China Unicom (Hong Kong) Ltd. Chairman Chang Xiaobing said he expects Apple Inc.’s iPhone to become China’s best-selling smart phone, countering skepticism by analysts who say the handset is too expensive.
“We’re very confident about the market position of the iPhone,” Chang said in an interview in Hong Kong yesterday. Unicom, China’s second-biggest wireless carrier, started an advertising program for the device this week, he said.
Unicom sold fewer iPhones than analysts anticipated in its debut week after offering the product for as much as 7,999 yuan ($1,172), compared with $299 in the U.S. The iPhone faces competition from Nokia Oyj and Research in Motion Ltd., and handsets that run China Mobile Ltd.’s OPhone software in the world’s biggest wireless market.
“In some markets where vendors get their marketing right, the iPhone is already the best-selling smart phone,” said Aloysius Choong, a Singapore-based analyst at research company IDC. “Unicom must lower its prices if it wants to access the mass market for the iPhone.”
Unicom’s iPhone sales since its debut last month “could have been higher,” Chang, 52, said in his first interview with overseas media since he became head of the carrier in 2004. The Beijing-based company beat bigger rival China Mobile Ltd. to become the first operator to offer the device in the Asian country, where more than 700 million people have mobile phones.
Unicom will charge customers 7,999 yuan initially for the 32 GB version of its IPhone 3GS, before refunding all or part of the cost through the duration of the contracts. That’s higher than the $299 paid by customers at AT&T Inc. in the U.S., and Chinese consumers may obtain the handset through unofficial distributors, the so-called gray market, at lower prices, according to consultancy BDA China.
Gray Market
“Gray-market sales won’t be very significant,” Chang said. Unicom’s sales of the device in China will “definitely surpass” shipments through unauthorized distributors, he said.
Chinese consumers may buy 1 million iPhones this year from gray-market distributors, adding to the more than 1.5 million already sold through this channel, according to BDA estimates.
Unicom shares fell 1.7 percent to HK$10.50 in Hong Kong trading today, and have gained 13 percent this year, compared with the 59 percent advance by the benchmark Hang Seng Index.
The Chinese carrier shipped more than 5,000 iPhones as of Nov. 3, after starting sales on Oct. 30, the company said earlier this month. Apple sold 1 million of its iPhone 3GS device within three days of its June debut in North America
Acceptable Sales
“Sales were acceptable,” Chang said in an interview with Bloomberg Television. Unicom may review its marketing strategy for the iPhone after spending more time to assess sales results, he said.
Chinese consumers bought 11 million smart phones last year, a total that may triple by 2013, according to IDC’s Choong. Nokia’s E71 and 5800 are among the best-selling models, he said.
Unicom aims to sign up 1 million subscribers to its third- generation mobile-phone services each month, matching the additions in October, when the carrier started the commercial roll-out of its high-speed wireless services, Chang said.
Revenue from new 3G users and a reduction of capital spending on networks will lead to an improvement in Unicom’s earnings, Chang said. The carrier last month posted third- quarter net income of 2.72 billion yuan, the lowest quarterly profit since a reorganization of the company last year, on higher 3G-related costs.
“We are now focused on subscriber growth,” Chang said yesterday. “Investors should be happy, we’re keeping costs low, and maintaining high growth.”
3G Users
Unicom’s 3G user additions last month makes the company China’s leading provider of the high-speed service, Chang said. China Mobile, the country’s biggest wireless carrier, had 1.66 million 3G users at the end of September, while China Telecom Corp. said it added 3 million mobile-phone users that month, without giving a breakdown between subscribers for 2G and 3G services.
China had about 720 million mobile-phone subscriptions at the end of September, according to government data.
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