Apple Inc., the maker of iPhone, is reportedly planning to sign a deal with China Mobile. The deal, if it goes through, can increase sales of its popular smartphones by as much as $3 billion for 2014. As of today, both camps remain mum on when the deal will be finalized. A partnership with China Mobile, the world’s largest mobile phone carrier, will allow Apple to claim a larger market share by tapping into China Mobile’s huge 759 million subscribers and 176 million 3G users. Analysts estimate that the deal could add 17 million more iPhone units sold for next year with the China market alone.
According to Xi Gouhua, chairman of China Mobile speaking before reporters in the southern Chinese city of Guangzhou, his company is not yet ready to announce any deal with Apple and that the two companies are still in talks.
Currently, Apple Inc. has established distribution deals with China’s other top mobile phone carriers China Telecom and China Unicom. Another deal with China Mobile could add billions of dollar sales as well as profit for Apple and place the company ahead of competitors Samsung and other manufacturers whose smartphones are running on Google’s Android mobile operating system.
The interests over the possible deal stemmed from previous industry speculation that it would announced on Dec. 18 to coincide with the release of Apple’s new high-end Mac Pro line of desktop computers priced each at $2,999. Investors were somewhat disappointed when the announcement did not come. According to Alex Gauna, an analyst at JMP Securities, “The market expected to see an announcement today, even though this was not something formally endorsed by Apple or China Mobile.”
South Korea’s Samsung Electronics Co Ltd. is Apple’s main rival in the smartphone market. According to market researcher International Data Corporation (IDC), Samsung is leading the smartphone race with a 31.4 percent market share. Apple on the other hand has a 13.1 percent market share placing the Silicon Valley technology company at far second. The worldwide smartphone market grew by 38.8 percent in the third quarter of 2013, added IDC.
The IDC data also revealed that the Android mobile operating system has an 80 percent market share compared with Apple’s iOS which powers the iPad and iPod with a 12.9 percent share in the last quarter of 2013.
In China, Samsung is the largest smartphone provider with a 21 percent share in the same quarter of 2013 according to research firm Canalys. Apple Inc. on the other hand is behind Samsung, Lenovo, Yulong and Huawei with a six percent market share making it fifth in the rankings in China, added Canalys. Topeka Capital Market, a full service broker-dealer estimates that even though the deal is not yet announced, China Mobile already has an estimated 40 million iPhone users in its network.
With the data on Apple Inc.’s performance for the last quarter of 2013 taken into account, the planned deal with China Mobile will be beneficial to the company and could increase smartphones sales dramatically. Apple is currently deflecting criticism that it is no longer introducing new products as fast as it could as compared to the time when its founder Steve Jobs was still alive. If the China Mobile deal pushes through, this could be an opportunity for Apple to once again retake the lead in the industry.
By Roberto I. Belda