Low Demand For Apple (AAPL) iPhone In China

In the United States, people will line up for blocks and camp out in the cold to be the first customers into Apple’s (NASDAQ:AAPL) retail stores when the consumer electronics wonder introduces a new product. The Chinese response to the introduction of the iPhone was muted.

The Wall Street Journal reports that iPhone sales in China may be slow, at least compared to those in the US. Among the reasons are a retail price that can be over $1,000 and the fact that two million iPhones has already been sold through unauthorized dealers.

A poor reception in China could be the first setback of any significance for the iPhone. It has already sold 34 million units worldwide and is widely viewed as Apple’s next flagship product, particularly now that iPod sales have begun to slow. China has about 700 million cellular subscribers. Apple would be successful even if it got a very modest part of the market.

Apple is also up against entrenched handset manufacturers on the mainland and they will not be easy to dislodge. Nokia (NYSE:NOK), the world’s largest cellular phone company, is the market share leader in China, followed by Samsung. Each of the companies is large enough to bring out new handsets for the world’s largest market and each has extensive relationship with the largest carriers–China Mobile (NYSE:CHL) and China Unicom (NYSE:CHU).

For the first time in a long time, Apple may be facing a hard uphill fight to become an important factor in a market it has targeted. China may be the iPhone’s Waterloo and that would set the global aspirations of Apple back considerably.

Douglas A. McIntyre