Will Apple’s deal with China Mobile come too late to turn around its fortunes in China?

September 12, 2013
September 12, 2013

It could be months before Apple’s iPhones are available from China Mobile, the world’s largest mobile phone company by subscribers, hobbling Apple’s growth plans in a crucial market.

“We believe the earliest time for China Mobile to launch iPhone is end November,” a China-based analyst from Citigroup wrote in a research note on Sept. 11. The launch could even be postponed “a little” further, he added, though it should happen before the Chinese New Year, which is Jan. 31, 2014.

On Sept. 11, China’s telecommunications ministry said that the new iPhone 5C and iPhone 5S were licensed to work on China Mobile’s network, a sign that the two companies definitely plan to work together in the future. But the fact that a deal wasn’t announced during Apple’s high profile new phone launch in Beijing the same day means they are still far from an agreement, analysts believe.

One looming question is how much momentum and cachet Apple will lose in China between now and the weeks or months that may take. Early signs aren’t good.

The newly-introduced “cheap” iPhone 5C was greeted with derision and sarcasm by social media users in China after the over-$700 price was announced. The company’s much-anticipated, first-ever iPhone launch in Beijing was nothing more than a video replay of the US launch, sparking bitter disappointment from the press invitees who flocked to the event after being promised on invitations that “this day is destined to be a sparkling day.”

“Apple has indeed done something remarkable—they have managed to piss off every media outlet in China,” the South China Morning Post quoted one mainland technology reviewer saying.

And some Chinese consumers have been scathing about the new iPhone 5 models’ looks. “I will not buy the new iPhone products because they are too ugly,” Xing Lu, an iPhone 4 user in Beijing, told the Global Times, a China state-run paper. “I think the iPhone is gradually losing its core competitiveness—a combination of technology and artistry,” Xing said.

“There was no surprise at all,” Zheng Xiyun, a marketing director, told state newswire Xinhua after the iPhone 5s were introduced in Beijing. “We miss the era of Steve Jobs.”

Apple desperately needs the iPhone 5C and iPhone 5S to sell in China, and a tie-up with China Mobile is sure to boost sales. Apple’s market share in China fell to below 5% at the end of the second quarter of this year and revenues dropped 14% from the year before. China’s Xiaomi, once considered a laughable copy-cat, is now beating Apple in China, in terms of market share, and is poised to pick up more customers with its much cheaper and, some would say, cooler smartphones.

Earlier, analysts in China predicted “blockbuster” sales for Apple’s new iPhones later this year, thanks to a deal with China Mobile that would be announced before October’s “Golden Week”, a national holiday during the first week of October marked by shopping and gift-giving. This timing seems unlikely now—and given the price of the iPhone 5C, there isn’t much time for Chinese shoppers to save up to buy it anyway.

Right now, the cards are in China Mobile’s hands, The New York Times believes:

An agreement would instantly give Apple access to China Mobile’s 700 million customers, and reaching it might require Apple to bend on price. China Mobile has been holding out on a deal for years, and it is now positioned to ask for better terms with Apple.

Apple has been savvy enough before to target Chinese New Year shoppers with special deals. This time around, a similar effort may come more from desperation than inspiration.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 26,263 other followers