iPhone growth potential from China high, but subsidy key

In a lengthy article discussing Apple’s negotiations with China Unicom to offer the iPhone in China, the Wall Street Journal revealed some new data on the iPhone’s sales and potential for success overseas. According to data from research firm IDC, iPhone sales numbers depend heavily on the U.S. market, which accounts for 49% of worldwide sales, compared to 25% for Western Europe, and just 7% for the Asia Pacific region, which includes Australia, Hong Kong, and India. Analysts believe that entering the Chinese market, which boasts over 685 million mobile subscribers compared to just 270 million in the U.S., could be key for future iPhone sales growth, although sales will likely depend considerably on the subsidy China Unicom provides. Xiang Ligang, CEO of the Chinese telecom news publication cctime.com, estimates 100 million Chinese mobile users switch phones every year, with 20 million of those purchasing high-end mobile phones, representing a large potential market for Apple. Though the average purchase price of a cell phone is roughly $160 in China, high-end phones typically cost roughly $440. Subsidies can be a serious problem, as average monthly service revenues are less than 1/10 of the $60 per month received by AT&T.

Earlier this month China Unicom denied a report from which claimed that it had signed an agreement with Apple to purchase 5 million iPhones to sell in China, saying, “[t]alks between us and Apple have been going on for some time, but no agreement has been reached yet. There are all kinds of possibilities. There is no particular timetable for the talks.”

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