'Pent-up demand' to help drive iPhone 5 sales in China, say analysts

IDG News Service - As Apple prepares to launch its iPhone 5 in China, some analysts expect the product to sell well in the country and possibly even top sales for Apple's previous iPhone models in the country.

Apple will finally launch the iPhone 5 in China on Dec. 14, almost three months after the device went on sale in the U.S. And already pre-orders for the product appear to be high.

On Monday, mobile carrier China Unicom began online pre-orders for the device. By 4 p.m. local time that day, it had received more than 100,000 online reservations, according to one of the company's official microblogs.

Previous iPhone launches have attracted wide consumer interest in China, drawing long lines at Apple stores in Beijing and Shanghai. But in the past two quarters, Apple's iPhone shipments for the Chinese market have declined, causing the company to drop out of the country's top five smartphone vendors, said Teck Zhung Wong, an analyst with research firm IDC.

"This implies there's some level of pent-up demand for the iPhone 5," he said. "We think (increased shipments) will manifest itself this quarter, and next quarter as well."

The launch of the iPhone 5 also occurs two years after the launch of the iPhone 4 in China. Many existing iPhone users' two-year contracts are expiring and so will likely upgrade, Wong said.

Competition is heated in China's smartphone market, with Samsung leading the field. Chinese vendors such as Lenovo, Huawei and ZTE are not far behind, and driving much of the country's smartphone sales are handsets at the lower end, with prices at US$150 and less when bought without a contract. In contrast, the 16GB model of the iPhone 5 will be priced at 5288 yuan (US$842).

But experts have said the iPhone still remains one of the most popular handsets in the country. Nicole Peng, an analyst with research firm Canalys, expects the iPhone 5 will outperform previous iPhone models sold in China.

"It arrives just in time for a major holiday/gifting season in China," she said in an email. Mobile carriers China Unicom and China Telecom will also take advantage of the phone's popularity to attract new subscribers, she added.

For this upcoming launch in China, Apple is slightly raising the price for the iPhone 5. The 16GB model's price is about 300 yuan more ($48), than when the iPhone 4 and iPhone 4S was first launched in China. The 32GB and 64GB, on the other hand, will cost about 100 yuan more.

Analysts, however, don't expect the price hike to deter Chinese consumers from buying the device. Many consumers will also choose to buy it from the mobile carriers China Unicom and China Telecom, which offer subsidized contract plans, they add.