Apple (NASDAQ:AAPL) hasn’t lost any time in announcing the launch of the new iPad in China following the settlement of the Proview case last week. The company said Tuesday that the new iPad will make its appearance on Chinese shores on July 20th and pre-orders can be placed from a day earlier.  Also, perhaps more importantly, the new iPad will be available at the same price as it does in the U.S.
Apple last week bought the rights to use the ‘IPAD’ trademark in China in a $60 million settlement with Proview that ended a longstanding legal dispute which threatened to ban iPad sales in the country. Going by how important China is for Apple considering the huge growth in sales that the company is seeing from the region, the announcement will help the company increase its iOS market share, spur the development of China-specific apps and prep the market for a greater Apple presence through China Mobile (NYSE:CHL).
Apple’s China story
China is Apple’s fastest growing market and the availability of the highly popular new iPad will further bolster Chinese sales. Revenues from greater China, which includes mainland China, Hong Kong and Taiwan, in the March quarter grew threefold year-over-year and accounted for almost 20% of Apple’s overall revenues. This brought Apple’s FY 2012 first half revenues from the region to $12.4 billion, just shy of the $13.3 billion in revenues Apple managed to generate from the region during the whole of last fiscal year. While most of the revenue growth was due to the iPhone 4S launch, the nascent stage of the tablet market as well as the halo effect of the iPhone makes the iPad a compelling buy among well-to-do Chinese customers.
The new iPad had a tremendous opening in March, selling over 3 million units in the debut weekend itself despite not being available to most of the Chinese (only Hong Kong saw shipments for the new iPad due to the Proview case). Apple sold almost 12 million units of the iPad last quarter, more than double as many as it did in the year ago quarter. Going forward, we see the iPad performing well in the absence of meaningful competitors in a nascent tablet market. Being available to most of the Chinese will bolster iPad sales in the coming quarters.
Driving Chinese app ecosystem
This, along with the already available iPhone 4S, should help accelerate the creation of China-centric apps that the iOS6 will support. The new iOS will offer an improved Chinese input system, a better Chinese dictionary, Baidu support as a search engine and enhanced compatibility with Chinese social networking as well as video sharing sites. Increasing the customer base for its iOS devices will help the development of apps that take advantage of the enhanced Chinese functionality in iOS6.
Creating a big enough ecosystem of Chinese apps will help bring more of the growing China’s middle class under Apple’s fold and see an even higher demand for the iDevices. Gartner’s first quarter numbers show that Apple had only 7.5% smartphone market share in China compared to Android’s 24.3%. However, Apple is preparing for a bigger Chinese play through its iOS6 initiatives and a deal with the world’s largest wireless carrier, China Mobile, is on the cards. Making the new iPad available will put more iDevices in the hands of the Chinese and spur the development of Chinese apps that the iOS6 will support; in turn increasing demand for the Apple’s products as it increases its Chinese presence.Notes: