Apple needs China Mobile more than China Mobile needs Apple
Apple's smartphone marketshare in the burgeoning Chinese market is dropping precipitously, and to bolster its position the company needs to strike a deal with China's largest carrier, China Mobile. The only problem is that Apple needs China Mobile a lot more than China Mobile needs Apple, according to Bloomberg:
"In this relationship, China Mobile has all of the power," said Edward Zabitsky, chief executive officer of Toronto-based ACI Research. "China Mobile will offer the iPhone as soon as Apple gives in on price."
That compromise may be coming next week when Apple stages a special event in Cupertino. The company is widely expected to introduce both a new iPhone 5s and an iPhone 5c, which may be priced lower than the flagship iPhone.
China Mobile has 63 percent marketshare in a country of more than a billion wireless accounts. Despite that, Apple and China Mobile have yet to strike a deal. Analysts suggest that the issue is subsidization and what China Mobile CEO Li Yue calls "benefit sharing." China Mobile is apparently looking for App Store revenue concessions from Apple.
Apple is expected to have a press conference in China on September 11th within a few hours of Apple's event in Cupertino on September 10th. (China is on the other side of the international date line from the United States.) It's unknown what Apple will reveal at the Chinese event besides the expected new iPhone models.
China Mobile doesn't want to lose iPhone sales to rival China Unicom: When Apple released the iPhone 4 in China, China Mobile offered gift cards to iPhone users to keep them from switching to China Unicom. But two years is a long time in the mobile handset market. Apple's been outpaced by Samsung and five Chinese handset makers, who are building products more in line with more Chinese consumers' wallets, and now Apple finds itself in the unfamiliar position of having to make up lost ground. China is way too big - and way too lucrative - a market for Apple to leave to competitors.