I thought Apple sounded a tad bit defensive about China on the conference call Monday, but Morgan Stanley analyst Katy Huberty says there's nothing to worry about: she expects Apple to sell up to four or five million iPhones in China per year. Apple told us on Monday that they've activated about 200,000 iPhones in China so far, but Huberty claims that there's a market for maybe 50 million iPhones over there, and echoes Tim Cook's assertion that price is the main issue. "Hardware pricing, service plan pricing and the large up-front payment," she says in her report, "were cited by 85%, 66% and 56% of respondents respectively, as reasons they were not likely to purchase an iPhone."
Keep in mind that the four to five million figure is a top end -- in the first year, Apple has said that they're aiming for more like one or two million. But there is definitely a solid market to be found in China, and significant sales there could help buoy Apple earnings reports over here for sure.