Apple is targeting the worlds biggest market of potential iPhone customers – those of China Mobile. Shares hanging at $395, Apples shares have lost 44% from an all-time high recorded last September. It market cap also has just been surpassed by rival Google.
China Mobile is the world largest wireless carrier including more than 700 million subscribers. Among them, around 12% are wealthy users which would easily afford Apples pricey smartphones according to HSBC analyst Tucker Grinnan cited by Wall Street Journal. As companys share is 55% of the market is very likely half of those 80 million users to buy an Apple device. Furthermore, at least 20 million China Mobiles users already have an unlocked iPhone using the carrier 2G network.
Apple sold 261 million smartphones in 2012. The firm is recognizing Chinas market as a huge boost to sales as 40 million potential users represent a huge opportunity especially considering the substantial profit margins – the highest in high-end smartphone industry.
Apple investors have awaited a deal between the two sides, considering the latest iPhone 5 which is the first model compatible with China Mobiles 3G network technology. One reason a deal hasnt been sealed may be that China Mobiles main shareholder, the Chinese government, doesnt want the company to offer the iPhone yet. A problem on Apples side, might be that it doesnt want users to be offered a poor service as China Mobiles version of 3G technology, called TD-SCDMA, is less reliable than those supported by smaller competitors like China Telecom and China Unicom.
The mobile operator could be waiting for implementing a new mobile system called TD-LTE. The iPhone is also compatible with that technology as well, which offers much faster data speeds for users. Getting the iPhone onto that market standard would give it additional advantage over the rest.
With innovation technology, strategic aims seem critical for the iPhone and China Mobile. Its about time for the two giants to enter into agreement according to analysts because a possible deal is too profitable to deny for both ends. A revolutionary new product could always be in the works when it comes to Apple. But a deal in China represents more of a practical thing to do on the line of many ahead. Apple could easily get at least $6 billion of profit even if they reduce profit margin analyst say.
Apples share price closed at 0.7% gain and China Mobile added 2.39% to its share price.
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