Apple’s next great leap forward

“Apple is yet to tap the world’s biggest pool of potential iPhone buyers: China Mobile’s customers,” Rolfe Winkler reports for The Wall Street Journal. “That is set to change. When and how will help determine whether the U.S. technology company’s flagging stock can regain momentum.”

“When the iPhone first launched in 2007, it was sold by just one carrier, AT&T, in just one country, the U.S. That is now up to 275 carriers in 114 countries, says Strategy Analytics,” Winkler reports. “The most glaring omission is China Mobile, the world’s largest wireless carrier with more than 700 million subscribers. Among them are about 80 million wealthier ones that can afford Apple’s pricey smartphone, estimates HSBC analyst Tucker Grinnan. And of that elite group, more than half may be likely buyers of the iPhone, considering that Apple’s market share of high-end smartphone sales in China is 55%, according to HSBC. Indeed, more than 20 million of China Mobile’s customers already use “unlocked” versions of the iPhone on the carrier’s aging 2G network.”

Winkler reports, “So Apple investors have anxiously awaited some sort of deal, especially since the fall 2012 launch of iPhone 5, which is the first model that is compatible with China Mobile’s 3G network technology… Several factors suggest the companies will strike a deal eventually.”

Read more in the full article here.

20 Comments

  1. Problem is if they aren’t careful while they concentrate on China/India they will further take their eye off the fact that outside the USA where its holding they are losing market share in every market. Fine, its late in the iPhone cycle but if the next one is only a mild update then after an initial upturn that will continue. God knows how low the market will go if that actually happens and no great advance occur in the Far East to more than compensate.

    1. Apple is not blindly focusing on China, although China Mobile is admittedly a major target for the iPhone. Apple continues to expand the reach of the iPhone and, for example, has been aggressively marketing the iPhone in India via a generous trade-in program.

      Apple has demonstrated its ability to successfully orchestrate complex, multi-faceted design, development, and distribution efforts. I see no need for the incessant “sky is falling” commentary from pundits, etc.

      One thing seems certain to me – the long term members of this forum knew that Apple was headed upwards in the early 2000s, many years before others caught on to the trend. When Apple is truly headed downhill, the members of this forum will know it early, well before the clueless pundits are able to figure it out. We care about Apple and we understand its technology and its ecosystem. We have evolved along with Apple. The gabbling of the pundits and analysts that you have heard, especially over the past few years after AAPL soared so high, is just noise. Pundits need and analysts need to differentiate themselves, so they make bold predictions based on speculation just to draw hits and (hopefully) make some money. Few of them are held accountable when their predictions are wrong, even when they are egregiously in error. And, by predicting nearly every possible outcome, sheer chance enables them to occasionally celebrate a “win.”

  2. I don’t think anyone except die-hard Apple fans believe the iPhone stands much of a chance of selling in high numbers in China. Sure, I HOPE they do, but it appears I’m in the minority. I feel that Apple could afford to finance its own iPhone sale to make iPhones available to a large number of consumers in China. Sitting on $100 billion overseas cash certainly makes low-cost financing feasible to put the iPhone somewhat on par with the Chinese “white box” smartphone makers.

    It just seems that the cheap Android smartphones always have the upper hand when it comes to high volume sales as far as Wall Street’s valuation goes. I think Apple absolutely has to sell more smartphones to boost the company valuation.

    1. Why on earth would Apple ever want to trade profit for marketshare. They make more money than any company in the industry on their smartphone business. Marketshare is the dumbest metric you could possibly use to measure a company’s health.

    2. 80 million rich customers who will buy the iPhone status simbol on China Mobile and you are worried about the Android Chinese White Phone Feature Trash.

      What a tool.

    3. The problem with investor intelligence is that it is biased toward share value based on head count, rather than on ecosystem lock-in and retention. The former can fuel growth until markets are saturated, but then what? The latter will cycle repeat buyers over time, and increase market share by coaxing others from less sticky platforms. As for blanketing the spectrum with models for all, remember that the purpose of business is to establish reliable profit margins in a sector and maintain them, not respond with reckless abandon to every form of competition. Investors terminally nervous about market forces wrongly valuing innovation can turn to the likes of Rubbermaid and Procter & Gamble.

  3. LB – I don’t get it. Apple are one of the few non-Asian companies to sell phones successfully in China and Japan. They have been able to get decent market share despite the high cost and not having China Mobile.
    I do hope that Apple add CM as a carrier since it will increase the addressable market. No one expects every customer to afford or even want an iPhone, but with a customer base that large CM would increase sales significantly.
    Apple’s MO has been to take the high end market and then reduce prices / release cheaper versions to squeeze the competition into the lower margin market. This has been more successful than chasing market share. Just look at Compaq, Dell, HP, Nokia.

  4. Guys, in Asia, South America and all over the world, people love American’s brand names for its quality and the art of beauty. Wish there are more products” MADE IN USA”.

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