“With the signing of DoCoMo in Japan (60M customers), T-Mobile in the US and soon China Mobile, home of 750M subscribers, Apple has put in place an expanded retail channel that should ensure healthy double digit iPhone growth for the next two years,” Ed McKernan writes for Seeking Alpha.
“When combined with its high performance positioning of the 64 bit A7 processor that I outlined in my previous article, Apple has set the stage for further long-term gains as it creates a worldwide level playing field, forcing cellular carriers to compete with each other and retail in their bid to secure new customers while poaching those of competitors,” McKernan writes. “It’s a recipe for channel commoditization similar to how Microsoft and Intel in the 1990s commoditized PCs and thus pulled a disproportionate amount of profits away from the consumer. Apple is now in this position with the caveat that its own retail will act as an added forcing function.”
McKernan writes, “The research firm Kantar reported at the end of September that in Japan Apple’s iPhone had 48.6% of the market vs. 47.4% for Android. After years of denial, the market share numbers speak of an urgency for DoCoMo, the largest Japanese carrier, to not just sign on with Apple but to do so with a robust sales and marketing plan to win back lost customers… Signing on with Apple was a difficult move for DoCoMo as part of the terms of the agreement, according to Nikkei, was a requirement that it agree that 40% of all new contracts be iPhone subscribers. Given that iPhones are nearly 50% of the market today, the prospects are that Apple could soon dominate the market in Japan with Android dropping off dramatically. Similar scenarios are likely to take hold in other regions of the world as the iPhone 5S comes off allocation later this year.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
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If DoCoMo had to agree to “40% of all new contracts be iPhone subscribers” what are the terms Apple is pushing for from China Mobile?
I’m sorry but I just can’t make much sense of what this guy has written. “…with the caveat that its own retail will act as an added forcing function…” What is a “forcing function?
“…are likely to take hold in other regions of the world as the iPhone 5S comes off allocation later this year…” Is this industry jargon? What does it mean for a phone to come “off allocation”?
Forcing function refers to the fact that Docomo will not only be competing with Android phones, etc. in order to achieve and sustain the minimum 40%, but with Apple stores as well. Competing with Samsung and Apple to not fall below this percentage means they will have to be very aggressive and not have their retail salespeople pushing other phones due to spiffs and the like, plenty of which has been seen during Android’s rise.
And the “off allocation” element speaks to the fact that iPhone 5s and iPhone 5c are presently being allocated to retail outlets, to spread the available production around. Later on, after production catches up with demand, the retail outlets will be able to order as many units as they want.
It sounds like a dream come true but with Apple not being able to supply enough iPhones to carriers, the dream seems destined to fall on its face. I was hoping Apple could make hay between Galaxy S launches to sell iPhones unimpeded by Samsung’s top smartphone offering.
They finally came around.