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Fight to the bottom

By Li Qiaoyi (Global Times)

08:17, February 22, 2013

While expectations and excitement are running high in anticipation of Mobile World Congress, to be held from Monday through Thursday, in Barcelona, the world's biggest annual trade show in the mobile arena, many tech aficionados have kept their ears to the ground over the past week, listening for the latest rumors about a possible new offering from Apple's iPhone lineup.

Many a Chinese consumer with less-bulging purses but nonetheless equal eager desire to own an iPhone may be especially ecstatic over the encouraging rumor, according to which the Cupertino, California-based tech giant is slated to unveil a cheaper iPhone in China sometime later this year.

"We believe Apple could launch the iPhone Mini at $330 (about 2,000 yuan), in line with flagship products in China from Lenovo, Huawei, ZTE, and Coolpad," Katy Huberty, a managing director at investment bank Morgan Stanley, said in a note to clients sent out on Tuesday.

The iPhone Mini, many analysts believe, will be Apple's next big move in the Chinese market to woo the nation's huge number of consumers who are more price-sensitive, although Apple has yet to confirm such speculation.

Tim Cook, chief executive of the popular iPhone maker did not respond to market rumors about the company's launch of a cheaper iPhone during his visit to China at the beginning of the year, but he said in an interview with the official Xinhua News Agency in Beijing that "China is currently our second-largest market. I believe it will become our first. I believe strongly that it will," highlighting the importance and great potential of the Chinese market.

Chinese market jubilee

"In the foreseeable future, the outlook for China's market is estimated to be much brighter than the global average, as the country still has a lot of room for growth in the field of smartphones," Bryan Wang, vice president and principal analyst at Forrester Research, said in an interview with the Global Times on Wednesday.

A recent report from JPMorgan Chase and Co forecast that growth momentum in the global smartphone sector will be on a downward spiral in the near future, with growth rates being estimated to decrease to 17 percent in 2014 from 37 percent in 2013 in terms of shipment.

The factors that have led to such a trend in moderation are a gradual saturation in the high-end smartphone segment, which will result in a lower number of first-time buyers, and the already dazzling features of smartphones in the hands of users, which may diminish demand for handset upgrades, said the JPMorgan report.

But this won't happen in China before 2016, when China's smartphone penetration is expected to reach more than 80 percent, Forrester Research's Wang noted, "There are still a number of Chinese lagging behind the smartphone boom, mostly living in smaller cities, who are either Luddites or so concerned about prices as to refrain from trading in their old-fashioned feature phones."

If this segment of the population were to join in on the smartphone spree sometime in the future, the result will of course drive strong growth in the country.

China's smartphone market currently leads in global market growth and has become one of the largest smartphone markets in the world, Wu Xiaofeng, a market researcher at research firm GfK China, revealed in a report sent to the Global Times,

In 2012, sales of smartphones in China surged by 123 percent year-on-year and the country's registers racked up 190 million units of smartphones, accounting for 65 percent of China's total mobile phone market.

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