Apple and China Mobile have finally announced a long awaited deal that would make the iPhone available on the world’s largest carrier from January 17. With close to 760 million subscribers in one of the world’s fastest growing smartphone market, the fortunes of both the companies, more importantly Apple’s, lie on the success of this partnership. Also Read - iPad Mini for 2021 to ditch fat bezels, could bring along new Apple Pencil Mini
The two companies have been in talks since at least 2010 since Steve Jobs’ days but nothing came out of them. The core issues at hand were Apple’s insistence of a minimum volume of units guarantee from the carrier, while at the same time its reluctance to create a custom variant for China Mobile that supported its unique 3G technology. Meanwhile, China Mobile’s two relatively smaller rivals inked deals with Apple and have been nibbling away its high-end subscribers.
With China Mobile flipping the switch on for its TD-LTE 4G network earlier this month, the carrier can finally provide high value services on iPhone to its subscribers. Both the iPhone 5C and iPhone 5S support China Mobile’s 4G network. However, users will be able to use only low-speed 2G networks in areas not under 4G coverage.
It would be ignorance to claim that the deal gives Apple access to 760 million potential subscribers. The Chinese market, even more so than India, is dominated by cheap Android smartphones and the iPhone won’t be affordable for majority of users. At most, less than 10 percent of China Mobile’s subscribers can be seen as potential customers, according to most analysts.
Still the deal works for Apple considering iPhone sales are seen to be plateauing for Apple in many European countries. For Apple, it is emerging markets like China and India where it does not have any significant market share. The upcoming 4G LTE networks in both the countries would provide Apple the best opportunity with high value subscribers expected to shift to the faster network. Apple has wisely ensured that its latest iPhones support the relevant 4G bands to have a headstart over others.
While its rivals would no doubt sell significant volumes of mid-end and low-end 4G Android smartphones, Apple wants to ensure it owns the relatively low volume but high-margin 4G smartphone segment in the world’s fastest growing smartphone markets.