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A deal between Apple and China Mobile could mean 70 million more iPhones sold in China

A man talks on an iPhone in Beijing July 24, 2013. A sharp drop in Apple Inc's China revenue in April-June underscores the challenges it faces in its second-largest market as the technology gap with cheaper local rivals narrows and as Samsung Electronics keeps up a steady stream of new models across all price ranges. REUTERS/Kim Kyung-Hoon
REUTERS/Kim Kyung-Hoon
China Mobile has over 700 million subscribers.
By Lily Kuo
ChinaPublished Last updated This article is more than 2 years old.

Apple has reportedly signed a deal to sell its iPhones with China Mobile—the world’s largest  mobile phone carrier, and one of the world’s only big carriers not to support the iPhone.

We’ve been anticipating this tie-up for a while. Apple already sells its phones with smaller Chinese carriers like China Unicom and China Telecom, but has lagged its competitors like Samsung as well as smaller domestic handset makers in China, and is currently ranked fifth in the market. China Mobile said previously it would only start carrying the iPhone when it offers 4G. Now that Chinese authorities have awarded 4g licenses to China Mobile and other carriers, industry observers have been eagerly anticipating an announcement from Apple or China Mobile. (Representatives from Apple and China Mobile both declined to comment on the story.)

The Wall Street Journal reported today (Dec. 5) that China Mobile will start selling the phone later this month. Caixin, a Chinese financial news publication, reported earlier this month that the carrier would only start selling the phones in June 2014 (link in Chinese). Last month, China Mobile said it would be unveiling a new brand of phone for its new 4G network at a conference on Dec. 18 in Guangzhou.

The deal does more than just increase Apple’s foothold in China, the world’s largest smartphone market by subscribers. It gives Apple more access to the market segment it needs. One oft-cited reason why other smartphone makers have done better than Apple in China is that they offer a range of low to middle-range phones for the many shoppers who can’t afford a $700 iPhone.

There’s also an expanding population of wealthy Chinese who can afford the iPhone, many of whom use China Mobile’s phone services. Marvin Lo, an analyst from Mizuho Securities, estimates that because of this group at least 10% of the carrier’s 700 million subscribers (pdf, link in Chinese) are likely to buy an iPhone, according to the Journal. That would be 70 million more iPhone orders overall, an amount equal to almost half of the total units Apple sold last year (150.2 million).

Of course, the figure is an estimate. Another analyst forecasts 20 million units will be sold for the year of 2014. However the numbers pan out Apple has plenty to gain from the Chinese market.

Gang Yang contributed additional reporting.

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