Apple-crazy China will become biggest iPhone market

By Jonny Evans

Get set for an Apple [AAPL] revenue revolution in China, as the country goes insane for the company's solutions while COO Tim Cook tours the place to seal the iPhone 5 on China Mobile deal. Where iPhone goes, iPads and Macs follow, and this is the beginnings of a new growth story.

[ABOVE: Not relevant to this story, this is the iPad-created animated video for new song, 'Undivided' from the band, Blush. Released this month.]

China Apple crazy

Look at the evidence. Look at the passion. Today we learn one Chinese teenager is so crazy to get an iPhone 4 she was caught trying to sell her virginity on Weibo. A few weeks ago, one Chinese teenage boy sold his kidney in exchange for an iPad.

Don't misunderstand me. I'm not representing those events as good news, just as illustrative of the passionate intensity with which Chinese consumers regard Apple products.

[This story is from Computerworld's Apple Holic blog. Follow on Twitter or subscribe via RSS to make sure you don't miss a beat.]

China already accounts for around 10 percent of Apple's revenues, and this is growing insanely fast. Two years ago Apple generated just $1 billion business in China.

Speaking during Apple's Q2 financial call, Cook said: "Greater China saw iPhone sales being up over 3x, about 200 -- almost 250%. And this catapulted revenue for the first half or first fiscal half in Greater China to just under $5 billion, which is up almost 4x year-over-year."

China will be Apple's biggest market 


[ABOVE: From Distimo. The download volume in the top 300 most popular applications is depicted in the world map above on a logarithmic scale from dark blue to pink with pink representing the highest number of downloads. The largest country is the United States while the smallest country is Uganda.]

The move to sell the iPhone 5 via China Mobile, the world's largest network, will massively increase the company's smartphone sales.

The network boasts 841.9 MILLION subscribers.

If Apple can get an iPhone 5 -- or, if it happens, an iPhone nano (or iPod nano+) into 10 percent of these hands, then that's gonna do the iOS ecosystem no harm at all.

New figures from app store analyst Distimo reveal China is now the second largest iPhone App market in terms of total download volume behind the US. And the volume of downloads in South Korea has now surpassed that of countries like Germany and France.

Ticonderoga Securities analyst Brian White believes the high-end mobile phone market in China offers 100 million to 125 million subscribers.

"Traveling to China is a major undertaking and we doubt Tim Cook would be visiting China Mobile unless the two companies were getting close to a partnership," White said.

China is a template for future growth

Worldwide, Apple already sells 2.37 iPhones every second (according to the 18.65 million iPhones it sold in its last reported financial quarter). 


[ABOVE: Apple's amazing Pudong, China store.]

This isn't to be considered in isolation, what's happening in China reflects the firm's attempt to create a template for best practice when it comes to building its business in other developing markets, India, for example.

"We purposely put the bulk of our emphasis from an emerging market point of view on China to really learn, and then we're going to take that learning to other markets," said Cook last April.

Apple's working to ignite a market for its products across the developing world, and it's pretty clear that its setting itself into a good place to benefit as China, India, Russia and other huge population centers pick-up on Apple.

The iPhone halo is shining over Apple's other devices. 100 people queued in the rain outside the company's Beijing store when iPad 1 went on sale in September last year. One man hired 13 people to buy 58 iPads for him, which he said he had acquired as gifts for his clients.

Wonders of the world

The Ticonderoga Securities analyst notes that there are already supposedly more than 4 million iPhone 4 users in China.

"We believe the ramp of the mobile Internet in China will be one of the great wonders of the tech world over the next decade and the country has clearly caught "Apple fever" that we believe will only accelerate as the company expands it carrier base to include both China Mobile and China Telecom."

Perhaps this is why Needham's analyst Charlie Wolf thinks Apple's iPhone 5 is going to decimate Android's market advantage when it ships in September.

What are your thoughts? Please say your piece in comments below. Otherwise, please follow me on Twitter so I can let you know when new reports get published here first on Computerworld.     

Copyright © 2011 IDG Communications, Inc.

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