(AAPL) Apple’s iPhone 4S Reaches China

The increasing popularity of Apple Inc.’s (AAPL) iPhone 4S has prompted the company to launch the latest version of the smartphone in China and 21 other countries on Friday, January 13. With the recent launch, iPhone 4S will now be available in 90 countries.

Apple’s iPhone 4S is based on the new A5 processor (used in iPad2), which significantly accelerates operations. Another addition to the 4S is Siri, a voice recognition command system to initiate operations, access information and navigate through the various features within the phone.

Now coming to the upgrades, the iPhone 4S features an 8 mega pixel camera with an improved sensitivity light sensor and better lens quality. The camera response time has also been accelerated to facilitate faster clicking of pictures. Moreover, the video capture has been upgraded to 1080p HD. iPhone 4S comes with a 3.5 inch high resolution screen (same as the earlier versions) and has its usual black and white casings.

Priced at $199 (16 GB), $299 (32GB) and $399 (64 GB), the iPhone 4S is set to be an instant hit among Apple fans.

China had been on Apple’s radar for a long time and has been the fastest growing region for the company. In the recently concluded quarter, China accounted for nearly 16% of Apple’s revenue with a staggering 270% increase on a year-over-year basis.

Moreover, China accounted for 12% of Apple’s revenue in fiscal 2011. Apple expects China to be a major contributor to its top-line growth going forward, especially since China has the largest population and a healthy economic growth outlook.

Apple has 40 patents related to mobile phones in China, including those for various user interface fundamentals and its speaker technology.

With lingering turmoil in the U.S. and Europe, Apple has finally reached out to the emerging markets, where several of its competitors are already well entrenched. Apple’s ability to spur the popularity of the products in developing nations, where pricing is often an important consideration, will go a long way toward deciding the company’s future growth. Judging from China’s rapidly growing middle class and Apple’s strategic superiority, this may not be an impossible task for the company.

Meanwhile, Apple remains entangled in various lawsuits against Samsung Electronics Co Ltd and Taiwan’s HTC Corp in various countries. Of course, the uncertain outcome of these legal tussles and impending lawsuits against several companies in different countries will remain overhangs on the stock going forward.

Apple’s primary smartphone and tablet markets are crowded with the likes of Research In Motion Ltd. (RIMM), Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), Samsung, Cisco Systems Inc. (CSCO), Toshiba and Acer, which are gaining popularity in several international markets.

However, so far Apple has managed to maintain its leadership position in the tablet market, and enjoys a very strong position in smartphone markets as well.

We maintain our Neutral recommendation over the long term (6-12 months). Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term.

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