Official Announcement of Apple’s China Mobile Deal Sobers Analyst Expectations

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Don’t feel bad if yesterday’s announcement gave you déjà vu.

It’s been nearly three weeks since news broke that Apple had signed a long awaited deal with China Mobile, giving the iPhone access to the provider’s 760-plus million subscribers. So yesterday’s announcement that Apple had finally struck a deal with China Mobile, giving the iPhone access to the provider’s 760-plus million subscribers, seemed a little bit like reheated leftovers.

The latest, seemingly-official announcement does provide a few new specifics about the “pact”; for starters, China Mobile and Apple have finally set the date. But more specific—and maybe arguably more important—details such as pricing structure remain obscured.[more]

Jan. 17 is the date targeted for China Mobile to begin carrying iPhone models 5s and 5c. The date, a month later than the originally rumored Dec. 18 target, is a very interesting choice likely aimed to capitalize on holiday spending, as Jan. 17 is two weeks before the most important Chinese Spring Festival (“Chinese New Year”) holiday. Also, China Mobile will begin taking sign-ups on Dec. 25. While it’s still not at the level it is in the west, Christmas has become a very important consumer holiday in China. Indeed, all those girlfriends are going to expect their rich boyfriends to get them a new “土豪金” (tuhaojin) China Mobile gold iPhone.

Speculation about how many iPhones could be sold by China Mobile has sobered over the past weeks. While some were throwing out expectations in the dozens of millions in early December, the latest reports have been more reasonable. For example, after early December’s first ‘announcement,’ some analysts made wild predictions of China Mobile selling 70 million iPhones. At that time, the most sober expectations were in the area of 17 million iPhones added. The latest Bloomberg announcement carries an analyst projection of up to 12 million iPhones added. And Sean Rein, analyst for China Market Research Group, went on record in an interview with a far more sober target of 8 to 10 million iPhones; that’s a long way from a drunken prediction of 70 million.

It’s good timing and a match that’s been much anticipated and there is no doubt that the iPhone should see a few million new users. But there are all kinds of signs that should worry the giddy. First, as has been mentioned over and over again:

“Way back in 2011, when talks of a deal between Apple and China Mobile were first being thrown around, China Mobile’s chairman admitted that four million China Mobile subscribers use iPhones for text and voice… it is not clear if that four million number (certainly higher now more than two years later) includes the millions more Chinese iPhone users who have unlocked their phones. The bottom line for those estimating that China Mobile could add tens of millions of iPhone users is that many, even millions, of those additions could be existing iPhone users just trading up to 4G. And while that’s great for new sales, it doesn’t help Apple’s China market share.”

Beyond this unknown “trade-up” number, China Mobile, like Apple, is actually itself losing China market share. As Bloomberg notes, “China Mobile had 62 percent of China’s total mobile subscribers at the end of October, down from 64 percent a year earlier and 67 percent at the same time in 2011, according to company data.”

The final detail that does not exactly bode well for the deal is that a day after the years-long awaited date was announced, China’s social media networks, such as Weibo, reacted with a shrug.

You can bet that Apple and China Mobile alike are hoping the new year brings in some new business. 

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