iPhone 5 Launch Fizzles in Beijing

Those hoping for a repeat of the madness that accompanied the aborted launch of the iPhone 4S in January left disappointed on Friday, as The Wall Street Journal reports that Apple’s flagship Beijing store began selling the iPhone 5 in uneventful fashion:

At 8 am on Friday, when the store opened to hurrahs from employees, only two consumers stood inside a cordon set up by Apple, though they were joined by a desultory snow man someone had made on a bench near the entrance. It’s not clear how much of the low turnout was attributable to the weather, how much to slack initial excitement for the device, and how much to the steps Apple has taken to smooth out the process of releasing products in China.

Apple recently added new stores in Beijing and the southern city of Shenzhen, with another one set to open soon in the southwestern city of Chengdu. The company has also changed how it releases its most popular products in China, requiring customers to apply online a day before to buy new devices and those selected are given a time window in which they can come out to get the phone. Those selected are given a time window in which they can come out to pick up their purchase.

Tian Jisheng, one of the two waiting in the cold when the store opened, said the lottery was competitive. He said he used four identities to apply for phones, but was only given an appointment for one. “I thought I didn’t get it, but then after 8 pm I received a notice I had gotten one,” he said.

Mr. Tian wasn’t visibly excited, but he said he was happy when he emerged from the store with his new, black iPhone 5. He said he was surprised there wasn’t a larger crowd.

One Beijing newspaper reported that an eager shopper broke into an Apple resale store before it opened this morning, according to CNET, but left empty handed after the store’s security system was activated. While the opening may have fallen flat, Reuters’ Melanie Lee writes that the release of the iPhone 5 may help Apple stabilize its shrinking market share in China, at least in the short-term:

Cupertino, California-based Apple has been in talks about a tie-up with China Mobile for four years. A deal with China’s biggest carrier is seen as crucial to improve Apple’s distribution in a market of 290 million users – which is forecast to double this year.

China is Apple’s second-largest and fastest-growing market – it brings in around 15 percent of total revenue – but the company’s failure to strike a deal with China Mobile means it is missing out on a large number of phone users. As the China pie grows, Apple’s sales increase, but without China Mobile, it’s losing ground at a faster rate compared to other brands.

“In absolute terms, this (iPhone 5) launch will certainly result in strong sales for Apple in China. However, in relative terms, I don’t believe it will move the needle enough in market share,” said Shiv Putcha, a Mumbai-based analyst at Ovum, a global technology consultant.

China Mobile and Apple initially said they were separated only by a technical issue – as the Chinese carrier runs a different 3G network from most of the world – but that has evolved into a broader and more complex issue of revenue-sharing.



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