Yesterday Apple announced that the iPhone will finally come to China Mobile on January 17th. Pre-orders will start on December 25th. The timing of the iPhones availability will coincide with the Chinese New Year. This time of year is a popular time for Chinese consumers to give gifts that reflect good fortune and coming prosperity for the new year. Which makes the initial timing of the iPhone release in China Mobile to be significant as a jumping off point.
China Mobile is the largest carrier in terms of subscribers by far in China. China Mobile has over 700m customers and largely due to their expansive converge of the country. Of course, not all of these devices are smartphones and even more relevantly not all of these devices are 3G. In fact most are still 2G. China Mobile over the past year as added between 23-31 million new 3G subscribers per quarter with their base of 3G subscribers at 169.5m at the end of Q3 2013.
This is a significant tracking statistic to have watched the 3G penetration grow over the past 2-3 years. It may shed some insight into the adoption rate of 4G devices, and in this case the iPhone, over the next 3 years. The iPhone will support China Mobile’s 3G/TD-SCDMA and of course their latest 4G/TD-LTE network in which the iPhone will be a flagship device.
The biggest question most are asking is what the impact of the China Mobile deal will do for iPhones in China. Most financial sell side analyst figures I’ve seen speculate that the bear case is an additional 5 million with the most bullish case estimating the deal could amount to an additional 31m units in 2014.
I tend to think estimates in the 20m range are reasonable as an increase to iPhone sales in 2014. That being said, I still believe most are underestimating the demand for the iPhone in China on China Mobile in particular. But even with that in mind a few things need to be pointed out.
Firstly, there are already an estimate 40-45m iPhones already in use on China Mobile’s network which were purchased on the grey market and brought onto the network unofficially. These devices, however, do not support all the bands of China Mobile’s network therefore have spotty coverage. A key question for the iPhone 5s and 5c are how many of these grey market devices have already been purchased and are running unofficially on China Mobile’s network. If this number is large then it potentially impacts the number of new consumers ready to buy officially from the network.
I have a hunch that many of the rumors, leaks, and even promo material being floated around China from China Mobile about the iPhone coming to the their network was designed to help thwart some of these grey market purchases in the hope that those consumers would wait for the device to be officially launched on China Mobile.
The other key question is what the price and or subsidies for the iPhone will be on China Mobile. While the device is still going to be out of the price range of most consumers on both the subsidy and pre-pay markets, if China Mobile gets creative it can potentially increase the market opportunity for the iPhone. Payment plans, on top of subsidies are examples of ways they can be creative.
When networks invest in new infrastructure they need to find ways to recoup those investments. Carriers around the globe have found that the iPhone is the best device in the market to focus on as a premium services promoter. The job the iPhone does for carriers is to help them sell premium services. China Mobile understands this and we believe is willing to push the iPhone hard as the flagship device for 4G on their networks and begin helping them down the road of recouping their investments in LTE.
A paragraph from Apple’s press release on the subject succinctly points out the aggressiveness of China Mobile’s 4G LTE roll out.
China Mobile now has over 1.2 million 2G/GSM, 3G/TD-SCDMA, 4G/TD-LTE base stations and over 4.2 million Wi-Fi access points, providing broad coverage to quality networks for iPhone 5s and iPhone 5c customers. China Mobile is rolling out the world’s largest 4G network. By the end of 2013, China Mobile’s 4G services will be available in 16 cities including Beijing, Shanghai, Guangzhou and Shenzhen. By the end of 2014, China Mobile plans to complete the rollout of more than 500,000 4G base stations, which will cover more than 340 cities with 4G service. The collaboration between Apple and China Mobile will give a big boost to the development of China’s homegrown 4G/TD-LTE technology. iPhone on China Mobile supports major cellular network standards, making a global phone a reality for China Mobile customers.
While there is still some speculation about the impact of the iPhone being on China Mobile, the key take away is that this is a marathon for Apple. China is poised to be Apple’s largest market for mobile. It is a mobile first and mobile primarily market making it the perfect place for iPhones and iPads from the view of the future of mobile computing.
Apple will surely benefit from this deal in 2014 but over the next 5 years, we expect China to be a booming market for the Apple ecosystem.
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OCNews.us covers local news in Orange County, CA, California and national news, sports, things to do and the best places to eat, business and the Orange County housing market. https://ocnews.us
Hmm is anyone else having problems with the images on this blog
loading? I’m trying to find out if its a problem on my
end or if it’s the blog. Any responses would be greatly appreciated.