China a key market in upcoming iPhone launch

For the first time, the new iPhone will be launched in China at the same time as the U.S. and Apple is working to ink deals with Chinese operators, specifically, China Mobile which doesn't yet distribute its products.
Written by Eileen Yu, Senior Contributing Editor

China appears to be an increasingly critical market for Apple as the iPhone maker rush to ink distribution deals with local mobile operators in the lead up to the September 11 launch, which for the first time will include China. 


China Unicom Hong Kong and China Telecom likely will offer the new iPhone within days of its launch next week, as Apple looks to regain its foothold in its second-largest market, according to a Reuters report Friday. The U.S. vendor will hold a satellite event in Beijing on September 11, just a day after its U.S. unveiling, marking the first time it is available in China so soon after its U.S. launch and indicating the importance of the Chinese market. 

"There used to be a wait of a few months before Apple launches their latest products in China, but nowadays, China is too important a market for Apple and so it will be the first batch of markets to start selling the low and high-end iPhones next week," a source at one of the telecom carriers, who declined to be identified, said in the Reuters report. 

Apple CEO Tim Cook reportedly met with China Mobile last month to discuss opportunities for a partnership which, if inked, could see the world's largest mobile operator--with over 740 million subscribers--finally distributing Apple products. It is currently the only Chinese carrier not to do so. 

China Unicom and China Telcom are the country's second- and third-largest mobile operators with a total subscriber base of 266 million.

China Mobile accounts for 63 percent of the country's 1.19 billion mobile accounts, according to a Bloomberg report, which said the operator played a key role in helping Apple claw back into the Chinese market. "In this relationship, China Mobile has all of the power... [and] will offer the iPhone as soon as Apple gives in on price," said Edward Zabitsky, CEO of Toronto-based ACI Research. 

"Apple's unwillingness to provide meaningful concessions and China Mobile's unwillingness to subsidize a high-cost device have inhibited a deal until now," John Bright, an analyst at Avondale Partners, told Bloomberg. "A lower-cost iPhone, financially accessible to a greater proportion of China Mobile's customer base, could be a middle ground."

Apple's share in the Chinese smartphone market had eroded due to intense competition from global players, specifically Samsung, as well as local manufacturers including Lenovo, Huawei Technologies, and Xiaomi.

Stats from Canalys revealed Samsung led the market with 20 percent share, while Yulong Computer, Huawei, and ZTE claimed the next three positions. Apple climbed up one rank to fifth place in the first quarter with 8 percent market share. Over 82 million smartphones were shipped during the quarter in China, three times more than that shipped in the U.S. in the same period.  

According to Canalys' China research director Nicole Peng, Apple would have to release a cheaper version of the iPhone if it hoped to improve its footprint in the Chinese market. 

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