Apple started selling its newest smartphone in the People's Republic of China on December 14. Late tonight, the company claims 2 million sales for Friday and the weekend. The announcement comes as rumors mount about slowing sales.
"Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China", Tim Cook, Apple CEO, says. "China is a very important market for us", which is quite the understatement. During fiscal fourth quarter China revenue reached $5.7 billion, up 26 percent year over year. iPhone rose 38 percent, Macs 44 percent and iPad 45 percent. For the fiscal year, China generated $23.38 billion revenue, or 15 percent for all Apple. China accounted for more than three-quarters of Asia-Pacific revenue.
Meanwhile, as a market for smartphones, China's importance rises. For 2012, IDC forecasts dramatic changes. In 2011, US share was 21.3 percent compared to 18.3 percent for China. This year, China is expected to reach 26.5 percent, while the United States falls to 17.8 percent.
As the United States cools and China heats up, Apple faces increasing competition from lower-cost Androids reaching people with lower incomes. "Regionally, we expect smartphone demand to flow down to lower-tier cities", James Yan, IDC senior market analyst, says.
Already, Androids put heat on iOS during third quarter, according to Gartner. Based on actual sales to end users, not less-reliable shipments to carriers and dealers, Android's global smartphone OS share rose a stunning 19.9 points year over year. That's to 72.4 percent, up from 52.5 percent. Meanwhile iOS fell to 13.9 percent from 15 percent.
"In China, sales of mobile phones grew driven by sales of smartphones, while demand of feature phones remained weak", Anshul Gupta, Gartner principal research analyst, says.
The real test of Apple's mettle and iPhone's capacity to cool Android momentum is the newest model's release in China. The company expects to have iPhone 5 available in more than 100 countries later this month.
Apple shares are in free fall. At Friday's close, the stock was down nearly $200, or 28 percent, from the all-time high set just a few months ago. Will the news give the stock lift? Tomorrow's trading will answer.
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