The China Times

iPhone sales in China could soon reach 60 million devices per year

January 30, 2012

The Apple store in Shanghai.

The growing middle class of China represents an opportunity for Apple, smartphone sales in China could reach 60 million units per year.

As China’s middle class grows, Apple’s sales in the Asian giant could soon reach 60 million devices per year, predicted Morgan Stanley in a note to clients of the firm on Sunday. The analyst Katy Huberty, based on the results of the survey AlphaWise on buying habits among the growing middle class in China, provides an overview of the smartphone market in mainland China, once Apple finally materialize its agreements with operators China Mobile and China Telecom.

Huberty assumes that:

In China there are approximately 150 million high-end subscribers who pay at least 100 RMB (16 USD) per month for mobile phone service.

The operator China Unicom, the only official Apple carrier for the moment, has 15 million of those subscribers, or about 10%.

At the end of this year or early next year, Apple will start selling next-generation iPhones via China Mobile (with 120 million high-end subscribers) and China Telecom (with 15 million subscribers in the same category).

20% of high-income subscribers of China Unicom buy iPhones, the other two operators reported a similar proportion of clients. (8% of high-income customers of China Mobile buy iPhones, despite receiving only a 2G service).

Assuming that 20% penetration, Apple should sell at least 24 million additional iPhones in 2013, which will result in more than $ 6.50 per share profit for the company.

As the iPhone gains popularity and expand the middle class, that figure could grow to nearly 40 million iPhones next year, adding another $ 10 to Apple’s earnings per share.

In the long run, says Huberty, iPhone in China will reach penetration levels comparable to those of AT & T, where today 63% of smartphone customers choose Apple iPhones.

In the bullish scenario of Morgan Stanley, in a couple of years Apple will sell 57 million additional iPhones year in China alone.

To put that number in perspective, in fiscal year 2011 Apple sold 68.5 million iPhones worldwide, but with the launch of the iPhone 4S in October the company sold more than half of that amount (about 37 million phones) only one quarter.

The first graph shows the potential iPhone users in the operators China Mobile and China Telecom. The second shows that Apple’s device is the first choice for mobile users.

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