When Apple holds its iPhone event in Beijing tomorrow — part of its push to simultaneously debut the product in multiple international markets — it looks like Apple could use the opportunity of new devices finally to close a long-anticipated deal with China Mobile, letting Apple better tap into a market of 1.2 billion mobile subscribers that is rapidly converting to smartphones.
A source familiar with the details of the Apple event tells us that China Mobile will in fact be there, and that this will be a “massive opportunity” for both, but we have also heard from another that this will not be the case.
CEO Tim Cook’s remarks during today’s presentation, welcoming viewers in Beijing, suggest that a stream of today’s Cupertino even will definitely be a part of the show. And to be clear, currently, Apple’s iPhone LTE availability page does not list support for any carriers in China. But cellular device specifications for the iPhone 5C and 5S models point to variations for both devices, respectively Model A1529 and Model A1530, supporting TD-LTE, the variety of LTE that China Mobile has adopted.
Without knowing whether China Mobile or any other carrier plans to subsidise these devices in the future, prices for the handsets in China will be at a premium: the 5C model will start at RMB4488 ($733) and the 5S model will be RMB5288 ($864).
According to Reuters, as of June, China had 1.18 billion mobile subscribers, with China Mobile accounting for the lion’s share of those at 740 million subscribers. In 3G, it also has the most subscribers at 138 million. China Mobile has yet to turn on its LTE network but has already been laying the groundwork by announcing several devices that will work on it when it is does get turned on.
China has long been a market that Apple has targeted, but it is one where growth has gone up and down, and where Android has stolen a major march. In Q2 of this year, Apple posted its biggest quarter ever for Greater China, with $8.8 billion in revenues. But then in Q3, revenues were down 43% but still accounted for 14% of the company’s overall revenues. Cook was defensive about what was going on. “China was weaker in the quarter,” he admitted, but said the “focus on revenue doesn’t tell the complete story…In the arc [of growth] I don’t get discouraged by a 90-day cycle that could have economic and other factors.”
What are those “other factors”? Cook doesn’t mention it by name but Android smartphones, collectively, have been a persistent competitive pressure on the company in China. Kantar Worldpanel estimates that Android took over 70% of all smartphone sales in China in the 12 weeks to July 31, growing by nine percentage points, while iOS took just over 22% of sales, dropping by four percentage points.
This is where LTE support could come in handy for Apple. On the one hand, it seems like offering LTE is simply table stakes in the smartphone world of today, but on the other it will make sure that Apple’s handsets will remain attractive devices to carriers keen to get their users spending more on their networks. As we pointed out yesterday, the iPhone has traditionally attracted more avid mobile data usage than any other smartphone platform — but Android, led by Samsung, has now finally overtaken it on a global basis.