Apple this past weekend announced a long-sought-after deal to sell its iPhone smart phones through China Mobile. The largest mobile phone operator in the world with over 760 million subscribers, China Mobile is also state-owned and directly controlled by the Chinese government.
"Apple has enormous respect for China Mobile and we are excited to begin working together," Apple CEO Tim Cook is quoted as saying in a prepared statement. "China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world's largest network."
Apple will begin selling the iPhone 5S and iPhone 5C through China Mobile starting on January 17, 2014, but customers can begin "preregistering" to purchase one of the devices starting on December 25, 2013. The devices will run on China Mobile's high-speed 4G network.
What's unclear is what China Mobile's customers will pay for Apple's expensive phones. When the firm announced the two new iPhone models—the iPhone 5S and 5C—back in September, the firm was expected to position the latter device as a low-cost model that could compete with the volume, value-oriented segment of the smart phone market. But it kept pricing high, ensuring that the iPhone 5C would sell only in small quantities, and would not be viable in emerging markets.
How unsuitable are these devices in China today? Apple sells the iPhone 5S for $870 in China, while the iPhone 5C is $738. Most Android devices sell for just a tiny fraction of those prices, and some can be had for under $100. Apple is only the fifth largest seller of smart phones in China, behind Samsung, Huawei, Lenovo and Yulong.
But China is a very important market for Apple, which has watched its worldwide market share shrink over the past few years. China Mobile's 760 million subscriber base is roughly 7 times larger than the number of customers claimed by Verizon Wireless, the largest wireless carrier in the United States. Apple could sell over 15 million subsidized iPhone handsets through China Mobile this coming year alone, assuming the devices are priced accordingly. And smart phone sales growth is expected to explode in the coming couple of years.
Apple says it will reveal its China Mobile pricing at a later date.