iPhones in China

Apple's iPhone (a combination cellphone & music/video player) is off to a mixed start. The iPhone apparently has not been selling up to the company's expectations in the United States so Apple reduced the initially inflated price by about $200. However, this angered people who had already bought iPods. Apple CEO Steve Jobs's initial response was basically tough luck, but after this further angered purchasers, he must have realized that pissing off your most loyal customers probably isn't the best public relations strategy and Apple announced today that it will offer $100 credits to people who bought iPhones at the initial $599 price (see Jobs Apologizes: Gives $100 Credit).

Ironically, while American consumers are griping about the iPhone price, some eager consumers in China have been paying about 3 times the U.S. price for iPhones that don't even work fully (Chinese are paying up to U.S. $1170 for phones that can make, but not receive calls). More ironically, Apple is not selling the iPhone in China yet and does not plan to introduce iPhones to Asia until 2008. The phones being sold are either counterfeits or legitimate copies being illegally sold in China (See Unauthorized iPhones on Sale in China). Here's a video showing one of the fake Chinese iPhones:



Apple's decision to release the iPhone only in the U.S. initially seems to me like a big mistake, reflecting a company that is ignorant of the Asian market and the reality of globalization. By ignoring Asia, Apple is passing up the chance to sell iPhones to the vast majority of potential customers for the device. Mobile phone use is extremely prevalent all over Asia, from highly developed countries such as Japan and South Korea to lesser developed countries including the India and the Philippines (see Cellphone Users by Country). China has the world's largest number of mobile phone users (around 500 million) and the number of Chinese mobile phone users is likely to keep growing substantially due the increasing middle class with disposable income.

Now I realize that Steve Jobs has a lot more money than I do, but being the profit-hungry, capitalist he is, I'd think he'd be working frantically to secure deals with Chinese (and other Asian nations) wireless service providers to offer the iPhone (which may admittedly not be easy). Consumers in Asia that want iPhones and can afford to pay for them are going to get them, whether they're legally available or not. Not having them available legally gives more time for fakes to take over and dominate the market. With the high prevalency of counterfeiting in China and other countries, businesses must figure out how to make their products legally available in all markets for their products in order to have a chance. Ignoring the majority of your customer base which results in buying imperfect, illegitimate copies just doesn't seem like good business sense to me. C'mon Steve, get on the ball or at least on the iPhone.