Saying tech giant Apple's (NASDAQ:AAPL) iPhone 6 and 6 Plus smartphones are a hot commodity would be an impressive understatement.
As perhaps the most anticipated tech story of the year, it should surprise exactly no one that demand has largely exceeded supply for Apple's new smartphone lineup, especially the larger iPhone 6 Plus.
Apple set yet another record for first weekend iPhone sales when the iPhone 6 and 6 Plus officially went on sale in its initial rounds across developed markets throughout late September. The company will likely raise eyebrows again this weekend when its iPhones will become available for preorder in another critical market for the world's largest publicly traded company: China.
Apple's next must-watch launch date
This Friday, Oct. 10, Apple will officially begin accepting preorders for the iPhone 6 and 6 Plus in China, with actual shipments starting one week later on the 17th. This is important for several reasons.
Under the supervision of CEO Tim Cook, Apple has made significant inroads into the high growth Chinese smartphone and tablet markets, a trend that will only accelerate in the years to come. Thanks to its cache as a status symbol, Apple's high-end consumer-electronics devices have proven enormously popular. However, the iPhone 6 and especially the 6 Plus are likely to prove significantly more popular than other devices in Apple's product portfolio in China for one key reason: screen size.
Chinese smartphone users absolutely love large-screened smartphone, colloquially referred to as "phablets." Case in point, 40% of Chinese smartphone sales in the month of March were attributed to devices with screen sizes of five inches or larger. Thankfully for Apple and its shareholders, the iPhone 6 Plus, with its 5.5 inch screen, is a device that perfectly situates Apple to take advantage of this growing preference among Chinese consumers. The Apple iPhone 6 and 6 Plus were likely to prove resounding successes in China because of the aged state of Apple's iPhone installed base in China, and the inclusion of the larger 6 Plus in Apple's latest iPhone refresh only further stacks the deck in Apple's favor.
Not without its risks
The accepted dogma for this storyline holds that the Apple iPhone 6 and 6 Plus will prove successful in China (and globally for that matter). However, there are several key potential mitigating factors anyone following the company will want to consider.
The first is price. For a developing country where per capita incomes remain relatively low, the Apple iPhone 6 and 6 Plus are by no means cheap. And, it's also no secret that additional costs like import taxes help drive up the cost of Apple's highly sought-after iDevices to levels well above their sticker price in developed markets. The 16GB version of the iPhone 6 will retail for roughly $860 (RMB 5,288), and the presumably more popular iPhone 6 Plus will cost around $990 (RMB 6,088). This is by no means cheap. However, also noting that the memory structure of Apple's new iPhone lineup (16, 64, and 128MB models) heavily incentivizes paying up for memory, the average cost of a new iPhone in China could easily sit somewhere above $1000, making it largely unobtainable for all but the richest Chinese citizens.
The second issue also relates to price for Apple's new iPhones. In a bid to support China's budding domestic smartphone makers, the Chinese government has been attempting to reduce the amount of subsidy support its domestic telecom companies can offer for highly popular foreign handsets like the iPhone. Such moves would help remove one of the critical tools Chinese telecom companies have to help reduce the overall sticker shock for consumers.
Despite these potentially dampening risk factors, the Apple iPhone 6 and 6 Plus are poised to quickly become Apple's best-selling iPhones ever in China when they launch later this month, and investors are undoubtedly aware of this. As such, anyone even casually interested in the iPhone 6 storyline will want to pay close attention to Apple's commentary on the relative strength of this weekend's presales figures. Apple's and its iPhone 6 and 6 Plus certainly have their work cut out for them in the world's largest smartphone market. However, I'm certainly a believer it's more likely than not that Apple will once again impress investors and the market as these key upcoming dates approach.