A new iPhone launch is not the only thing Apple is reportedly prepping this week. According to The Wall Street Journal, the company is also getting ready to ship iPhones to the world’s largest wireless carrier, China Mobile. Other sources say Apple will not announce its deal with China Mobile at this week’s press events, but that Apple is indeed getting ready to ship iPhones to China Mobile.
With an estimated 750 million subscribers, China Mobile will be a key partner for Apple. China is now the world’s largest smartphone market. 29% of the smartphones sold worldwide this year will go to Chinese consumers, according to Canalys, and at 240 million units the Chinese smartphone market is almost twice as big as the U.S. market.
“But the Chinese smart phone market will be dominated by domestically based vendors in the coming quarters,” said Canalys’s Nicole Peng, research director in Shanghai. “Domestic brands are rapidly moving their businesses toward smart phones and winning consumers with their competitively priced devices. This will continue to put significant pressure on international vendors in 2013.
In order to fight back, Apple needs China Mobile. A deal between the two companies has been elusive for years because China Mobile did not want to pay subsidies, and because it uses TD-SCDMA technology in its network, and Apple has not yet launched an iPhone with a TD-SCDMA chipset. Last month a Chinese news source reported that Qualcomm is adapting its iPhone modem for China Mobile’s TD-SCDMA network. MediaTek and Marvell are also makers of TD-SCDMA modems. With or without an iPhone, TD-SCDMA phones are set to proliferate; Strategy Analytics projects that 100 million of these phones will ship this year.
The Chinese market is incredibly important for Apple as it works to grow its core device business. In more developed markets the inventor of the touchscreen phone faces increasing competition from Google, Microsoft, and Amazon, who appear willing to market cheap smartphones as loss leaders to drive their advertising, software, and e-commerce businesses, respectively. This weekend, a report of a free Amazon smartphone in development are sure to have gotten some attention in Cupertino, despite the fact that Amazon vehemently denied the report. Amazon may never offer a free smartphone, but its business model will allow it to lose money on devices, something Apple can’t afford to do consistently.
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