China To Apple: Give Us Something Special

China underwhelmed by new iPhones

The buzz is quickly dying over the newest iPhone, with Chinese media and gadget fanatics decidedly underwhelmed by China’s first-ever inclusion in a global launch for a major new Apple (Nasdaq: AAPL) product. In many ways this kind of disillusionment was almost inevitable, since there was so much hype when media first began reporting last week that China would be included in the global launch for the iPhone 5S. But at a deeper level, it looks to me like the Chinese are disappointed that they weren’t given more special treatment to acknowledge their status as the world’s largest smartphone market, and are also annoyed at having to pay a big premium for the 2 newest iPhones.

If I had to rate the success of the China launch for Apple’s newly unveiled iPhone 5S and lower cost iPhone 5C, I would probably give it a 5 out of 10. I still have to congratulate Apple for finally including China in a global iPhone launch, since the country’s repeated exclusion in previous debuts was making many Chinese fans feel like second-class citizens. But the lukewarm response by Chinese media and consumers shows that Apple may have quite a bit more work to do to win back public opinion in the world’s biggest mobile market.

I’ve read quite a few reports in the Chinese media, and nearly all complain that the new phones, which will go on sale here September 20, are priced too high. (English article; Chinese article) Disappointment was especially high surrounding the highly anticipated iPhone 5C, which many hoped would be competitive with the flood of lower-end smartphones in China priced in the 1,000-2,500 yuan ($250-$400) range. Many were hoping the 5C could become an attractive alternative to those legions of cheaper models being churned out by the likes of Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992).

Instead, consumers learned the new 5C will sell for 4,488 yuan in China, or just 15 percent less than the premium iPhone 5S that will sell for 5,288. Both of those prices represent more than a month’s salary for the vast majority of Chinese and the prices are far higher than those in the US, meaning we’re unlikely to see either model gain major traction outside the premium market.

At a more subtle level, Chinese media were also disappointed at the lack of attention Apple gave to China in terms of localizing its Beijing launch event. The English-language China Daily was typical, complaining that the Beijing event on Wednesday was mostly recycled material from the global launch held hours earlier in California. The China event even featured a rebroadcast of video from the original California launch.

At least some of the blame for this underwhelming performance should go to Apple’s 2 China partners, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHA), which could have helped to create a more China-specific event. I’m sure this pair of laggard, state-run behemoths are probably proud that they finally got China included in the global launch for the 5S and 5C, and indeed they deserve kudos for this effort.

At the end of the day, perhaps this underwhelming launch will provide important feedback for Apple about what it needs to do to regain its luster not only in China but also the rest of the world. From a marketing perspective, it needs to show more interest in its biggest markets by crafting marketing campaigns and product offerings more tailored to local consumers. As I’ve said in previous posts, it also needs to broaden its efforts to include other activities like new store openings and investments in R&D facilities.

Based on earlier signals, I suspect this launch will just be the first in a series of big moves for Apple in China over the next month (previous post). Hopefully it will improve its performance at some of those upcoming events, giving it more time to win back local consumers after the disappointing 5S and 5C launch.

Bottom line: Apple’s iPhone 5S launch in China was largely a dud, due to high prices for the new models and lack of a China-specific launch event.

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