iPhone 11 scores early China success with lower retail price

Customers with the iPhone 11 Pro Max at an Apple Store in Beijing. Apple drew positive responses by lowering the starting price of the new devices by US$50 (S$68), and working to increase battery life and overhaul image quality, but it still faces an
Customers with the iPhone 11 Pro Max at an Apple Store in Beijing. Apple drew positive responses by lowering the starting price of the new devices by US$50 (S$68), and working to increase battery life and overhaul image quality, but it still faces an uphill climb in China against local brands like Huawei. PHOTO: REUTERS

BEIJING • Chinese consumers are rediscovering their appetite for iPhones.

Apple shipped 10 million iPhones in China in September and last month, based on Bloomberg's calculations from government data on overall and Android device shipments.

That is the first indication of the firm's performance, following the autumn release of its latest gadgets and it shows iPhone shipments up 6 per cent from a year earlier, according to the China Academy of Information and Communications Technology, which is run by the country's technology ministry.

That affirms expectations that Apple's iPhone 11 is selling more strongly than its predecessor, particularly in a market that is second only to the US in importance to Apple's bottom line. The firm had recently been stuck in a rut in China, ceding ground to local rivals like Huawei Technologies and Xiaomi, which offer more enticing pricing, better specifications and increa-singly premium design. Apple also lost market share to Samsung Electronics and Huawei globally prior to the iPhone 11's release.

Chief executive officer Tim Cook has said new pricing, a monthly payment programme and trade-in offers helped the iPhone's performance in China.

"Chinese customers seem to be receiving the iPhone 11 series better than last year's models because of the lower retail price," said Canalys analyst Nicole Peng. "We see weaker shipments for old models but the latest products are going strong."

Overall, Chinese smartphone shipments dropped 5 per cent to 69.3 million units during the two months, according to reports published by the academy, which is run by the Ministry of Industry and Information Technology, and tracks the number of smartphones that get permits to be sold in China.

Apple took major steps to increase battery life in its iPhone 11 and 11 Pro devices while lowering the starting price by US$50 (S$68). After years of stagnation in cameras, it overhauled the iPhone's image quality this year. This approach drew an overwhelmingly positive reception.

In China, however, Apple still faces an uphill climb against local brands like Huawei and Xiaomi.

Beyond new device sales, Apple's other major challenge will be to make available more of its lucrative subscription services there.

As the company transitions to a business model more reliant on recurring fees - such as via iTunes Music, Apple TV+ and Apple Arcade - their unavailability in China becomes increasingly a hurdle to growth.

BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on November 19, 2019, with the headline iPhone 11 scores early China success with lower retail price. Subscribe