China Mobile Deal With Apple Rumoured, Could Open Up Market Where Budget Rules

A China Mobile advert for 4G has added to speculation that they are close to a deal with Apple to release the iPhone.

China Mobile is the largest mobile operator in the world, with a 700m strong customer base.

Apple have been seeking a deal with the company since 2007, which is the only carrier in China that doesn’t sell the iPhone.

Rumours are circulating that the deal may go through before November 11th, the busiest shopping day in China, where $4bn was spent last year according to McKinsey Global Institute.

The Guardian reported Forecaster ISI Group saying that the deal could boost iPhone sales by more than 38m in 2014.

This would come after a poor performance of Apple’s new handsets in China, their revenue growing by just 6% in the September quarter, despite releasing the 5c and 5s.

A recent report by Reuters said the company’s modest market share in Asia is due to a preference for low-price alternatives to the iPhone.

Companies like Samsung offer much cheaper alternatives – demand for their low-end smartphones led to a 40.5% increase in their shipments in the third quarter.

Chinese company Xiaomi also offer high-spec but vastly cheaper alternatives – their most popular handset (the Mi3, below) is $327, a stark difference to the 5c’s $730 price tag.

Launched in 2010, Xiaomi has made serious waves in China’s smartphone market – selling 7m handsets last year and on track to sell 20m in 2013.

The Beijing-based company has a contract with China Mobile, and research firm Canalys reported in July that they overtook Apple’s market share in China.

 

IDC analyst Ryan Reith said: “Price points have declined significantly, driven largely by low-cost Android solutions. This has helped China to become one of the fastest growing smartphone markets in the world.”

Many thought Apple’s 5c would be a much cheaper phone, designed to compete against companies like Xiaomi in the more budget-conscious markets of China and Russia.

So there was suprise upon release at its high price-tag – an iPhone 5s priced at about $860, an iPhone 5c at $730.

Apple’s boss Tim Cook recently responded to criticism over the pricing.

Cook said: “I realise that some people were reading rumours that the entry iPhone would be the 5c but that was not our intent.

“Our entry iPhone was the iPhone 4s.”

Localytics reported that the more expensive phone, the iPhone 5s, made up 83% of sales relative to the 5c. 

All of which makes the rumoured and long sought-after China Mobile deal an even higher priority – as it would help Apple significantly bolster their influence in the Chinese smartphone market.