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China Mobile Gets the iPhone

Robert Clark
News Analysis
Robert Clark
1/17/2014
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Ever since the iPhone debuted in 2007, speculation about a distribution deal with China Mobile has been as big an industry talking point as how to kill off OTT.

Now the wait is over. Apple Inc. (Nasdaq: AAPL)'s flagship product went on sale officially Friday in China Mobile Ltd. (NYSE: CHL) stores, priced as low as 5,288 yuan (US$874) for a standalone product. The 5s is available on a two-year contract for CNY5,488 ($906), with 4G packages starting at CNY138 ($22.81) per month.

Apple CEO Tim Cook even accompanied China Mobile boss Xi Guohua to one of the operator's Beijing outlets to mark the occasion.

China Mobile has presold 1.3 million devices since it began taking orders three weeks ago. HSBC and IDC estimate it will sell 10 million iPhones in 2014. (See Apple-China Mobile Deal: A Boost for LTE TDD in 2014.)

Those would be official sales, though. Thanks to the grey market, already 45 million of China Mobile's 763 million customers use an iPhone, Reuters reports.

But while the official arrival of the iPhone is expected to cause a sales pop, its impact on China Mobile's bottom line will likely be overshadowed by 4G. That's because, for most of this year, 4G in China will be a market of one.

China Mobile has already rolled out commercial-ready LTE TDD in 16 big cities and expects to have the world's biggest 4G network by year-end, with half a million basestations in 340 cities. By comparison, China Telecom Corp. Ltd. and China Unicom Ltd. have only just called tenders. (See China Unicom Calls 4G Tender.)

Experience in other markets has shown the importance of first-mover advantage in 4G adoption, and China Mobile is keen to capitalize after a 3G nightmare. Its enforced experiment with TD-SCDMA during the past five years shrank its market share by a dozen points and limited its choice of handset partners, hence its aggressive rollout schedule and its ability to finally strike a deal with Apple. (See China Mobile, ZTE Kick Off VoLTE Rollout .)

For once, it's the mobile network, and not the device, that is proving decisive.

— Robert Clark, contributing editor, special to Light Reading

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