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Home » Opinion » Biz Commentary

Apple out to expand core business

MILLIONS of Apple iPhones and iPads are playing an increasing role in the daily lives of Chinese, and the company that recently became the world's biggest by market value is now expanding its reach into the world's biggest wireless market by users.

Besides the possible iPhone 5 debut next month, Chinese Apple fans have something else to whet their appetites. They will be able to buy new gadgets, including a digital stylus, personal blood pressure monitors and a golf lessons device, through Apple retail and online stores by the end of this year.

Apple itself does not make all the new devices, but all are designed for iPhones and iPads, with both hardware and applications on them.

For example, a digital stylus costing US$29 has been exclusively designed for an application called Crayola ColorStudio HD, which is available in Apple's online application store. Both the stylus and application are designed for digital painting on iPad for Children. Yes, now you will be able to draw something on an iPad with pens instead of fingers.

Apple, which overtook Exxon Mobil as the world's biggest firm by market value during the recent stock market turmoil, isn't expected to derive considerable income from the new devices, but they do open a new business channel for the company.

The advent of "created only for Apple" devices improves the functions of iPhones and iPads and expands Apple's online application store off-line. Then, too, there is the facet of drilling Apple's brand name more deeply into the public psyche.

By the end of 2011, all the newest devices will be available in Apple's four retail stores on China's mainland - two in Beijing and two in Shanghai - and through its online stores and probably in many Apple reseller stores. Apple will share revenue with the device makers, but the size of its cut hasn't been revealed. In its online store, Apple gets 30 percent of the revenue of paid applications.

Up to now, Apple China hasn't been into peripheral gadget selling much, with the exception of some speakers with iPhone output functions.

The latest move, I think, is a natural business extension for the company. It's almost a given for any company with a huge user base to tap.

At present, more than 100 million iPhones have been sold worldwide, 18.6 million in the second quarter alone. That makes the iPhone the most popular smartphone on the market.

The iPad, introduced just a year ago, has had equally phenomenal success, with more than 19 million units sold. Apple has captured about 80 percent of the booming tablet computer market.

Apple's online iTunes store has attracted 200 million users, offering credit card shopping for songs, movies, books and applications.

People in China, the world's biggest mobile phone market, seemed hooked on Apple.

In the second quarter, Apple's revenue in China grew sixfold from a year earlier to US$3.8 billion. IPhone sales alone quintupled.

The company said it plans to open 25 retail stores in China "as soon as possible." In addition to expanding the functions of the iPhone and iPad, Apple seems destined to changing Chinese people's daily lives.

Just look at the news headlines from the United States. According to a survey conducted by Telenav and released last week, more than 30 percent of Americans would choose having smartphones over sex for a whole week!

Smartphones using specifically designed gadgets can take people into any realm of interest, from education and healthcare to sports and entertainment.

Apple benefits from the "halo effect." Everything that works on an iPhone or iPad sells at higher prices and sells well. For example, an iPhone holder that probably costs about 20 yuan (US$3) to make is often sold at 200 yuan or more in Shanghai.

New devices feature related applications for the iPhone or iPad, which makes them web-linked, smarter and more useful in daily life.

For example, a device called iHealth Blood Pressure Dock, costing US$99, can work with an online application called iHealth on iPhone. It monitor's blood pressure daily and stores the data, which can be measured against World Health Organization standards and analyzed.

The data can also be transferred to a family doctor by computer or another iPhone. People can then get specific advice from their doctors or receive basic recommendations on nutrition and exercise stored in the application.

I guess one could say that Apple has established a "WalMart online" for third-party applications, music, videos and books. Now it seems intent on creating a "WalMart offline" for Apple users only.

The new market seems economically attractive for the company because the devices often cost several dozen to several hundred dollars each, compared with applications that often sell for 99 US cents to US$2.99 apiece.

I think the debut of these devices might be called Apple's "one more thing" - a motto once reserved for the debuts of the iPod, the iPhone and the iPad.



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