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Tuesday, 18 December 2012 10:00

Is Apple telling the truth about China success?

Written by Nick Farrell



Is two million iPhone 5’s a good thing

Late last week it was clear that Apple’s launch into China was not going well. Unlike previous launches in China there were none of the usual riots, or even queues. The problem for Apple was that it desperately needed China sales to take off to the same levels as the iPhone4 and iPhone4S to prove to the world that the company was not sliding down the loo.

The Tame Apple press did its best to help out. It was claimed that Apple fanboys were not queuing this time because of the cold weather and that “the authorities” had insisted that Apple allow online sales to curb rioting. However Apple has a policy of encouraging queuing because it creates the marketing belief that a product is in demand. Apple fanboys will queue in any weather, even if it means turning into a giant popsicle. If they die of cold, they will at least be martyred to the shallowest religion humanity has created. Online sales would not curb those who wanted to by quantities of iPhones and these are the people who usually riot.

Either way the lack of queuing was a bad sign. This started some hacks to get onto the blower and start talking to Apple’s suppliers. Sure enough, it appears that Jobs’ Mob did not expect the iPhone 5 to sell well either. Rather than asking suppliers for more iPhone 5s it was actually asking for less. Given that this was the time when sales should be flat out, this was a very bad sign for Chinese hopes. Not surprisingly when several analysts reported this fact, Apple’s shares took a tumble and continued their long slide towards something a little more sensible.

It was clear that something had to be done and Apple did the unthinkable. It copied Microsoft and told the world how many iPhones it sold in China over the weekend. Apple CEO Tim Cook described customer response to the iPhone in China as “incredible” and pointed out that the launch broke all previous sales records.

"China is a very important market for us and customers there cannot wait to get their hands on Apple products," claimed Cook.

At no point did anyone in the press question the validity of the comment, or where Cook plucked the figure of two million from. In fact two million for Apple in China is absolute pants. Microsoft has a habit of listing phones it has in the channel as actual early day sales and it is fairly clear that this is what Apple has done too. Apple would have placed a large number of phones with its telecom partners to be sold as packages over the coming months. With this figure included, online sales etc. the figure should have been much higher for it to be the incredible sales that Apple claims. You have to remember that we have to take Cook’s word for it that the sales broke previous records, because Apple does not normally release sales figures.

Needless to say the Tame Apple press reported Cook’s words and then had to face the fact that analysts, and cynics like me, thought that the figures were rubbish. Yesterday Citi downgraded Apple stock citing diminishing hype around the iPhone 5 and improving competition in smartphones. Analysts, however, say that in the long term Apple’s future in China does not depend on turning out a new expensive iPhone every year but expanding its partners in that country to include China Mobile Ltd, the country's top telecoms carrier.

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