John Paczkowski

Recent Posts by John Paczkowski

Apple's Latest Fortune: You Will Be Unusually Successful in Business

“We will enter Asia with the iPhone in 2008,” Apple COO Tim Cook declared in March 2008. “And we will one day enter China, we’re not saying when.”

How’s September of 2009 sound? Because China Business Network claims that China Unicom and Apple have finally inked a deal that will bring the iPhone to the country around that time.

Manufactured by Foxconn, the Chinese version of the iconic handset will reportedly be identical to the original in all features save one: To comply with the demands of China’s Ministry of Industry and Information Technology, the Chinese version of the iPhone will lack Wi-Fi support.

Why would people pay retail for a defeatured iPhone when they could buy the real thing on the country’s flourishing gray market? Well, for one thing, Wi-Fi-enabled iPhones are pricey–$695 for the 16GB model, $811 for the 32GB version. For another, they might not perceive Wi-Fi as a necessity, as Dan Butterfield notes over at iPhonAsia.

“While some consumers in China may prefer grey-market iPhones with WiFi, there are many millions that have never used WiFi on their phones and have only experienced 2G speeds,” Butterfield explains. “For this group, WiFi might be a less important feature. They may be more interested in iPhone’s enjoyable user-experience, entertainment value and status.”

Either way, defeatured or not, Apple (AAPL) benefits. “For China’s most tech-savvy power-consumers, WiFi will be important,” says Butterfield. “As a result, I suspect smuggling of WiFi-enabled iPhones will continue to be a profitable enterprise. Apple will be a prime beneficiary as grey-marketers will continue to acquire full-price WiFi enabled iPhones in Hong Kong….

“Using conservative estimates,” Butterfield continues, “I believe Apple can capture a full 2% share of the wireless market in China within the first 12 months of an official iPhone launch. That’s 14 million iPhones and perhaps another 2 million or so coming via grey-market iPhone sales.”

[Image credit: iPhonAsia]


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik