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Demand for iPhones in China could skyrocket, analyst says

January 30, 2012 |  4:47 pm

Cleanup of Apple store in Beijing after riots related to iPhone 4S launch

What do tenacious chief executives dream about during their four nightly hours of fitful sleep?

How about a world in which hundreds of millions of people desperately want to buy your product -- so much so that riots break out in long lines while they wait in front of your stores. Meanwhile, although you're already the world leader when it comes to high-speed, high-efficiency manufacturing, your legions of factories simply cannot churn out enough iPhones to satisfy demand.

Oops, I let the cat out of the bag there. Because yes, there's a good chance Apple Inc. Chief Executive Tim Cook is having a version of this very dream -- a kind of nightmare of success in which you fear that a huge opportunity right under your nose is simply too huge to take advantage of.

For some context, Apple sold 72 million iPhones in its fiscal 2011, a staggering number that required all the muscle of the world's most valuable technology company, as well as a network of Asian factories pumping out the devices at a breakneck pace. The sales came from more than 100 countries.

Now Chinese consumers may want to buy nearly that many iPhones all by themselves.

That may well happen, says Morgan Stanley analyst Katy Huberty, who in a note to investors guessed that Apple may soon be selling 57 million iPhones annually in China, capturing 60% of the projected market for smartphone buyers there. That would be a sixfold increase from the 10 million iPhones Chinese consumers bought in 2011. 

The pent-up demand for the iPhone in China is hard to overestimate. The nation's leading carrier, China Mobile, has 650 million mobile subscribers, according to Huberty (compared with about 200 million for second-place China Unicom, which offers the iPhone). China Mobile does not technically support the iPhone because its network isn't compatible. But that hasn't stopped 10 million of its customers from finding ways to use the device anyway.

Starting this year, China Mobile may flip on its next generation 4G mobile network. If analysts are correct, that upgrade might prove beneficial for the iPhone 5. The next version of the device, which observers guess may hit stores in the summer, is likely to work on the faster 4G networks.

That day may well bring "double happiness" to the folks in Cupertino, Calif.

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-- David Sarno

Photo: Workers clean the windows of an Apple store in Beijing this month. Customers who had waited overnight for the launch of the iPhone 4S turned angry and pelted the flagship store with eggs after it failed to open. Credit: ChinaFotoPress / Getty Images

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