Apple's Cook back in China; Retail store, iPhone boost on cards?
Apple's Tim Cook is back in China for reasons unknown. What is likely on Cook's mind is expanding Apple's retail store numbers in the country, and negotiating a way in to the world's largest cellular network.
When Cook was serving as Apple's chief operating officer, he visited China instead of the late then-chief executive Steve Jobs. Cook is no stranger to China and his presence in the country will surely install confidence in knowing that the company has an ear to the ground in the region.
But now as the head of one of the world's technology powerhouses, Cook still has a lot to navigate in a region in which Apple, unlike most other developed nations, is not an automatic market leader.
There are almost without doubt at least two things Cook will be trying to accomplish during his time in the country: expand the company's retail operations in the country, and expand the iPhone's reach on the Chinese mobile market.
For Apple, much of the company's reputation falls down to its retail stores, but Apple only has a handful of stores in mainland China and a couple in overseas territories, like Hong Kong.
Last year, a Reuters report warned that the high extremely high store-to-customer ratio could harm "more than just sales." By mid-2012, there were only six stores in China, despite the country representing roughly 15 percent of the company's global sales. Apple chief financial officer Peter Oppenheimer said on Apple's Q4 earnings call that as numbers of retail store customers around the world are rising, an increase in Apple stores in China was "important for the company."
Also likely on Cook's agenda is a bit to work on a deal with the world's largest cellular network, China Mobile, something Apple will want in order to expand its iPhone spread across the country.
The iPhone 5 launched in China in December after a range of regulatory hurdles on the second and third largest networks, China Unicom and China Telecom. Combined, Apple can reach around 340 million users, or one-quarter of China's burgeoning population. But, while it's a good start, it's not enough. With a deal between the two smartphone giants, Apple would be able to tap into an additional 120 million subscribers.
Apple has yet to support China Mobile's TD-SCDMA cellular standard, but if it gave way the company would surely be able to make a killing. It's not as simple as "supporting a new standard," as it involves procuring the correct hardware, licenses, and a bevy of hardware changes, and this would in turn bump the price of the handset.
All eyes are on Cook. Actually, most eyes are on Google's executive chairman Eric Schmidt in North Korea, of all places, but Apple's future rests on China, and it's a market that is far too large to ignore.