“The shock wave caused by the Apple iPhone has been spreading from the US to China at an unbelievable rate. Savvy entrepreneurs have been purchasing hundreds of thousands of iPhones in the US and Europe, then “cracking” the operating system to allow the device to be used on any GSM network. According to China Mobile, the biggest wireless carrier in China, there were about 400,000 cracked iPhones using its cellular network service at the end of 2007, representing one out of every 10 iPhone shipments announced officially by Apple. The figure surprised us as it is fourfold of that we estimated before,” Anty Zheng reports for In-Stat China.
MacDailyNews Take: There’s nothing like granting Steve Jobs massive bargaining power and carte blanche to negotiate from a position of strength.
“We have never doubted that the iPhone will achieve greater success than iPod in China if Apple teams with China Mobile to launch its Chinese version. There are two reasons. Firstly, different from the US where the smartphone market is fairly limited, appealing primarily to business users, The smartphone market in China, though, is an entertainment-oriented individual consumer market. The main reasons that Chinese mobile users purchase smartphones include entertainment (such as music players, cameras and video) and to access mobile Internet applications (such as IM, e-book, and games). We believe the iPhone will be favored by these consumers as it can better meet such demand. Secondly, high-end handset buyers significantly outnumber high-end mp3 player buyers. We estimate that 20% of handsets sold in China in 2007 cost more than 4,000 RMB (US$533). In another words, there are an estimated 28 million potential users for the iPhone in China.,” Zheng reports.
“Further, the iPhone is not just a successful product. In-Stat feels that the iPhone is leading the way to a new generation of smartphones that are very different from their older counterparts. One important trend is that revolutionary UI and UE, enabled by touchscreens and 3D sensor technologies, will be widely used in the next generation of smartphones in China and around the world,” Zheng reports.
“Also, the trend toward the mobile Internet will drive handset makers to deliver more smartphone models. More Internet applications, such as social networking, maps, search, and e-mail, will be developed for smartphones, and these will make the iPhone and other smartphones more attractive to mobile users who like to use their handsets to pass the time. In turn, the mobile Internet will become a new selling point for smartphones, and drive up sales. Taking the long view, In-Stat believes that the smartphone is evolving into a increasingly wide range of mobile devices, where cellular voice communications are just one function of the converged appliance,” Zheng reports.
For more information about Chinese smartphone market, check out In-Stat’s recently published report titled “Mobile Internet and GPS Change the Future of Smartphones in China,” available online at: http://www.instat.com/Abstract.asp?ID=279&SKU=IN0703655CWW
[Thanks to MacDailyNews Reader “Mike in Helsinki” for the heads up.]
Well, now, there’s a rotating, mile-high by mile-wide, blinking neon billboard screaming “Apple’s iPhone will rule the world!” One question remains, of course, is that large and bright enough for Wall Street to finally be able to see it, read it, and understand what it means?
Apple can’t get that Apple Store in Beijing built fast enough.
Peace.
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Olmecmystic
Am I really first?
Oh, I think Wall Street will again run up Apple’s Stock price and then forcible crash it again…
“Apple’s iPhone will rule the world!”
With well over a dozen iPhone type phones already available and more on the way – many with superior features at lower prices – this statement looks really really stupid.
But, keep it up and I’ll keep shorting AAPL all the way to the bank over and over and over again.
It was true 6 months ago and even moreso now – especially in foreign markets where Steve’s competitors are lapping him. Check it out – China isn’t going to pull AAPL out of its hole on the strength of a smartphone that’s just one in the pack.
http://www.informationweek.com/blog/main/archives/2007/09/better_than_iph.html
$14,924,000,000.00 potential for Apple’s bottom line. Not too shabby.
” . . . a dozen iPhone type phones already available and more on the way . . . “
Yeah. It’s really a shame Apple has stopped its R & D on the iPhone. </sarcasm>
The unlocked iPhones are indeed a “good problem to have” for Apple. It’s like “pre-selling” the iPhone into these untapped markets. Their popularity demonstrates potential sales to would-be wireless partners and improves Apple’s negotiating position for the exclusivity contract. And once Apple starts selling iPhones in those markets legitimately, a good percentage of those pre-sold iPhones will join the official network; Apple will then start earning the recurring revenue from many of those 400,000 older iPhones in China.
“The unlocked iPhones are indeed a “good problem to have” for Apple.”
It’s also beneficial in helping more people to distinguish the real thing from cheap knock-offs or wannabes like the HTC Touch running Windows Immobile crapware.
I don’t see why anyone would think this would make Wall Street happy. The number of iPhones sold is already known. All this says is that 400,000 of them are not giving any residuals. If I were Wall Street I’d be pissed. Oh look. It is.
@MIE
You must be joking, right? Those phones the author “is just a sucker for” are pieces of junk compared to the iPhone. The author could have written glowing words about the phones he loves without mentioning the iPhone once (he even goes so far to throwing a comment about iPods having “breakage problems”), yet that he repeatedly scorns the iPhone before he gets to highlighting his “favorites” is an indication that this is a paid for piece of PR writing meant to undermine iPhone sales with a little fear and give his obvious clients a bit of breathing space and a few more unit sales before Apple’s product kicks their ass.
I’d say Wall Street wouldn’t like it, but it is some revenue where there otherwise would be none. I don’t think Apple’s eating the cost on these devices, so it could be a situation of a win-win. The funny thing is if Apple really wanted to permanently brick unauthorized iPhones, they probably could — and now we can see the extent of the damage it would cause. In the black market of devices, you get what you pay for. Yes, you don’t have to pay the carrier a fee, and Apple doesn’t receive it, but your future is forever clouded and uncertain.
In any event, the next generation device is only a few months away. It may bring with it higher security features. That would give Apple greater leverage in negotiating exclusive deals.
“…With well over a dozen iPhone type phones already available and more on the way – many with superior features at lower prices – this statement looks really really stupid…”
Irrational Exburance really is irrational, is clueless about the differences between second-rate copies and the original Mac OS. The iPhone hardware is great to be sure, but it’s all about the Mobile Mac OS X and future potential, D**Khead.
From now forward, Apple will always be ahead thanks to furiously-paced features development…Those knock-offs you speak of are pathetic imitations.
You are assuming that Wall Street analysts can read. Quite a stretch, don’t you think?
But… but. you need those stinking little keyboards…lol
All those iconographic languages will use the gesture pad, if not need it. why do you think the SDK is in the works so long? A revolution, and not a anglo-centric one, is in the works. Windows mobile— how arcane!
the original white paper showing this data is for purchase only.
i therefore have not read that original research.
however, 400,000 is not credible.
we need to understand how those data were collected.
it simply is not correct or at least overstated.
@niji, reading between the lines, it seems that In-stat’s source for the 400k figure was China Mobile, itself. Can’t go wrong with that, unless the carrier is lying.
Well, there are those missing iPhones that everyone was in such a dither about. They just forgot to look in China.
Puts a new angle on the price cut, eh? That’s no hole in a dike, 400,000 in one market is a fscking levee collapse! The iPhone market does want to be free.
Thing is, not only do the service people unlock ’em, they fill ’em with apps for you too – all from a little stall in the flea markets.
“the one called truth or reality or common sense”
Nope. Keep guessing. And halfway on-topic, I just had dinner with a friend and sold him on the iPhone. He had seen the commercials but was amazed seeing one close up and all the things it could do.
@KenC
I wonder why it might be worth while for China Mobile to overstate the number of unlocked iPhones on its network…oh, yes, I remember, it was recently confirmed by the CEO of CM that talks between it and apple had broken down.
Get the picture?
HD Boy:
Thanks for saying what needed to be said to the irrational dickhea*.
If it was just about copying the ‘look’, Vista would be a good OS….
If I was Apple (which would be strange because I am a person and Apple is a company), but if I was, I would sell the iPhone UNLOCKED everywhere except where it is now.
Can Apple make 50 million iphones quickly?
What cellphone makers/carriers are learning-it doesn’t matter if you cram 1,600,000 features into a phone, no one will use them if they have to jump through hoops to find them and figure out how to use them and have a horrible experience with it after using it.
Smartphones existed before the iPhone, they had a bigger feature set than the iPhone-yet the iPhone kicked their ass in sales.
Why do you think iPhone users are actually using their phone for web surfing?
Because it is simple and provides a real web experience-2 things windows mobile,blackberry.Rim, symbian, etc. never did.
I was in Hong Kong last fall. I was in a photography studio getting some portraits when the three employees there found out I was from the U.S. They instantly started asking me questions about the iPhone. Seriously, no joke. And this was only after the iPhone started selling in the U.S. for a mere 3 months.
Many people in Asia tend to purchase high-end phones because their mindset is to keep the phones for several years. Unlike our “disposable phone / new phone in two years” thinking. As an aside, the telecom companies there act as a conduit to information, they don’t try to be the information provider like the telecom companies do over here.
I asked the local dealer in Shanghai where are the iPhone clones, he said nobody wants them since they cost about the same as iPhone but offer less. There are already hundreds of cool apps/widgets for iPhone (even in Chinese language) and only dozens of boring and mostly useless apps for the clones.
I thought I will not need iPhone but since my wife is now using one, I find it way too cool and useful device to pass. Enough of the Nokia hype-phones I want the iPhone.
<sharing_of_interesting_experience_here_in_Oz>
I was shopping yesterday and walked by a kiosk that sells various mobile/cell phones. In Australia, you can purchase most mobile phones “unlocked” – as in not tied to a certain carrier because it is the law. All phones imported (none are manufactured here) must be unlocked. Sooo.. I am wearing my “MacGeek” t-shirt and this guy behind the counter asks, “Have you seen the new iPhone?” gesturing to my shirt. I said that I have seen several here in Oz that were “jailbroke”.
He said, “Well, we have them here.” I asked, “to buy?” “Oh, no – we were sent “unlocked” ones from Apple to become familiar with so that when they hit the market, we will be ready for the onslaught”, he replied.
Then he proceeded to try to convince me that the Prada was a better phone – because it was easier to use. When I stopped gagging and almost hurling, I asked, “Have you actually used an iPhone? and are you aware that it is as easy to use as an iPod touch?”
He admitted that he had not used the iPhone, yet because he couldn’t get it away from his boss long enough to “give it a go”…
I just know I am seeing more and more “unlocked” iPhones here. And this isn’t China but it has one of the highest per capita users of mobile phones in the world. There are many people who have a mobile phone and a VoIP line but no land line here. Even ISP are offering to connect now without having to be land line dependent.
So, what was my reaction to the Prada? (urp, hurl {almost}, feel queasy)
</sharing_of_interesting_experience_here_in_Oz>
Cannot wait for Optus to have the iPhone… come on April (the hoped for month for the iPhone here because the official Apple Store in Syd supposedly opens then).
Cheers.