Image by Getty Images AsiaPac via @daylife
Apple has just stopped selling iPhone 4S in China. It seems oxymoronic but it is good for Apple.
An angry mob of potential customers, the Apple store being pelted with eggs, and riot police completed the scene outside the Apple store in one of Beijing’s high end malls.
Some believe that this is a conscious marketing strategy by Apple to create frenzy of demand by limiting supply.
Apple has closed stores in China as it ran out of iPhone 4S. In the Chinese smart phone market, Apple has a 10% share and had sales of $13 billion for the fiscal year ending in September.
Apple has five stores in China, two in Beijing and three in Shanghai. On average, these stores generate more sales than any other Apple store in the world.
Unlike most U.S. consumers, in China, a large number of consumers tend to buy the device without a cell phone plan. In the gray market, Apple iPhone 4S reportedly sells for more than $1000.
The other interesting phenomena is that the people lined up in front of Apple stores in China are typically not the consumers themselves but temporary migrant workers hired by consumers to stand in line.
This week there have been pronouncements by some gurus that it is time to sell Apple stock. Some have advocated shifting from Apple stock into Google (GOOG), Microsoft (MSFT), and Research in Motion (RIMM). What is happening in China may prove such gurus wrong.
About Me: I am an engineer and nuclear physicist by background, have founded two Inc. 500 fastest growing companies and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com.
Full disclosure: I am long Apple from an average of $131. I took profits on 50% of the position at an average price of $360. Subscribers to ZYX Buy Change Alert may have a similar position and may have taken similar actions.
