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Apple's share of China's smartphone market fell by nearly half, from 9.1 percent to 4.8 percent, over the past year, according to research firm Canalys.
Apple appeared to be trying to capture some of that lower-tier market with this week's announcement of the lower-priced 5c. But the company's Web site said it will start at 4,488 yuan ($712) in China, well above analysts' expectations of as little as 2,500 yuan ($400).
"People were expecting a much cheaper version to expand the market to the mid-tier segment. But that didn't happen," said analyst C.K. Lu of Gartner Inc. "We don't see much is going on in the China market with this new product launch."
Investors gave Apple's two new iPhones a similarly lukewarm reception.
Shares fell 6 percent in U.S. trading on Wednesday following the announcement. Apple stock has fallen nearly 30 percent since peaking at $705.07 when the last iPhone came out.
Apple also disappointed observers by failing to announce an agreement with China Mobile Ltd., the world's biggest phone company by number of subscribers, though Apple had promised no deal.
After this week's announcement that Japan's biggest mobile carrier, NTT DoCoMo, would support the new iPhone lineup, China Mobile is the last major holdout. A tie-up would require Apple to create an iPhone that runs on China's homegrown mobile standard but would give it a partner with 750 million subscribers.
The latest iPhone release also marks an upgrading of Apple's marketing in China. For the first time, the new model will be released in China at the same time as it debuts on Sept. 20 in the United States and other major markets such as Britain, Japan and France. In more than 100 other countries, it will not go on sale until December.
But advance orders for the iPhone 5s and 5c have been "much lower" than for previous models, according to Zhang Xue, a saleswoman for China Telecom Ltd., one of two Chinese carriers that support the iPhone.
"Customers are much calmer when they face the new iPhone lineup," Zhang said.
Apple still has plenty of fervent admirers in China, but some complained the latest iPhones offer too few technical advances.
Liu Guanlin, a junior at the Beijing Contemporary Music Academy, said he traded up from Samsung Galaxy to an iPhone because Apple's operating system seemed more stable. But he said the 5c didn't look like it would be worth the money. (continued...)
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