China has a market to accommodate Apple's 4G iPad

In China, Apple's premium brand strategy is targeted at the same wealthy buyers of Este Lauder cosmetics, BMW cars and Burberry clothing.

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Apple announced that its 4G LTE iPad is on sale today in China, one of the two Chinas. Apple can’t compete with Android in the entire Chinese market. There are too many Android devices at much lower price points that compete for the average consumer in a market where the average per capita GDP (ppp) is below $9,000 per year, or one seventh of that in the United States, and the average family income is about $2,100 per year, according to a New York Times report. The least-expensive iPad mini announced today is more than a quarter of this average family income.

The LTE iPad Air’s suggested retail prices are about 15% higher than in the U.S. The prices depend on memory size, just like in the U.S.: $730 for the 16GB model, $840 for the 32GB model, $960 for the 64GB model, and $1,070 for the 128GB model.

By comparison, the iPad Mini with Retina display’s suggested retail prices are about 15% higher in China than in the U.S.: $620 for the 16GB model, $730 for the 32GB model, $840 for the 64GB model, and $960 for the 128GB model.

But in the big, wealthy cities, Apple will compete very effectively. Apple accounts for just 7% of market share in China, as reported by IDC, but in the other China, the big cities, its market share is closer to 30%.

It’s not just the money that attracts Apple; it’s the mobile networks. China Telecom, China Unicom, and China Mobile are all in the midst of building out 4G LTE networks that are very fast, operating at 100 Mbps, with even faster networks available. China Mobile has tested TD-LTE at speeds well above 100 Mbps.

This year, China Mobile will finish building the fastest and biggest TD-LTE network in the world, serving 760 million customers. When completed later this year, the network will cover 340 cities with 500,000 base stations. China Mobile is taking a page from Verizon Wireless’s play book - investing heavily to build 4G networks ahead of its competitors to protect its huge customer base from attrition. And Apple is trying to lead in these cities too, selling iPhones and iPads to those with the money and affinity for premium western brands.

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