the mainland Chinese get their iPhones.
As for the issue about most mainland Chinese do not have credit cards, that is a good point. But the people in mainland China who can afford the real iPhone and China Unicom’s high tariff plans, are the percentage of mainland China population who already have access to credit cards. The mid to lower middle class are not able to afford the iPhone and its on going cost through the 2-year contract from China Unicom. Therefore, whether these percentage of mainland China has access to credit cards or not is not an issue.
It is true if Apple lowers the price of the China iPhones so that it is comparable to the more featured gray market version iPhones, sales through the official channels may imrpove. Although, I think Apple [Steve Jobs] is trying to make a point to the China government, who demands Apple removes the current WiFi capability and insists that Apple’s iPhone supports China’s WAPI authentication protocol.
The iPhone is a success in Asia and well before the official availability of the iPhone. Taking the small population (over 7 million) of Hong Kong as an example, the wide range of individuals who use the iPhone is broad. They include average middle income house wives to executives, young working class to high school students. Of the 7 mobile carriers in Hong Kong, 5 of them has iPhone specific tariff plans, even though currently there’s only one Apple official carrier (3 HK).
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