Apple (NASDAQ:AAPL) is a household name. In fact, this mobile manufacturing giant was the most admired company in the world from 2008 to 2012 according to Fortune Magazine. Apple is also the third largest manufacturers of mobile phones in world behind Nokia and Samsung. It is also the second largest mobile phone company by revenue. However, Apple’s revenue and market share has been dwindling for the last couple of years. This is why Apple must make headway in China. In other words, China is a market that Apple cannot afford to lose.
Greater China i.e. mainland China, Honk Kong and Taiwan is the third largest market for Apple after Europe and America. This makes it a very important market for Apple in terms of future growth. For example, Apple’s CEO Tim Cook has repeatedly stated that in last year’s final quarter Apple sold a record number of iPhones in Greater China. This means that making headway in China could actually improve Apple’s fortunes. In fact, the fourth quarter revenue for Apple in Greater China rose by six percent to stand at a whopping $5.73 billion.
Unfortunately, Apple is also facing some serious challenges in China. To being with, competition from rival phone manufacturers is heating up. In truth, Apple ranks fifth in terms of market share in Greater China. In addition, products from Apple are expensive and hence, Chinese consumers are opting for cheaper product such as Android based phones. However, Apple remains optimistic. The fact that over fifty-seven percent of all the mobile browsing traffic comes from Apple’s iOS is partly responsible for this optimism. Another reason for this optimism is the recently concluded deal between Apple and China Mobile.
Apple’s Deal with China Mobile
China Mobile has more than seven hundred and sixty million subscribers. This makes it the largest mobile phone operator in the world. Apple now has a deal with the mobile operator that will see China Mobile offer its subscribers a chance to own an iPhone. The deal took more than six years of intense negotiations.
The key obstacle to the deal was the unreliability of China Mobile’s third generation network. This unreliability would have adversely affected the experience of iPhone users on China Mobile. However, discussions were fruitful and plans are underway to get iPhones to operate on China Mobile’s fourth generation network. This deal with China Mobile effectively means that iPhones are now available to Chinese consumers on all three mobile operators in China.
The Impact of the Apple – China Mobile Deal on Apple
The deal has a huge impact on Apple in terms of both market share and sales volume. For example, the mobile manufacturing firm now has access to more than 700 million subscribers. In addition, Apple can now sell iPhones to an additional three thousand retail outlets all across Greater China owned by China Mobile.
Market analysts predict that this deal could actually boost Apple’s iPhone shipments by fifteen million. In fact, the iPhone craze among subscribers to China Mobile has already begun. More specifically, China Mobile received millions of pre-orders for the iPhone soon after sealing the deal with Apple.