What the China Mobile deal means for Apple

The huge carrier will finally begin selling the iPhone, further cementing a market CEO Tim Cook has worked hard to woo. But there's still the problem of price.

By Benzinga Dec 23, 2013 1:02PM

Apple Senior Vice President of Worldwide Marketing at Phil Schiller speaks about the new iPhone 5C on September 10, 2013 in Cupertino, Calif. (© Justin Sullivan/Getty Images)By Tim Parker


With little fanfare, it finally happened.


Sunday night, when most Americans were watching holiday specials on TV, China Mobile (CHL) announced that it would begin selling iPhone 5s and 5c on Jan. 17.


With more than 760 million subscribers -- significantly larger than Verizon (VZ) -- China Mobile represents a huge win for Apple (AAPL). It's no wonder that CEO Tim Cook, normally not one for lengthy comments to the press, had so much to say.


"Apple has enormous respect for China Mobile and we are excited to begin working together," he said. "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."


China Mobile Chairman Xi Guohua was equally excited. "Apple's iPhone is very much loved by millions of customers around the world," he said.


The other key player in the deal, Wall Street, seemed happy as well. Shares of Apple rose nearly 3% in Monday morning trading to top $565.


How big is the deal?

Dow Jones cited reports prepared by analysts that estimated 2014 sales at 39 million in China alone. This compares to 34 million units sold worldwide in the most recent quarter. That would represent a 25 percent increase in units sold each quarter next year.


There's still the problem of price.


According to CNBC Asia reporter Eunice Yoon, it costs about $850 to purchase from grey market vendors and China Mobile's competitor, China Unicom (CHU), currently offers the iPhone for free when customers purchase about $1,000 worth of minutes. She says China Mobile will have to offer a package at least as competitive as China Unicom's current package.


Despite the criticism that the iPhone will be too expensive for most China customers, demand is expected to be strong, according to Yoon.


At the time of this writing, Tim Parker was long Apple.


Read more from Benzinga

38Comments
Dec 23, 2013 2:33PM
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Why not make it in the U.S. and export it to China?   If something is not made in the USA, Americans should not buy it.  Time to slap down overpriced CEOs (chief exploitation officer) and the greedy 1%ers who are willing to sell out what is left of the middle class.
Dec 23, 2013 2:34PM
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what they should do is make the phones in our country and sell them to the chinese
Dec 23, 2013 2:26PM
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Like cost really means anything to someone who wants to get something like an iPhone. Now the real story is how long before China starts to sell the knock-off iPhones to its customers at a better price with the same tech specs.
Dec 23, 2013 2:11PM
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'bout time they can start selling the same devices to the slaves that manufacture them. 


Dec 23, 2013 3:09PM
Dec 23, 2013 2:49PM
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A lot of money for a carry-around toy.
Dec 23, 2013 3:07PM
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Too expensive?  That has not stopped Americans from buying those phones in droves!  I can't imagine that the Chinese masses are any more financially savvy than the American consumer which we already know to be mathematically challenged and technically illiterate.
Dec 23, 2013 3:14PM
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and so what.  if they want an American product, let em pay for it. 
Dec 23, 2013 3:02PM
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This will bring billions more in profits for apple but they get 3% raise in stock prices.  Wall st. is funny.
Dec 23, 2013 2:40PM
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Good for Apple, but what Apple is going to need to survive as any kind of profitable business is a new idea.  Milking the same old one is only going to work for so long.
Dec 23, 2013 3:32PM
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Apple seems to find a hard time making their crappy phones for cheap. unlike all the other companies that make great phones for less then an iphone. OMG how do they do it.
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I PERSONALLY  try NOT TO BUY ANYTHING MADE IN CHINA OR S E ASIA. Pretty soon the only jobs in the U.S. WILL BE FAST FOOD JOBS!  GUESS I WON'T BE BUYING AN APPLE NEW ANYTHING /SOON!  BRING OUR JOBS BACK TO THIS COUNTRY OR BOYCOTT THE COMPANIES THAT SHIP WORK OVERSEAS!  TOO MANY SHEEP IN THIS COUNTRY!!   THE ONLY GOOD THING CHINA DOES IS ONE CHILD PER FAMILY THEY KNOW WE ARE OVER-POPULATED BY BILLIONS!  TOO MANY PEOPLE NOT ENOUGH JOBS IN THE U.S.

Dec 23, 2013 6:18PM
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how many iphone purchases will be made not by individual Chinese consumers, but instead by Chinese corporations for their employees?

1st Answer.... Millions.

2nd answer... way too many for me to consider selling my APPL shares

Dec 23, 2013 4:56PM
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What you're wearing now is made in China.
Dec 23, 2013 3:39PM
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Hope they don't use them wile driving.
Dec 23, 2013 7:44PM
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China will steal all the Apple technology & tell apple to take a hike.  Also, China's intelligence agencies will figure out a way to spy on all apple users.
Dec 23, 2013 7:45PM
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If we start boycotting a company for a quarter for making their production oversea. they will probably start listening.
Dec 24, 2013 11:34AM
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wasn't aware apple made in china, so I have added them to my list of DO NOT BUY
Dec 23, 2013 11:29PM
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Apple has 3% market share in China, next year they'll have 5% market share. Samsung has 80% market share. Windows Phones has 2% market share. The other 10% goes to HTC, Lenovo and other vendors. The Chinese are a lot smart about technology then Americans just ask Target.
Dec 23, 2013 6:33PM
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That explains the bleating sounds coming from China.
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