The iPhone 4S recently launched in China to massive crowds and overwhelming demand. Eager punters looking to get hold of the device have caused such problems, and sometimes, riots at Apple retail stores, that Apple has had to implement a lottery system in Hong Kong. The incredible demand for the device, helped in no small part by a huge number of scalpers looking to get hold of multiple iPhone 4S units for sale on the grey market.
The lottery system implemented by Apple means that Hong Kong residents have to enter a lottery between 9am and 12pm each morning in order to secure an appointment at the Apple Store to potentially purchase an iPhone 4S. The lottery requires that entrants supply the number printed on their government-issued ID, as well as being limited to two units per person. Having had the opportunity to travel to Hong Kong in the past few days, I decided to look at what the iPhone 4S market in Hong Kong is actually like, as well as conducting a small experiment. The results were weird.
The iPhone 4S is so popular among scalpers in Hong Kong because it is very cheap and is supplied carrier-unlocked. A 16GB iPhone 4S retails at $5,088 HKD (the official Apple Store price) which is equivalent to $656 USD or £415 GBP. As a non-resident of Hong Kong, I wasn’t eligible to enter the lottery but as this was just an experiment and I wasn’t interested in actually purchasing a device as I had one already, it made no difference. However, anecdotal reports from residents that I spoke to suggested that it was pretty difficult to obtain an appointment. So much so, that people were turning to authorized Apple resellers and chain electronics suppliers like Fortess and Broadway. This is where the issues start.
After visiting four Fortress stores, four Broadway stores, two Apple premium resellers and an independant electronics store, the results were interesting. I started with the Apple premium resellers first. One of the premium resellers was completely out of stock, one had just had a small delivery of 64GB iPhone 4S units and was quite happy to sell me one at the official Apple price of $6,688. Fair enough.
The Fortress stores were another experience. Fortress is one of the biggest electronics retailers in Hong Kong and has in excess of 70 retail outlets. During my visits, in two of the stores, I was told the iPhone 4S was out of stock. In the other two, I was told that they did have stock but that in order to gain permission to purchase an iPhone 4S for $5,088 HKD, I had to spend another $3000 HKD, or nearly $400 USD on another item. As I didn’t speak the language, I was curious as to whether this policy applied to residents of the island as well so I sent in my friend, Michael, who was a native resident of Hong Kong to see how the conversation would go. Miraculously, all four stores managed to find some stock, although the policy was still in place. Obviously, as an out-of-towner, I had been labelled as a scalper.
In the second batch of stores, this time I tried four outlets run by Broadway electronics. Once again, in three stores, I was told the old story that the iPhone 4S was out of stock. In the fourth store, which advertised the price of the 16GB iPhone 4S at $5,088, I was told that I’d have to pay $6,688. When I queried why, particularly since the price was advertised at $5,088, I was told that they only sold the iPhone 4S as part of a package. When I asked what was in the package that merited the extra $1,600 (approximately $200 US dollars), I was told I would receive a plastic screen protector and rubber bumper.
My friend had a little more luck. Two of the stores that had previously been out of stock managed to ‘find’ some, and he was quoted $5,988 for the price rather than $6,688.
The final visit to the independent electronics store, labelled as an ‘Apple Authorized Reseller’ also pegged the16GB iPhone 4S at the price of $5,988, or $900 above the official Apple price.
I’m not sure what to take from this experiment. On one hand, the stores are clearly trying to ward off scalpers who are circumventing the Apple Store purchase policy. On the other hand, third party retailers given the Apple stamp of approval are making a lot of money off this device. It was interesting to see, however, the reaction of some of the staff in the stores just in response to my mentioning an iPhone 4S. They have clearly had to deal with a lot of scalpers.
I tend to enjoy the experience of buying a new Apple device. Had I actually been in the market for an iPhone 4S in Hong Kong, this experience would have been miserable.