Will Apple's Failure to Get Approval for the iPhone 6 in China Keep iPhone Sales From Reaching Historic New Heights on Sept. 19th, 2014?
When Apple launched the iPhone 5S and 5C last year (Sept. 2013), the devices were available in mainland China simultaneously with the rest of the world.
On that frenzied Sept. 20th -22nd weekend in 2013, Apple was able to push 9 million phones into eager hands worldwide - equalling the number of phones they had sold in their previous two introductions combined (Oct. 2011 - 4 million iPhone 4S's and Sept. 2012 - 5 million iPhone 5's).
That near doubling of a previous first weekend record could happen again with the iPhone 6... but that lofty goal just got a little bit harder.
According to a report in the Sept, 10th, 2014 NY Times, the new iPhone 6 "is facing a potential setback in China, one of [Apple's] biggest and fastest-growing markets, after the much-anticipated introductions here of the new iPhone models were delayed."
According to unconfirmed reports, Apple was caught off guard by a last-minute snag in getting its new iPhones certified for sale in China by that country's Ministry of Industry and Information Technology. There are even rumors from inside China that the iPhone 6 may be unavailable in China (unless you're willing to buy an illegal iPhone at a premium after it has been smuggled into the Middle Kingdom) until sometime in 2015.
The approval delays in China are just one small piece of the larger iPhone 6 sales story.
While the marketing guys from Apple clearly enjoy the dramatic news coverage they get from fan-boy lines at their retail outlets, it's a mistake to read too much into first weekend sales figures. The numbers sold on a single weekend may make for good marketing copy - but it's easy to see how - constrained by supply chain issues and other vagaries - Apple could lose a marketing battle and still win the sales war.
Still... a delay in China that puts iPhone sales into a new year's reporting period (missing this quarter altogether?), while leaving the dynamic Chinese market wide-open to local (better-connected?) competitors, while also promoting gray market sales and counterfeiting...?
The guys in Cupertino can't be too happy about all that.
And it seems all but certain that Apple wasn't really expecting the 11th hour push-back from Chinese officials.
According to the NY Times, "Apple’s staff in China appeared to have been caught off-guard by the last-minute change of plans, with one executive saying on Wednesday that all of the company’s stores in Beijing and Shanghai had been preparing for sales to begin on Sept. 19. The executive spoke on the condition of anonymity."
As Apple and Chinese government reps considered the ramifications of the delayed iPhone 6 release (both privately inside their own headquarters and in trans-Pacific conversations) one wonders if there was any discussion of Chinese jobs and Apple's continued reliance on manufacturing and assembly in China? And was there any express pushback concerning post-Edward Snowden concerns about cyber security?
Here's what we know as of Sept. 17th, 2014...
According to the NY Times: "News reports in China on Wednesday (Sept. 17th, 2014) said the iPhone 6 had not yet been approved by the Ministry for Industry and Information Technology, which must sign off on the technology of devices like smartphones."
But many analysts are still bullish on the iPhone 6: For example, Piper Jaffray's Gene Munster increased his estimates for quarterly iPhone 6 sales to between 56.7-62.7 million - in comparison to his previous estimates of 54.5 million - based on a Sept. 15th, 2014 Apple report of iPhone 6 and iPhone 6 presales in the first 24 hours of 4 million units.
Still... no approval for the iPhone 6 has appeared on the Ministry of Industry and Information Technology’s website as of the end of business on Sept. 17th, 2014.
And it may be time to consider whether this delay in official sales in China (which represents about 15% of Apple's total revenue - in a market that is rapidly expanding) could keep a lid on what might have otherwise been a massively historic new sales record for Apple and their iPhone 6.
Here is a link to the syllabus for the graduate producing students at TNUA who are taking Producing 1 with Prof. Finch Fall 2014.
Extra credit for the students who can identify the movie producer with the great eyebrows and moustache.