Why is iphone so popular in China?

Why is iphone so popular in China?
Feb 19, 2008 00:59
guestjack	New York Times: After China Ships Out iPhones, Smugglers Make It a Return Trip By DAVID BARBOZA Published: February 18, 2008 SHANGHAI — Factories here churn out iPhones that are exported to the United States and Europe. Then thousands of them are smuggled right back into China. The strange journey of Apple’s popular iPhone, to nearly every corner of the world, shows what happens when the world’s hottest consumer product defies a company’s attempt to slowly introduce it in new markets. The iPhone has been swept up in a frenzy of global smuggling and word-of-mouth marketing that leads friends to ask friends, “While you’re in the U.S., would you mind picking up an iPhone for me?” These unofficial distribution networks help explain a mystery that analysts who follow Apple have been pondering: why is there a large gap between the number of iPhones that Apple says it sold last year, about 3.7 million, and the 2.3 million that are actually registered on the networks of its wireless partners in the United States and Europe? The answer now seems clear. For months, tourists, small entrepreneurs and smugglers of electronic goods have been buying iPhones in the United States and then shipping them overseas. There the phones’ digital locks are broken so they can work on local cellular networks, and they are outfitted with localized software, essentially undermining Apple’s effort to introduce the phone with exclusive partnership deals, similar to its primary partnership agreement with AT&T in the United States. “There’s no question many of them are ending up abroad,” said Charles R. Wolf, an analyst who follows Apple for Needham & Company. For Apple, the booming overseas market for iPhones is both a sign of its marketing prowess and a blow to a business model that could be coming undone, costing the company as much as $1 billion over the next three years, according to some analysts. But those economic realities do not play into the mind of Daniel Pan, a 22-year-old Web site designer in Shanghai who says a friend recently bought an iPhone for him in the United States. He and other people here often pay $450 to $600 to get a phone that sells for $400 in the United States. But they are happy. “This is even better than I thought it would be,” he said, toying with his iPhone at an upscale coffee shop. “This is definitely one of the great inventions of this century.” Mr. Pan is among the new breed of young professionals in China who can afford to buy the latest gadgets and the coolest Western brands. IPhones are widely available at electronic stores in big cities, and many stores offer unlocking services for imported phones. Chinese sellers of iPhones say they typically get the phones from suppliers who buy them in the United States, then have them shipped or brought to China by airline passengers. Often, they say, the phones are given to members of Chinese tourist groups or Chinese airline flight attendants, who are typically paid a commission of about $30 for every phone they deliver. Although unlocking the phone violates Apple’s purchase agreement, it does not appear to violate any laws here, though many stores may be avoiding import duties. Considering China’s penchant for smuggling and counterfeiting high-quality goods, the huge number of iPhones being sold here is not surprising, particularly given the popularity of the Apple brand in China. Indeed, within months of the release of the iPhone in the United States last June, iPhone knockoffs, or iClones as some have called them, were selling here for as little as $125. But most people opt for the real thing. “A lot of people here want to get an iPhone,” says Conlyn Chan, 31, a lawyer who was born in Taiwan and now lives in Shanghai. “I know a guy who went back to the States and bought 20 iPhones. He even gave one to his driver.” Negotiations between Apple and China Mobile, the world’s biggest mobile-phone service operator with more than 350 million subscribers, broke down last month, stalling the official release of the iPhone in China. Long before that, however, there was a thriving gray market. “I love all of Apple’s products,” said a 27-year-old Beijing engineer named Chen Chen who found his iPhone through a bulletin board Web site. “I bought mine for $625 last October, and the seller helped me unlock it. Reading and sending Chinese messages is no problem.” An iPhone purchased in Shanghai or Beijing typically costs about $555. To unlock the phone and add Chinese language software costs an additional $25.

Feb 19, 2008 00:59

guestjack

New York Times: After China Ships Out iPhones, Smugglers Make It a Return Trip By DAVID BARBOZA Published: February 18, 2008

SHANGHAI — Factories here churn out iPhones that are exported to the United States and Europe. Then thousands of them are smuggled right back into China.

The strange journey of Apple’s popular iPhone, to nearly every corner of the world, shows what happens when the world’s hottest consumer product defies a company’s attempt to slowly introduce it in new markets.

The iPhone has been swept up in a frenzy of global smuggling and word-of-mouth marketing that leads friends to ask friends, “While you’re in the U.S., would you mind picking up an iPhone for me?”

These unofficial distribution networks help explain a mystery that analysts who follow Apple have been pondering: why is there a large gap between the number of iPhones that Apple says it sold last year, about 3.7 million, and the 2.3 million that are actually registered on the networks of its wireless partners in the United States and Europe?

The answer now seems clear. For months, tourists, small entrepreneurs and smugglers of electronic goods have been buying iPhones in the United States and then shipping them overseas.

There the phones’ digital locks are broken so they can work on local cellular networks, and they are outfitted with localized software, essentially undermining Apple’s effort to introduce the phone with exclusive partnership deals, similar to its primary partnership agreement with AT&T in the United States.

“There’s no question many of them are ending up abroad,” said Charles R. Wolf, an analyst who follows Apple for Needham & Company.

For Apple, the booming overseas market for iPhones is both a sign of its marketing prowess and a blow to a business model that could be coming undone, costing the company as much as $1 billion over the next three years, according to some analysts.

But those economic realities do not play into the mind of Daniel Pan, a 22-year-old Web site designer in Shanghai who says a friend recently bought an iPhone for him in the United States.

He and other people here often pay $450 to $600 to get a phone that sells for $400 in the United States. But they are happy.

“This is even better than I thought it would be,” he said, toying with his iPhone at an upscale coffee shop. “This is definitely one of the great inventions of this century.”

Mr. Pan is among the new breed of young professionals in China who can afford to buy the latest gadgets and the coolest Western brands. IPhones are widely available at electronic stores in big cities, and many stores offer unlocking services for imported phones.

Chinese sellers of iPhones say they typically get the phones from suppliers who buy them in the United States, then have them shipped or brought to China by airline passengers.

Often, they say, the phones are given to members of Chinese tourist groups or Chinese airline flight attendants, who are typically paid a commission of about $30 for every phone they deliver.

Although unlocking the phone violates Apple’s purchase agreement, it does not appear to violate any laws here, though many stores may be avoiding import duties.

Considering China’s penchant for smuggling and counterfeiting high-quality goods, the huge number of iPhones being sold here is not surprising, particularly given the popularity of the Apple brand in China.

Indeed, within months of the release of the iPhone in the United States last June, iPhone knockoffs, or iClones as some have called them, were selling here for as little as $125. But most people opt for the real thing.

“A lot of people here want to get an iPhone,” says Conlyn Chan, 31, a lawyer who was born in Taiwan and now lives in Shanghai. “I know a guy who went back to the States and bought 20 iPhones. He even gave one to his driver.”

Negotiations between Apple and China Mobile, the world’s biggest mobile-phone service operator with more than 350 million subscribers, broke down last month, stalling the official release of the iPhone in China. Long before that, however, there was a thriving gray market.

“I love all of Apple’s products,” said a 27-year-old Beijing engineer named Chen Chen who found his iPhone through a bulletin board Web site. “I bought mine for $625 last October, and the seller helped me unlock it. Reading and sending Chinese messages is no problem.”

An iPhone purchased in Shanghai or Beijing typically costs about $555. To unlock the phone and add Chinese language software costs an additional $25.

Feb 19, 2008 01:01

GUESTJACK

For Apple, the sale of iPhones to people who ship them to China is a source of revenue. But the company is still losing out, because its exclusive deals with phone service providers bring in revenue after the phone is sold. If the phones were activated in the United States, Apple would receive as much as $120 a year per user from AT&T, analysts say.

But there are forces working against that. Programmers around the world collaborate on and share programs that unlock the iPhone, racing to put out new versions when Apple updates its defenses.

While Apple has not strongly condemned unlocking, it has warned consumers that this violates the purchase agreement and can cause problems with software updates.

Some analysts say abandoning the locked phone system and allowing buyers to sign up with any carrier they choose, in any country, could spur sales.

“The model is threatened,” Mr. Wolf, the analyst, said. But “if they sold the phone unlocked with no exclusive carrier, demand could be much higher.”

An Apple spokeswoman declined to comment on the proliferation of iPhones in China. When asked about the number of unlocked iPhones during a conference call with analysts last month, Timothy D. Cook, Apple’s chief operating officer, said it was “significant in the quarter, but we’re unsure how to reliably estimate the number.”

The copycat models are another possible threat to Apple. Not long after the iPhone was released, research and development teams in China were taking it apart, trying to copy or steal the design and software for use in knockoffs.

Some people who have used the clones say they are sophisticated and have many functions that mimic the iPhone.

In Shanghai, television advertisements market the Ai Feng, a phone with a name that sounds like iPhone but in Chinese translates roughly as the Crazy Love. That phone sells for about $125.

Some of the sellers of the copycats admit the phones are a scam.

“It’s a fake iPhone, but it looks nearly the same,” said a man who answered the phone last week at the Shenzhen Sunshine Trade Company, in southern China’s biggest electronics manufacturing area. “We manufacture it by ourselves. We have our own R. &D. group and manufacturing plant. Most of our products are for export.”

Most people here seem to want the glory that comes with showing off a real iPhone to friends.

“My friends envy me a lot,” says Mr. Pan, the Web designer. “They say, “Wow, you can get an iPhone.’ ”

Feb 19, 2008 01:03	#2
GUESTJACK	I just take iphone as a ordinary cellphone but I can't understand why so many Chinese guys are crazy about iphone. Perhaps, some Chinese here can solve my puzzle.

Feb 19, 2008 01:13	#3
GUESTSINOBOY	Having an iphone is cool, because Iphone is flashy. Iphone is part of fashion accessories for Chinese young people.

Feb 19, 2008 19:01

SHESGOTTOBE
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Why is iPhone so popular? To some, it is a cool thing to have, to some, it is a status symbol. Of course, that’s subjective. Gotta admit the interface is cool though. ^_^

Being bound to a 2-year contract at $60 (plus taxes & surcharges) a month with AT&T stopped me from getting one. Too expensive for a device that I only use during emergencies considering I am only paying $24 a month on my Verizon Wireless service. Besides, the phone feature is just about the only difference between iPhone and iTouch.

Feb 19, 2008 19:20

BBQQ
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Apple's products are very popular in China, the newly-released iphone, ipod and computer. Before iphone was released, ipod was those young guy's favourite though it cost too much. Some guys are very interested in the newly released electronic products. Once a new design product is released, they are so eager to have one. So it is not rare to see a young guy changes his/her cellphone 3 to 4 times just in one year. BTW, what is the difference between iphone and itouch, SHESGOTTOBE?

Feb 19, 2008 19:46	#6
SHESGOTTOBE Points: Join Date: Nov 23, 2007 Status: Offline	An iphone is a phone, mp3 player with touch screen.

Feb 19, 2008 19:48	#7
SHESGOTTOBE Points: Join Date: Nov 23, 2007 Status: Offline	An iTouch is basically the same as iPhone except that it doesn't have a phone. It has wi-fi capability for web browsing and you can access youtube videos.

Feb 19, 2008 19:56	#8
BBQQ Points: Join Date: Feb 7, 2007 Status: Offline	Wow, they are so cool. Now I have the impulse to buy one. From your words, I conclude that you can't use iphone to access webs and watch videos. Am I correct? Why not combine the functions of iphone and itouch together? Apple is so smart to make money.

Feb 19, 2008 20:12

SHESGOTTOBE
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From wikipedia:
The iPhone is an Internet-enabled multimedia mobile phone designed and marketed by Apple Inc. It has a multi-touch screen with virtual keyboard and buttons. The iPhone's functions include those of a camera phone and a portable media player ("iPod"), in addition to text messaging and visual voicemail. It also offers Internet services including e-mail, web browsing, and local Wi-Fi connectivity. It is a quad-band mobile phone that uses the GSM standard, and hence has international capability. It supports the EDGE data technology.
Following the success of iPods, Apple announced the iPhone in January 2007. The announcement was preceded by rumors and speculations that circulated for several months. The iPhone was introduced, first in the United States on June 29, 2007 with much media frenzy and then in the United Kingdom, Germany and France in November 2007. It was named Time magazine's Invention of the Year in 2007. A version of Apple's iPhone is expected to be introduced in 2008 that is capable of operating on faster 3G cellular networks.
Like the fifth generation iPods introduced in 2005, the iPhone can play video, allowing users to watch TV shows and films.

~~

I think Apple released iTouch when it realized that not everyone is excited about having an all in one device for phone and music. And not everyone likes AT&T as a carrier. ^_^"

Feb 19, 2008 20:47	#10
BBQQ Points: Join Date: Feb 7, 2007 Status: Offline	Now I understand why so many Chinese young guys are crazy about iphone. They like it not only because of its cool appearance but also its fantastic functions. If I want to buy one, I will choose iphone. Sigh! It is too expensive. 555 dollars! It is nearly 4000 yuan.

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