Unsold Smartphones Pile Up in China ahead of iPhone 6 Launch

Smartphone demand in China was down 9 percent last quarter even as shipments to the country climbed 37 percent. That decline is leaving unpurchased mobile phones stacking up while carriers cut back on advertising and consumers anticipate the coming release of the iPhone 6, according to Morgan Stanley analyst Katy Huberty.

Unsold smartphones piling up in ChinaUnsold smartphones piling up in China

China's carriers have apparently been reluctant to invest more in marketing and subsidies as they wait for the government to issue 4G licenses, which will let them boost their wireless network performance.

Once new iPhones ship, iPhone resellers are expecting demand to be 20 percent higher than it was for the iPhone 5S when it was released. That will spell good news for China's cell service carriers because customer money will start flowing again, although it won't do much for the surplus of phones they're dealing with now.

Apple hasn't said when the next iPhone model will ship, or what features it will have. That silence has led to the usual truck load of rumors about what to expect. Rumors are claiming Apple has a 4.7-inch model in the works and possibly a 5.5-inch model later, and that this will finally be the year Apple embraces NFC.

Assuming the next iPhone sports a larger screen, Apple could see a sales boost in the United States as well as China. Based on a Morgan Stanley survey conducted by AlphaWise, Apple could gain another 11 points marketshare in the U.S.

Ms. Huberty collected her data about the state of China's smartphone market while on a trip to the country, which could've given her easier access to supply channel information. Considering her less than accurate track record with Apple, however, it's possible she's misinterpreting what her data really means for the company.

[Some image elements courtesy Shutterstock and Jon Le-Bon]