No more iRiots: Why Apple fans in China prefer to buy from carriers

The days of riots and launch day madness at Apple Stores in China are over, with consumer interest in the iPhone now more focused on carrier stores and long-term pricing deals, as today’s launch of the iPhone 5s and iPhone 5c showed.

The new Apple devices went on public sale in China today but, far from the chaotic scenes of past times, there were more customers waiting at China Unicom or China Telecom stores than Apple’s own retail outlets.

Queues for China Unicom’s subsidised Apple handsets longer than at Apple shops in Beijing – iPhones still seen by many as too expensive

— Angus Walker (@anguswalkeritv) September 20, 2013

Part of the reason for the ending of the kind of madness that saw the iPhone 4S launch cancelled in Beijing and Shanghai in 2012 is Apple’s reservation system. Customers must register online the day before they come to the Apple Store to pick up their phone.

That means no more opportunistic queuing and fewer direct sales to scalpers.

At Apple’s Wangfujing store in Beijing, about 50 ppl queued for the 8 am Iphone 5s/5c release. Online registration was required, no walkins.

— Edmond Lococo 罗孟德 (@EdmondLococo) September 20, 2013

But there’s another explanation: price.

Apple has taken a lot of criticism for the cost of the new iPhones in China. While it is true that unlocked versions of the devices retail significantly higher in the country (the iPhone 5c is priced 33 percent higher than the US, tax included), Chinese carriers have been subsidizing Apple smartphones for some while.

Both Unicom and Telecom will let customers grab either phone without paying a cent, but they require long contracts. A free iPhone 5s comes with a 30-month contract, while the iPhone 5c carries a 36-month lock-in — as this chart at Tech In Asia shows.

Even still, that isn’t cheap and it shifts the financial challenge from paying the equivalent of $900 upfront for the iPhone 5s (or $750 for the iPhone 5c), to managing a 2.5 year contract priced at $63 ($48 for the iPhone 5c) per month.

Indeed, that monthly repayment cost is too much for many Chinese in the first instance.

Obviously, the longer contract makes China-based devices more expensive than those the US, but it seems Chinese consumers aren’t put off by that and are keen to take advantage of the lack of upfront cost.

There’s one more thing to note. China Mobile, the world’s largest carrier with over 720 million customers, is strongly rumored to preparing to offer the iPhone for the first time after gaining regulatory approval.

China Mobile is estimated to already have 42 million iPhone users already — each of whom bought the phone SIM-free and are limited to 2G data connections — so it will be interesting how partnership with Apple disrupts the market.

The prospect of China Mobile’s wide distribution business selling an iPhone 5c (at $0 upfront) could help Apple reach new demographics in China — even if the phone itself is ‘cheaper’ rather than ‘cheap,’ as many had hoped.

(Hat tip to @Niubi for inspiring the iRiot headline.)

Photo credit — Getty Images: 1, 2