Posted : 2011-12-13 16:39
Updated : 2011-12-13 16:39

Apple’s rule of no sale put to test

A pedestrian walks by an Apple store in downtown Seoul in this July file photo. / Korea Times
By Kim Yoo-chul

Sales of Apple’s latest release, the iPhone 4S, are stagnant.

SK Telecom and KT, the nation’s iPhone vendors, are known to have guaranteed the sale of some 600,000 of the Apple smartphones by the end of this year since the device was launched on Nov. 3.

Some online shops which have been selling the Apple device have recently cut its price by 230,000 won or some $200.

Sources said customers are able to buy the 16-gigabyte iPhone 4S at 580,000 won, down from the suggested retail price of 814,000 won. The 64-GB model, whose original retail price was 1.07 million won, was selling to 840,000 won level.

``Although the discount includes a two-year contract, it is very rare because Apple has a tendency to maintain the prices of its key products despite any market situations,’’ said one official.

The aggressive promotions by SK Telecom are also squeezing its biggest local rival, resulting in KT giving more subsidies to its local distributors and outlets.

KT’s Olleh Shop has been selling the 16-GB iPhone 4S for 774,000 won, the 32-GB handset at 906,000 won and the 64-GB model for 1.03 million won.

``Customers who want to buy the iPhone 4S don’t have to pay registration fees and for USIM cards because domestic outlets are unexpectedly busy to lower their iPhone 4S inventories with the subsidies of SK Telecom and KT,’’ said Kim Sang-min, who runs an outlet in Myeong-dong, where Seoul’s busiest shopping street is located, told The Korea Times.

``We are still being asked to stick to the suggested retail price, however, we shouldn’t because it’s true the iPhone 4S is receiving a rather lackluster greeting from local customers,’’ said Kim.

Officials from SK Telecom and KT said some 300,000 of the Apple smartphones have been here sold so far.

``In order to attain sales targets for Apple, SK Telecom and KT should provide more subsidies to their official iPhone 4S sellers. Because Apple doesn’t give any financial help for marketing promotions, SK Telecom and KT should fully take this burden,’’ said Park Min-jeong, who also runs another outlet in Myeong-dong.

KT spokeswoman Kim Yoon-jeong said her firm is increasing its efforts to sell more Apple smartphones, though she declined to elaborate further.

SK Telecom executives who represent the company declined to comment and Apple’s local spokesman Steve Park wasn’t available for comment.

The sluggish iPhone sales come after Apple’s chief executive Tim Cook is facing big challenges in his leadership at the iconic company in the United States.

Apple yielded its previous lead in smartphones to Samsung as the Korean heavyweight is leading the global market in terms of total shipments since the third quarter of this year.

The California-based consumer electronics firm is also involved in heavy patent disputes with Samsung in nine countries with 30 separate lawsuits.

Apple recently lost its bid to block Samsung devices on its home-turf, while Samsung won in a separate legal battle in Australia.

Apple is also being challenged by the emergence of Amazon in the market for tablets as Amazon’s $199 low-priced tablet KindleFire has been gaining attention, threatening the iPad, which was selling at $499.

Market research firm IHS predicts the KindleFire will take 14 percent of the global tablet market by the end of 2011.

In South Korea, the iPhone 4S’ “lack of competitiveness” was also due to higher appetites for 4G LTE-equipped (Long Term Evolution) smartphones, according to market watchers.

4G LTE smartphones had sold over 620,000 handsets by the end of November, just a month since their release, according to officials from SK Telecom and KT. The officials have no doubt that the combined number of LTE phones sold is going to rise over 800,000 this year.

``It’s quite an exaggeration, however, I can say that the iPhone 4S is disappearing from local shelves. Tech-savvy Koreans are going for 4G LTE smartphones, while Apple fans are helping Apple secure its bottom line in South Korea,’’ said an official.
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