Apple, China Mobile ink deal: Here comes the iPhone volume

Apple, China Mobile ink deal: Here comes the iPhone volume

Summary: Apple CEO Tim Cook noted that China is "an extremely important market" to the company and touted a deal with China Mobile. The biggest perk is that Apple gets a distribution boost for the iPhone.

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TOPICS: Mobility, Apple, iPhone, China
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Apple and China Mobile have officially inked a multi-year deal that will bring the iPhone to China's largest telecom and provide a distribution and volume boost for months to come. 

Analysts have estimated that China Mobile will enable Apple to sell anywhere from 15 million to about 20 million more iPhones. Specifically, Apple said that it will sell the iPhone 5s and 5c on China Mobile beginning Jan. 17.

china screen 1

China Mobile, which has 760 million customers, is rolling out 4G and expects to have 16 cities covered by the end of 2013. China Mobile will have 340 cities covered by 4G by the end of 2014. These 4G networks are based on China's own version of LTE. Apple will give that 4G standard a boost as well as support China's 3G flavors.

For Apple, the China Mobile deal is all about volume. As more subscribers in China go 4G, Apple stands to benefit. Apple CEO Tim Cook noted that China is "an extremely important market" to the company.

Forrester, however, noted:

Apple’s iPhone offerings are very expensive by China standards, starting at about $550 without subsidies, he also reports that there is lots of interest among China Mobile subscribers. With this deal, we’ll finally find out how far Apple can get in China without offering products that match the prices of Samsung, Huawei, or Xiaomi.

Indeed, Apple also needs to nudge Samsung a bit. China Mobile's Web site pushes Samsung devices on many of its pages. Apple is in fifth place in China. 

The companies didn't reveal pricing or availability yet.

chinamobile screen

Topics: Mobility, Apple, iPhone, China

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35 comments
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  • Oooyee!

    This is wonderful and amazing. Congrats China
    emymugi@...
  • I think the iphone will be to expensive for a lot of Chinese people

    Cheaper phones sell better there unless they're going to make it cheap for China? I hope Android and Windows Phone continues to beat the iphone there.
    rkegel@...
    • Did you even read the article?

      Did you even read the article? Estimates are they will sell 15 to 20 million more iPhones because of the deal. As for Windows phone it hasn't done well at all in China - and it's falling, not rising.
      rbgaynor
      • 15-20 million

        The article says China Mobile has 760 Million customers, expects to move 15-20 million iPhones. So They expect Apple to get maybe 3% of sales - sounds about right.
        john-whorfin
        • Estimate is for next year

          The estimate is just for 2014. Don't forget that estimates are that China Mobile already has 10's of millions of iPhone users already on their network.
          rbgaynor
      • still selling more than Apple

        And with the 520 at bargain price that will probably stay that way too!
        paulskUK
        • Not in China

          Apple is already outselling WP in China.
          rbgaynor
          • how is apple outselling anyone

            if they just inked this deal?
            Challenger R/T
          • How is Apple currently outselling anyone in China?

            People were buying iPhones in the US and elsewhere at the unsubsidized price and jail breaking them in China. I personally took a couple of them to our local Apple store to buy iPhones - they each plucked down over $600. I have many Chinese colleagues as far back as 2009 who've had iPhones while I was still struggling with my ancient blackberry.
            engrpas
  • I wonder if it will catch on, Apple not "cool" elsewhere

    iPhones are awful expensive to not be cool anymore, then again, China gets a discount that may offend everybody else. Z10? Cheaper and same numbers. Galaxy, cool with the tech crowd and likely better suited to Asian market. Apple may be too late
    HenselM
  • Apple, China Mobile ink deal: Here comes the iPhone volume

    I will be curious to see how many people buy authentic Apple iPhones vs. the knock offs they have in China.
    Loverock.Davidson
  • apple will need the boost

    I phone is dead ios biggest failure with out steve its over we already all know this dump your stock and watch them squeal
    DoDbAnZ
  • Chinese Market

    Lots of talk about this deal without a lot of knowledge.

    China Mobile is one of three mobile carriers in China. The others being China Unicom and China Telecom. China Mobile is by far the largest, but it's the only one currently not selling iPhones. Anyone who wanted an iPhone could already get one by switching to the other carriers' 3G networks or by using an unlocked iPhone on China Mobile's 2G network.

    This deal will undoubtedly increase iPhone sales in China, but its not as big a deal as some are making out. With average pricing for an Android phone coming in at around $230, a $700 iPhone is going to be a niche product unless Apple completely reinvents itself for the Chinese market by selling much lower priced phones.
    REBERY
    • What's wrong with a niche product?

      There's not necessarily anything wrong with marketing the iPhone as a niche product. They don't necessarily care terribly much that 700 million customers can't afford an iPhone provided that 20 million can.
      neilcoffey
  • Um

    so these phones they have been making in China all along can now be sold there?
    B_Manx
  • wonder how many will

    'Go missing' from the factory?
    paulskUK
  • Good News for Apple

    Apple is up 3.85% ($21 per share) after this news was released today.
    Emo Fudpucker
  • Here comes the iPhone volume???....what volume?

    The Chinese market will move 360 million smartphones this year. Apple's deal is projected to give them an additional 17 million device sales next year....which works out to less than 5 million additional iPhones per quarter. Apple makes a few billions more in profit, but in China's smartphone market that number of phones is peanuts. Next year, China will be moving up to 450 million smartphones. That's volume.

    China Mobile already has iPhone users...up to 40 million of them, and they're mostly users of seriously outdated iPhones. Instead of switching to using 3G from one of the other two carriers, they're using a combination of 2G and China Mobile Wifi to save cash. At least a third of them are using jailbroken iPhones and get their iOS apps from Chinese app stores. Switching these folks to more expensive LTE plans and away from the benefits of jailbreaking in China is not going to be as easy as the media makes it sound. You can forget about that fat 760 million subscriber number that you guys love to quote. That's mostly prepaid users. 70% of Chinese mobile users are prepaid customers. China Mobile's 3G user base doesn't exceed 180 million. If you can't afford 3G, you can't afford an iPhone. The media folks pay far too much attention to the cost of the device and forget that in the developing and emerging markets, the barrier to smartphone adoption isn't just device cost but service costs. Even if you heavily subsidize an iPhone's upfront price, what you end up with is a monthly service fee that will drive most folks away from it. It will be interesting to see what sort of subsidy China Mobile puts on their iPhones. I calculated a few days ago that the total amount they spent on subsidizing phones this year would have only been enough to subsidize a mere 9 million iPhones down to $200.
    eMJayy
    • Math

      (Small-but-growing market share x ginormous market) x (industry-leading margin) = HUGE profit and rising share value. What don't you people get?
      Scott HB
  • Apple - A classic case of bubble psychology!

    Now that they have reached their peak, they will think it will persist. And it will not.

    Clearly Apple lacks the intuitive business brilliance of Steve Jobs. No new ground breaking products in 2012. No new ground breaking products in 2013. And there will be no new ground breaking products in 2014.

    iPad Air is an me too product. What is the preference factor for an iPad Air over iPad Mini Retina device? Except for size, none what so ever.

    The battle for Helms Deep is over. The battle for Middle Earth has begun.

    And in this new Battle of the Middle Earth, Apple (the Orcs) will get vanquished. And the Men, the Elves and the Dwarves will rise. Which are Android (Dwarves) and Windows Phone (Elves) and Firefox OS and Tizen (Men).

    The growth rate at the high end smartphone market already tends to zero. It is the mid end and low end smartphones that will capture the imagination and usability of existing feature phone owners. App installations and app upgrades at the low end and mid end will ultimately match the rates at the high end.

    With GDR3, WP OS has robust support for Qualcomm SOCs. Once support for competing SOCs arrives, the distribution can expand even faster. Especially the business model change of giving WP license for free in return for packaging Bing and Microsoft services favorably will position WP as a direct competitor to Android, feature by feature. If this business model really arrives, then Microsoft can sell or give away phone licenses like Google does while charging for loading Bing services. With Bing getting even more mass adoption than now on mobile app and search services, Bing ad revenue will take off.

    2014 is a transition year for Microsoft. If it really announces an OS model change like above, then Apple is toast. Apple hardly justifies its growth and existence in the presence of rapid mobile growth from Google. Microsoft has now arrived. And if it grows much like Android, then the growth story of iOS is over. WP is the black swan event for iOS.
    calahan