Forbes Says Lawsuit-Bolstered iPhone Must Lower Price To Compete In China

In an article published on Forbes.com, an unnamed "Trevis Team" analyst is predicting a restructured pricing model for Apple sales in the Chinese mobile market. However, in doing so, the article's author makes a number of tenuous assertions about the fundamental basis for Apple's global success. Instead of chalking up Apple's popularity to the company's winning combination of premium hardware, elegant software, and a robust ecosystem, Anonymous intimates that Cupertino grows its coffers primarily through litigation:

Having identified China as a significant area of growth, it will not be long before Apple joins the fray more seriously. However now that Chinese manufacturers have formed an alliance, this could make it more difficult for Apple to single any one manufacturer out for patent infringement. If Apple fails to impede the growth of Chinese manufacturers with lawsuits, it may be forced to lower the prices of its mobile devices sooner than expected.

Never mind the fact that such a litigious Apple (re)action has yet to significantly impact a single competitor in any meaningful way (save for a sole Samsung tablet in Germany -- for a month), but it ignores the very approach Apple has already established in attacking the Chinese market. Part of that attack, as I've discussed before, is a big reason why Apple held off releasing a redesigned iPhone 5 last year. The iPhone 4 assembly lines were already running at full capacity, and Apple knew it needed to maximize volume to meet (or rather, come close to) demand. Until production capabilities are drastically increased, China won't ever receive the newest iPhones en masse. But that hardly matters. As evidenced by strong international iPhone 4 sales and the outright longevity of the (now-free) 3GS model, most consumers -- here and abroad -- would rather buy a year-old iPhone than some half-hearted, budget Android affair. And, since Anonymous cites the "economical" going rate for mid-level Chinese smartphones as "up to CNY 1,000 ($158)" on contract, his argument is doubly dead. Why? Because Apple's prices are already low! China Unicom now offers the 16 GB iPhone 4S for free on select plans, and last year's model -- while sometimes more expensive than its US counterpart -- is dropping in price. (It should be noted that any markup on Apple hardware in China is determined by second- and third-party retailers and service providers. Apple's wholesale prices are largely the same worldwide.) How many Chinese customers -- other than a few fundamental nationalists -- are going to pay more money for Coolpad-, Huawei-, Lenovo-, SED-, TCL- and ZTE-branded subpar smartphones? If China's carriers remain content to pay Apple's prices and recoup those losses with new and returning subscribers, there won't be a change in Cupertino's financial approach. Whatever its net cost, as long as the iPhone remains so overwhelmingly sought-after, Apple won't need lawsuits and low prices to keep people buying. While you might use a smartphone for more than just speaking, the iPhone speaks for itself. In any language. [Image: chinadaily.com]

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