The iPhone officially launched in China over the weekend, after years of grey-market availability through unlocked iPhones streaming in from Hong Kong. Although the main sales channel is service provider China Unicom Ltd., one indication of the lukewarm reception can be seen in the sales numbers at Apple's only retail outlet in Beijing: ten on Saturday, and grand total of one on Sunday.
The Wall Street Journal captured the gloomy mood in its story today:
Hundreds of people braved cold and rain to attend a Friday night party thrown by China Unicom Ltd., the state-owned carrier selling the iPhone, at a Beijing shopping center. Still, the crowd seemed subdued compared with the thousands who turned up at stores when the iPhone was introduced in markets such as the U.S. and Japan, where it quickly sold out in many locations. As of Sunday night, stores around Beijing still had the iPhone in stock.
So if you buy a 32 GB iPhone 3GS and get Unicom’s top of the line data plan,you'll end up dropping ¥21,000 ($3,076) over two years for phone and service. By comparison, buying the same model in the US with AT&T’s most expensive plan will cost about $2,600 over two years.
If you buy phone and service from China Unicom, though, they subsidize your bill. And it's important to remember that Chinese users generally do pay-as-you-go with phone cards rather than service contracts. So if you take into account two years of the service packages with subsidies that come with that China Unicom iPhone users can see from 10% to 27% of savings even compared to grey-market iPhones because of the cost of pay-as-you-go monthly service (the amount of the discount, of course, is going to depend on the model iPhone and the kind of service package you buy).
However, the combination of the higher upfront cost and the lack of WiFi - which will force users to get all of their data over 3G - will be a significant hurdle for Unicom to overcome in the months to come. I'd expect further giveaways and price drops as they struggle to make inroads on a grey market that's already 2 illion strong by some accounts.