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October 27, 2016

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iPhone makeover in China may dent Apple’s efforts to lift sales

SOME Chinese iPhone owners are giving their old models a makeover to look like the latest iPhone 7, rather than buying new — a trend that could dent Apple Inc’s efforts to boost sales in what has been its biggest growth driver.

Online sites offer shoppers makeover kits, false cameras and even dust plugs to hide the removed headphone jack to give their iPhone 6 or 6S the appearance of the iPhone 7 — Apple’s latest flagship product which launched last month.

The makeover quirk mirrors a broader view among some Chinese users that the iPhone 7 doesn’t have enough new features to convince them to trade up.

“I don’t have the money to upgrade, and the (iPhone) 7 is just so-so,” said a Beijing-based sales worker, who said he was getting a Shenzhen firm to replace his iPhone 6 back casing with a fake iPhone 7 shell. “I’m changing it to show off,” he said, giving only his surname Gao as he wasn’t sure that what he was doing was legal.

Searches on platforms including Alibaba’s Taobao showed a range of products to transform older phones to an iPhone 7 — from stickers and engraving services to replacing the outer casing and even some of the hardware.

“Now people have money and the Internet, these are very convenient to do,” said Hu Benshu, who owns an electronics retail outlet in Beijing’s popular Zhongguancun technology hub. He added that at his store, Apple’s iPhone 4 — launched six years ago — is still the best-seller because of its durability.

Apple did not immediately respond to requests for comment.

The US firm posted a third straight quarter of declining iPhone sales globally on Tuesday, and said its China revenue slipped 30 percent to US$8.79 billion in the July-September quarter — despite the partial impact of the new iPhone launch. The company said any bump from iPhone 7 sales would not be seen fully until the current quarter, and a jump in sales was just around the corner.

“I think the fourth quarter looks promising for Apple in China as long as they ensure supply of the larger 7 Plus,” said Canalys analyst Nicole Peng.

Apple has struggled with supply issues, causing some demand gaps in China, particularly for the large-screen iPhone 7 Plus and the coveted jet black model.

The world’s most valuable listed firm has seen its China market share slip to 8.4 percent, lagging local smartphone makers Huawei, Oppo and Vivo, which have won over shoppers with similar features at lower prices, according to research firm Counterpoint.

“The iPhone 7 series should help Apple regain lost (China) market share as demand is tracking better than for the iPhone 6S series,” said Counterpoint analyst Neil Shah. But “Apple needs to offer something cutting-edge to appeal to maturing Chinese smartphone users who are warming to local brands.”

Apple has something of an opportunity in China as its traditional rival, South Korea’s Samsung Electronics, had to yank its large-screen Galaxy Note 7 off the market this month as some phones were catching fire.

But consumers and retailers said the iPhone maker faces an uphill task to convert Samsung fans. One Samsung user wrote online that “an exploding Note 7 is still better than an un-innovative iPhone 7.”

Apple Chief Financial Officer Luca Maestri said on Tuesday that it was “impossible to know” if there was any effect yet from Samsung halting production of its Note 7 phones.

Of six ex-Samsung smartphone users Reuters spoke to in China, only one said he would consider switching to the iPhone 7, which was seen lacking ground-breaking features.

“The iPhone 7 design was ... not much of an upgrade,” said Zhao Bo, a 26-year-old student from Jilin Province, who plans to buy a Samsung C9 Pro after returning his Note 7. “There’s no headphone jack and the price is so much higher,” he said, noting also that Samsung is offering subsidies to users who trade in their Note 7 for another Samsung phone.



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