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Why it’s about to get tougher for Apple to grow iPhone sales in China

A Chinese state agency told the country's three main carriers they're spending too much on phone subsidies. Now the largest of these, China Mobile, is reducing its budget for subsidies by $2 billion, which could steer customers to lower-priced handsets.

Why it’s about to get tougher for Apple to grow iPhone sales in China originally published by Gigaom, © copyright 2014.

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China Mobile iPhone launch could lead to subsidy wars, say analysts

Image: thenextweb.com

Image: thenextweb.com

Analysts say that the official launch of the iPhone on China Mobile could lead to subsidy wars as Chinese carriers compete to attract buyers. The predictions, quoted by Business Insider, follow price cuts by rival carriers China Unicom and China Telecom as China Mobile reports 1.2 million pre-orders.

China Mobile is currently offering the iPhone 5s free with a 24-month contract costing the equivalent of $98 a month. A 30-month contract on China Unicom costs $63 a month.

I do think you’re going to see a subsidy war coming,” said Michael Clendenin, managing director of Shanghai-based RedTech Advisors. ”China Mobile, if they’re not making their targets on sales for these phones, they’re going to increase the subsidies [...] It’s like airlines: the other guys will fall like dominoes, so China Unicom will do it and China Telecom will do it” … 

CK Lu, a Gartner analyst based in Taiwan, agrees.

You need to consider the cannibalization for sales to China Unicom, China Telecom and the grey market, so even though there’s an addition from China Mobile it will also impact sales from other channels as well.

The grey market refers to handsets smuggled into China through Hong Kong, then used on the China Mobile network. It has been estimated that there may have been more than 40 million handsets already in use on China Mobile prior to the official launch, though if the number is true it almost certainly includes a great many iPhones several generations old.

Others, however, think it unlikely that China Mobile would engage in a price-war, instead relying on its data speeds to attract customers. An informal test by the WSJ found that China Mobile was delivering twice the download speed of smaller rival China Unicom.

One thing all seem agreed on, however: any subsidy wars that do take place won’t affect whatever deal Apple has already agreed with the carriers – its margins will remain safe.


Filed under: AAPL Company, iOS Devices Tagged: Apple, Apple in China, china, China Mobile, China Telecom, China Unicom, Hong Kong, iPhone, iPhone 5, iPhone 5C, iPhone 5S

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In rare TV interview, Tim Cook says he is ‘honored’ to be doing business with China Mobile

In a rare TV interview, Tim Cook described this week’s launch of the iPhone on China Mobile as “a watershed day” for the company. While the soft-spoken Apple CEO is noted for the humbleness with which he speaks, it’s hard to imagine him describing Apple as being “honored” to do business with many other companies.

I’m so honored to be doing business with … China Mobile. It’s a huge announcement…we’re incredibly impressed with them, we have deep respect for them, and have had from the very first discussion that we’ve had together” … 

It had been suggested that Apple found itself in an unusually weak position when negotiating with the carrier, and may have had to make significant concessions to seal the deal.

Neither Cook nor China Mobile’s chairman Xi Guohua would be drawn on sales expectations, but China Mobile did say that it had received 1.2 million pre-orders as of Monday. It was reported yesterday that Apple had shipped 1.4 million iPhone 5s handsets to China ahead of Friday’s launch – with no word on 5c numbers.

Analyst estimates of the likely value of the deal have varied wildly. Cook had previously spoken of the deal as “only the beginning” of its cooperation with the carrier, saying there were “a lot more things our companies can do together in the future.”

The iPhone 5s and 5c have been officially sold by both China Unicom and China Telecom since the handsets were launched last year, but China Mobile’s network dwarfs both. Both smaller carriers have cut their pricing in a bid to compete.

Apple’s stock price initially fell when the launch did not take place on 18th December as had been predicted, then rose again when the deal was finally officially confirmed.


Filed under: AAPL Company Tagged: AAPL, aapl stock price, Apple, Apple in China, china, China Mobile, China Telecom, China Unicom, Friday, iPhone, iPhone 5, Tim Cook

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With new 4G licenses awarded in China, Apple is ready for big iPhone sales

Three China telecom operators have shiny new 4G licenses and guess what: Apple’s iPhone was certified for some of these networks back in September. All three providers – China Mobile, China Telecom and China Unicom — can now officially move forward with their TD-LTE plans and that means Apple is lined up to take full advantage of a big opportunity.

When China’s Telecom Equipment Certification Center provided a license for Apple’s phones to run on China Mobile’s network a few months back we wondered exactly why. After all, at that time, China Mobile didn’t have 4G and was using TD-SCDMA for 3G, which Apple’s new iPhones don’t support. Now it’s expected that China Mobile will launch its LTE service on December 18, which means Apple can sell then a compatible iPhone although the current model won’t fall back to 3G, posing an interesting situation.

China offers a huge opportunity for smartphone sales; not only does it have nearly 1.4 billion people as the world’s most populous country, smartphone uptake has been slower than in other regions, mainly because China is late to the 4G game. That’s fine by Apple because Cupertino has already prepared for TD-LTE support overseas by including it along with compatibility with 16 other LTE network implementations in a single handset.

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iPhone 5s & iPhone 5c Finally Approved For China Mobile

Further evidence to suggest that the new iPhones are almost ready for their long-awaited debut on China Mobile — the world’s largest carrier — has surfaced today after both the iPhone 5s and the iPhone 5c gained regulatory approval for

The post iPhone 5s & iPhone 5c Finally Approved For China Mobile appeared first on Cult of Mac.


    






$0 down on both 5c and 5s in China, but high monthly cost and 3-year lock-in

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TechInAsia reports that Chinese buyers are buying from China Unicom rather than Apple as the carrier offers both iPhone 5c and 5s with no up-front cost.

The catch? Monthly costs higher than in the USA, and contracts that run for either 30 or 36 months. Those monthly costs are massive in a country where the average monthly salary is around $800, and a 36-month contract means that buying an iPhone 5c or 5s today will see you sitting out the iPhone 6 and 6s/c/whoknowswhat.

It’s estimated that China already had 42M iPhone users before the launch of the new phones, and before they were officially supported by any of the local carriers.

Full comparison of U.S. and China Unicom costs below … 

iphone-cost

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