Apple has been in China for years already, for both manufacturing and sales. The big news this year is that Apple and China Mobile, the world’s largest cell phone company, are about to tie the knot.
What it means for Apple is obvious. More iPhone sales. What it means for China Mobile is obvious. iPhone sales. Like NTT Docomo was in Japan, China Mobile is the last major holdout among cell phone companies that sell the iPhone to their customers. In Japan, as elsewhere, cell phone companies prospered when they could sell the iPhone, and those that did not usually bled customers.
Is a China Mobile deal good news for Apple? Let the facts and numbers speak for themselves.
China Mobile has almost 800-million subscribers. That’s nearly two and a half times all the subscribers in all the cell phone companies in the U.S. combined. Better yet, China Mobile is rolling out a faster 4G LTE system which is perfect for Apple’s iPhone 5S and iPhone 5C. China’s brand conscious middle class is booming and it’s exactly that segment who aspire to own iPhones, arguably the affordable premium brand.
So, why are stock market analysts and Apple’s many critics so down and dirty negative on the the China Mobile deal?
Most will point out that Samsung has already been in China for years, that Chinese smartphone users are somehow smarter and prefer cheaper iPhone knockoffs with higher specifications. It’s as if the critics are expected a mass awakening any moment whereby a few hundred million iPhone customers ditch their phones and line up to buy devices from Motorola, HTC, Samsung, et al.
That. Won’t. Happen.
The iPhone was a major leap over smartphones back in 2007 and look how many years it took for Apple to become the market leader (#1 in the U.S., Japan, and many other countries; unit sales, revenue, profits). Are there any new smartphones that are leaps and bounds better than the iPhone?
China’s smartphone market is becoming more like the U.S. and Japan, complete with carrier subsidies (not the right word, I know) from major players, and a low barrier to entry and ownership. How does that not play to Apple’s strengths as a brand?
That brings me to brand. Samsung was wise to carve out a brand name from the standard riffraff of Android fare. Why? Humans care about brand and are willing to pay more to attain brand status. It’s that premium which often marks the difference between profit and loss, success and failure. Remember, Samsung and Apple are the two major players making a real profit on their smartphone products.
Not Google, not Microsoft, not BlackBerry, not Nokia, not HTC et al. As people in emerging markets become more affluent what do they want? Premium products. Apple products. That’s why China Mobile is a really big deal for Apple. And China Mobile.