LDN - Business

Apple's budget iPhone unlikely to make splash in China: Weibo poll

[April 16, 2020] By Josh Horwitz

SHANGHAI (Reuters) - Apple Inc's <AAPL.O> new iPhone SE for the budget-conscious is unlikely to be a major driver of sales in China, a Weibo survey suggested, with analysts noting its lacks of 5G capability.

In a poll conducted on social media site Weibo, 60% of roughly 350,000 respondents said they would not buy the new $399 model, the cheapest iPhone available.

But roughly a fifth said they would buy it, while the rest said they would consider a purchase. Though respondents were not asked for reasons for their choices in the poll, many commented that they would be interested if the price drops further.

"If you don't buy it and I don't buy it, tomorrow the price will drop another 200 yuan ($28)," said one Weibo user whose comment got more than 10,000 likes.

Apple's market share in China - its third-biggest market, accounting for roughly 15% of its sales - has shrunk over the past several years as Chinese Android brands increasingly release higher-end phones.

The reception for the iPhone SE was similarly muted in Europe, where almost 1 million people have caught the coronavirus and many countries have closed shops or ordered people to stay at home.

Despite the inauspicious backdrop, the new Apple device will offer owners of the ageing iPhone 6 an affordable way to get onto the latest and most secure version of Apple's iOS smartphone operating system, one industry analyst said.

"These are people who keep their phones for four or five years, until they either break or the battery dies," said Annette Zimmermann at consultancy Gartner.

5G RACE

Competition has intensified in China as rivals are now releasing 5G devices compatible with the country's upgraded telecoms networks while Apple has yet to launch an iPhone with 5G capability.

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People wearing protective masks are seen in an Apple Store, as China is hit by an outbreak of the new coronavirus, in Shanghai, China, January 29, 2020. REUTERS/Aly Song/File Photo

Last week several Chinese online retailers reduced iPhone 11 prices by as much as 17%. Apple occasionally lets its Chinese seller partners cut prices to spur demand, though it seldom allows pricing leeway for vendors overseas.

Three China-based analysts said the iPhone SE would mainly appeal to Apple brand loyalists who don't want to spend about $700 for the high-end iPhone 11.

"The new iPhone SE will, for sure, attract mid-range users who don't take 5G connectivity as a necessity," said Mo Jia, who tracks the global smartphone industry at research firm Canalys.

Tech investors will nevertheless be watching its reception in China to gauge how demand for consumer devices may rebound once the coronavirus pandemic subsides and whether iPhone sales in China can soften the blow of lost purchases elsewhere.

China is the only major market where Apple's stores have reopened as the spread of the virus prompts governments around the world to impose lockdowns and other social distancing measures.

Government data showed that Apple shipped 2.5 million iPhones to Chinese vendors in March, nearly a fifth higher than the same month a year earlier and a sharp jump from only 500,000 in February, when the virus outbreak was at its peak in China.

The company will start taking orders for the phone on its website on Friday, with deliveries expected from April 24.

(Reporting by Josh Horwitz in Shanghai and the Shanghai newsroom; Additional reporting by Douglas Busvine in Berlin; Writing by Sayantani Ghosh; Editing by Edwina Gibbs and David Goodman)

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