Gray market sales have been a serious problem for Apple (NASDAQ: AAPL) with its hit iPhone and now it's getting weirder: iPhones made in China are being exported to the United States and Europe and then smuggled back to the People's Republic.
Apple's been puzzling over a paradox with the iPhone. The company says it has sold 3.7 million units, but only 2.3 million have been registered on the networks of its U.S. and European wireless partners. It seems that the phones are being smuggled out of their target markets by small-time entrepreneurs and then shipped overseas where they are unlocked and set up with wireless providers that are not part of Apple's distribution deals. iPhones sell for at least $100 more in China than they do here.
The New York Times reports that "For Apple, the booming overseas market for iPhones is both a sign of its marketing prowess and a blow to a business model that could be coming undone, costing the company as much as $1 billion over the next three years, according to some analysts."
Apple's struggle to hash out a wireless network deal in China has stalled the phone's official release there and, for now, the company is giving up a huge amount of revenue while consumers get the iPhone the only way they can. To make it worse, Apple doesn't appear to have any legal recourse.
iPhones making their way back to China
Posted Feb 18th 2008 10:30AM by Zac Bissonnette
Filed under: Apple Inc (AAPL), China, iPhone
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Reader Comments (Page 1 of 1)
2-18-2008 @ 5:01PM
NewsVisual said...
Sprint Nextel Corp announced on Monday that it and Samsung Mobile were offering customers a new high-end product that could be interpreted as a strategic effort to compete against the iPhone of Apple Inc and AT&T Inc. Called the Samsung M520 and dubbed a “slider phone,” Sprint said in its statement that the phone will offer users enhanced functionality. The M520 will allow customers to access the Web, find local restaurants, watch live television, download their favorite songs, send text messages or use GPS to find their way home.
2-18-2008 @ 5:36PM
gumby said...
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