Stakes are high as Apple is prepared to battle in China for China Mobile subscribers

Stakes are high as Apple is prepared to battle in China for China Mobile subscribers
With the long awaited deal between China Mobile and Apple expected to be announced as soon as this coming week, some analysts are saying that after picking the low hanging fruit, Apple is going to have to work hard to snag a large percentage of China Mobile subscribers. With 759 million subscribers, China Mobile is the largest mobile carrier on the planet. Some expect Apple to grow its revenues by as much as $3 billion in 2014 directly as a result of the deal with China Mobile. That would be 25% of the total growth in revenue Apple is expected to achieve in 2014.

But after that, some analysts are saying that it will be Apple vs. Samsung in a battle over Chinese smartphone sales. China Mobile's proprietary 3G TD-SCDMA network prevented Apple from selling the iPhone to its customers. But that is no longer the case now that 4G LTE service is allowed in the country. Analysts expect this to be a boon to both Apple and China Mobile. The latter already has 45 million unlocked iPhones on its network and Forrester Research expects 17 million more units to be activated on China Mobile's network in 2014, bringing $3 billion of revenue to Apple next year. Those 45 million unlocked units can only run on 2G, which gives Apple an incentive to dangle in front of these prospective iPhone buyers who will need to upgrade to the newest model in order to get 4G speeds.

But Apple does have a problem. In the third quarter, nearly 90% of Chinese smartphone buyers spent $500 or less on a new handset. In other words, low-price, home town producers using MediaTek chips have the edge in China. Consider that Apple's website in the country has the Apple iPhone 5s priced at $868 while the Apple iPhone 5c costs $737.

While the deal with China Mobile should add to Apple's profits immediately, it might take more than a year for China Mobile to benefit. The carrier is still shelling out cash to build out its LTE pipeline, and is spending 30% of its revenue on capital spending in 2014, according to Moody's

If Apple is able to snag just 3% of China Mobile's customers, that would be more than 21 million new iPhones sold in the area. If the Cupertino based tech titan can grab 6% of China Mobile's customers, that would be more than 42 million new iPhone buyers in China. For Apple, this could be a huge deal. But it will have to get past the high price of the iPhone in the country, and take attention away from Samsung's constant spending on marketing. It is going to be a tough battle for Apple, and the stakes are high.

source: Reuters



9. rusticguy

Posts: 2828; Member since: Aug 11, 2012

More than anything else Apple will be first looking at suing Samsung and others in China. But before that Apple has been forced to take one app off its store ... Welcome to China :)

5. Killertech2099

Posts: 148; Member since: Sep 28, 2013

Nah not going to work look at the big china phone companies. Their phones are cheaper i doubt they want to pay anywhere near that amount be serious. Yeah the stakes are high and that's a big IF, now if they pull it off then their awesome. But that's going to be a rock in a hard place. Trying to do so much in such little time may back fire.

6. JakeLee

Posts: 1021; Member since: Nov 02, 2013

Phones are status symbols in China. The higher the price, the better. iPhone will do exceptionally well with China Mobile.

4. JakeLee

Posts: 1021; Member since: Nov 02, 2013

In the third quarter, people didn't purchase >$500 phones because they knew iPhone will arrive.

2. Finalflash

Posts: 4063; Member since: Jul 23, 2013

It is going to be the same as the situation in the rest of the world. Apple will grab the 10% or so market share of the mobile population while the rest will go largely to android with some bits and pieces of others in there.

3. Sauce unregistered

Are you an analyst? I wouldn't doubt it. My dog is.

7. Finalflash

Posts: 4063; Member since: Jul 23, 2013

No doubt, I bet the dog would also post more informative comments than you.

8. Sauce unregistered

See what I'm saying? Good analyzations! I told you that you are good! By good I mean utterly baboonish. Analysts are always wrong. :)

1. darkkjedii

Posts: 31801; Member since: Feb 05, 2011

China will be rocking gold 5S's like crazy. As Raffi says gold is good.

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