Analyst: Apple’s bid to expand in China could get more challenging or something

“Apple’s bid to expand in China could get more challenging as it faces ramped up price competition from Samsung and a possible cut in smartphone subsidies at a major state-owned agency, an analyst said Tuesday,” Benjamin Pimentel reports for MarketWatch.

“UBS analyst Steven Milunovich said Apple may feel the impact of Samsung’s effort to shore up its share of the smartphone market in China, which has taken a hit according to the Korean company’s pre-announced results. Milunovich said Samsung is expected ‘to get more aggressive on pricing in China with the aim of thwarting scale gains by local vendors,'” Pimentel reports. “Milunovich said Apple could also be hurt by the reported plan of China’s state-owned Assets Supervision and Administration Council to push ‘telcos to reduce their sales and marketing costs by about 20%, out of which handset subsidies likely amount to more than one-third.'”

Pimentel reports, “He noted that up to 60% of smartphone sales in China are subsidized, ‘so a reduction in subsidies could weigh on the high end of the market where Apple participates.'”

Read more in the full article here.

MacDailyNews Take: Back to the old “carriers might reduce subsidies” FUD. Come up with a new scare tactic, Stevie.

Apple customers are swayed by cheap BOGOF iPhone knockoffs and wannabes. Apple iPhone is the aspirational smartphone.

10 Comments

  1. In other news today, Samsung is reporting lower than expected profits. Now I’m not one to tell large companies how to run their businesses, but if your profits are already declining, becoming more aggressive on pricing doesn’t look like a good strategy for improving your bottom line.

  2. “reduce their sales and marketing costs by about 20%”

    That does not necessarily imply any effect on subsidies. Subsidies are recovered under the monthly contract payment, so they are not really a cost.

  3. Now the shysters are going to focus on xioami and huawei to say that apple is losing out.
    Actually, the iPhones must be selling like hotcakes in china. Look at china mobiles 3G and LTE numbers. This will be a blowout for apple. This quarter, is the quarter that apple sells morbiphones in china than any other region/country in the world.
    While WS is ravaging the American middle class by the blatant manipulation in the commodity markets with the help of Obama and congress. There is more love of country in a single Chinese bureaucrat than the whole of congress and the executive branch. Maybe only Bernie Sanders of vermont has the well being of the American consumer at heart. He has a bill in the senate to lower the leverage of the shysters in the commodity markets. Of course Harry Reid will never put it on the floor.

  4. The consensus in the media seems to be that any success Apple has is just because other companies can’t be bothered to compete with them. It’s as if they truly believe that is Samsung states they want to do something it will just happen and that even if it did there would be nothing Apple could do about it.

    The main reason is that Apple are probably the most creative technology company in the world (at least of any scale), and “analysts” are not remotely creative and can in now way understand it, and therefore it can’t work in their eyes.

  5. The iPhone is “hired” by most carriers (e.g. China Mobile) to sell to the consumers who will use a lot of data and therefore pay a healthier monthly service bill and thus provide the steady stream of income to finance their costly 4-G expansion and roll out. Hence the Chinese government might be hesitant to slow down the iPhone rollout increasingly happening across this very populous country.

  6. Realistically: China mostly consists of peasantry, not to be insulting but economically descriptive. They are NOT going to be buying Apple iPhones. They ARE going to be buying whatever is cheap.

    Apple is, as ever, competing at the high end of the market. Comparing Apple iPhone sales to cheap knockoff stupidphones and feature phones is NOT worth anyone’s consideration. They’re different markets, Apple is not going into the cheap market, end of story. As to the profitability and sales numbers within the high end Chinese market, THAT is far more interesting and worth reporting with regard to Apple.

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