Report: The Apple-China Mobile Deal Doesn’t Solve Anything

  • December 24, 2013

In his piece for Bloomberg Businessweek, Bruce Einhorn suggests that the multi-year deal Apple recently struck with China Mobile to the iPhone, doesn’t solve anything for both parties.

Bruce Einhorn:

Coming just a few months after a similar breakthrough with the leading carrier in Japan, NTT Docomo, the China Mobile deal addresses Apple’s traditional weakness in Asia. What it won’t do, however, is propel Apple to the top of the Chinese market. Samsung Electronics is No. 1 now, followed by Lenovo and other local makers that sell good smartphones for far less than the cost of an iPhone. “Chinese consumers like to buy low-end, so-called white box, low-priced mobile phones,” Barclays analyst Kirk Yang told Bloomberg Television.

This tells me Einhorn does not understand Apple’s strategy when it comes to selling the iPhone. Apple is not after market share in China, the company is targeting affluent consumers are willing to pay a premium for the iPhone and continue to invest in the ecosystem.

Yoni Heisler‘s post – Contextualizing Apple’s iPhone deal with China Mobile, for TUAW describes the importance of this deal to Apple:

The takeaway is that if you’re starting with a figure as big as 763 million users, even a small percentage yields a significant number of potential customers.

So while the vast majority of China Mobile subscribers won’t be carrying around iPhones anytime soon, the opportunity for Apple is still rather sizable.

One final point worth mentioning is that the smartphone market in China is not as subsidy-friendly as it is in the US. As a result, some analysts have wondered how much this dynamic will adversely impact iPhone sales and temper analyst expectations. To this end, China Mobile is reportedly looking to increase the amount it spends on subsidies by 42 percent, from $4.4 billion spent in 2013 to $6.24 billion in 2014.

Posted by | Posted at December 24, 2013 12:27 | Tags: , , ,
Storm is a technology enthusiast, who resides in the UK. He enjoys reading and writing about technology.

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