After playing push-me-pull-you for much of last year, in December Apple finally struck its long rumoured deal with China’s premier carrier, China Mobile. The deal was finalised on 22 December 2013 (23 December Beijing time) and entailed the two companies signing a multi-year agreement to bring the iPhone to the world’s largest mobile network, utilising its new fourth-generation mobile network.
Everything kicks off this week, with the iPhone 5s and 5c becoming available in China Mobile’s network of retail outlets, as well as Apple’s own retail stores right across mainland China from Friday 17 January.
Both of the latest iPhones have been available for pre-registration from China Mobile’s official website since Christmas Day.
And now we have some idea of just what kind of numbers this means. Reports reveal that Foxconn has shipped around 1.4 million units of the iPhone 5s. Figures for the iPhone 5c, which is primarily assembled by Pegatron, have not been revealed, however. The Wall Street Journal‘s Lorraine Luk elaborates on the 5s shipping figures, quoting an anonymous source (or “person familiar with the matter”), who told Luk, “While the initial shipment volume doesn’t represent the total sales at China Mobile for January, the figure helps to gauge early demand for iPhones from China Mobile, the world’s biggest carrier by subscribers with more than 760 million customers… Shipping one million or more iPhones to a single carrier per month is substantial. But we have limited visibility beyond this month as Apple hasn’t informed Foxconn of the volume for the next shipment to China Mobile.”
The WSJ suggests that the China Mobile deal could help Apple to sell between 10 and 30 million more iPhones a year, though Wedge Partners believes expectations should perhaps be a little lower, as the shipments to China Mobile appear to be cannibalising the existing orders to various non-carrier ‘open channels’. “We understand pre-orders from China Mobile resulted in a roughly 35 percent drop in weekly iPhone 5s sales in various non-carrier ‘open channels’ from the week before China Mobile announced the deal,” says Wedge.
Then, there’s the competition, of course. “According to Gartner, Apple sold 18.5 million iPhones in China in the first three quarters of 2013, up 28 percent from a year earlier. But the growth rate has slowed over the past few years partly due to intensifying competition.” Gartner analyst Sandy Shen, explains, “We have seen fading enthusiasm for iPhones compared with the past few years as we have more choices in China now. There has been no dramatic change to the iPhone and consumers want a larger screen size.”
The WSJ notes that in last year’s third quarter, Apple placed fifth in market share, with six percent compared to Samsung with 21 percent, Lenovo on 13 percent and two of the local companies: Yulong and Huawei.
But as China Mobile and Apple’s deal gets underway, we may start seeing a shift in those positions. Only time will tell.