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September 17, 2016

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Latest iPhones sell out but reception is muted

Source: Agencies | September 17, 2016, Saturday | Print Edition

APPLE fans from Shanghai to Sydney, the first customers worldwide to snap up the new iPhone 7, cheered as they left stores yesterday brandishing their purchases, flanked by applauding sales staff.

But underneath the usual fanfare, the crowds of enthusiasts and overnight campers were smaller than in past years.

In part, online pre-ordering has made queues unnecessary for all but diehard fans, and in Chinese stores only those who had ordered in advance were queuing to collect.

Yet in markets like China online interest in the new phone has also been muted compared to past launches, as cheaper local brands amp up their features, design and marketing.

The iPhone 7, which Apple claims is splash and water resistant, features faster chips and wireless headphones. It costs from 5,388 yuan (US$816) in China while the iPhone 7 Plus, which has two cameras, starts at 6,388 yuan.

Wu Ting, a 28-year-old from Nanjing, was surprised to find herself first in line at a downtown Apple store in Shanghai yesterday.

“I found last year that there were crowds of people, but this year almost no one. I came an hour early thinking I’d have to wait a long time before getting seen,” Wu said.

Li Jun, a Shanghai designer, paid online for a jet black iPhone 128GB because it had “the fastest chip, best camera and a nice design.”

Sales in China will be the acid test for Apple’s year ahead. The success of the iPhone 6 in China drove sales last year, while the slower-burn 6S contributed to Apple’s first global revenue drop in over a decade earlier this year.

Chatter about the iPhone 7 launch on Weibo has been far more muted than when the
iPhone 6 debuted in 2014. An index of searches on Baidu Inc, China’s most popular search engine, shows the new phone lagging behind both the iPhone 6 and iPhone 5.

Apple’s China sales dropped by a third in April-June, albeit after more than doubling a year earlier, while its market share has fallen to around 7.8 percent, placing it fifth behind local rivals Huawei, OPPO and Vivo.

Apple has been slower to adapt, consumers and analysts say — the new iPhone has few major changes to win over fickle shoppers and the firm’s marketing has been generic.

“From Steve Jobs to Tim Cook, Apple has never had any marketing strategy tailor-made for China,” said Zhou Zhanggui, a strategic consultant. “Apple risks losing out more if it does not better cater to local demands in its marketing as well as product design.”

However, Credit Suisse said it expects Apple to sell 215 million iPhones this year and 221 million units in 2017.

In Beijing’s fashionable Sanlitun shopping district, several people who had already grabbed new iPhone 7s were hawking them for a markup just outside a flagship store.

Scalpers were out in Shanghai, too, offering the new phones at a premium of 500-2,500 yuan.

There has been much chatter among Apple fans since the new iPhone 7 and iPhone 7 Plus were unveiled about the decision to eliminate headphone jacks and embrace a wireless future. But yesterday most talk focused on supply issues.

Apple shares finished up 3.4 percent at US$115.56 on Thursday as the firm said the iPhone 7 Plus and jet black version of the iPhone 7 had already sold out in pre-orders.

BusinessIT


 

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