Nomura's comparison of various iPhone generations
Two days after the hullaballoo from the unveiling of Apple Inc.'s (Nasdaq: AAPL) newest smartphone, contrarian reports are beginning to indicate the iPhone 5 could have trouble taking off in the fast-growing Chinese market.
On Friday, a Hong Kong-based analyst for Japanese financial services firm Nomura wrote in a note to clients that "contrary to some media reports' suggestions, the initial version of iPhone 5 does not work" on the 4G LTE network infrastructure of China's biggest wireless carrier, China Mobile.
The new phone "can only operate on 2G (GSM) / 2.5G (GPRS) / 2.75G (EDGE) networks of China Mobile," the analysts wrote, noting the "data uplink/downlink speeds of the latter technologies are slower than 3G technology such as WCDMA" and that "subscribers using the phone will not have an ideal data usage experience."
China Mobile does not subsidize iPhone sales to lure customers into long-term contracts, as is standard practice in the mobile industry. Nomura analysts, again striking against published rumors, note that "China Mobile is reluctant to commit to an iPhone partnership agreement."
The iPhone 5 will be available on the networks of large competitors China Telecom and China Unicom, both of which confirmed Thursday the device will go on sale in China later this year. But China Mobile is the world's largest cellular service provider with nearly 688 million customers. And 69 million of those subscribers receive 3G or 4G service, amounting to over half of all high-speed smartphone service subscribers in the country.
The iPhone 5's prospects in China seem somewhat fragmented, according to various media reports. On the one hand, the South China Morning Post reports how Apple enthusiasts are angry the country is not among the 100 nations that will participate in the device's global launch later this month -- with the expected launch date of the phone in the country some time in December -- and suggests some will go to the lengths of paying 6,500¥ (over $1,000) for black market shuihuo phones.
On the other, Marketwatch explains how, according to data from market firm Analysys, Apple's share of the high-end smartphone market has been steadily losing ground in China, dropping to 38 percent in 2012. Android-compliant phones, by contrast, rose sharply to 59 percent, from 41 percent, over the same period.
It could get worse for Apple in China. A survey conducted Thursday by Sina, a major Chinese portal, found that out of more than 36,000 respondents to an online survey 48.1 percent of respondents said they would "not buy the iPhone 5."
"I will consider buying the iPhone 5 after it is available in China, maybe in several months, but the impulse has dimmed into inertia," Wang Yao, a 26-year-old white collar worker in Beijing who owns an iPhone 4S and has also owned various iPads, told state-run Xinhua news agency.
"The feeling of being unique has long faded away as so many people have the iPhone," Wang added.