After years of negotiations it appears that China’s largest mobile carrier will finally be selling Apple’s iPhones.
China Mobile has an estimated 700 million subscribers in the world’s largest smartphone market, about seven times the number of subscribers Verizon Wireless boasts in the U.S. Thus far, China Mobile has not carried Apple products due to disputes between the two companies over the quality of China Mobile’s broadband and Apple’s insistence on obtaining a sales guarantee from the carrier.
However, on the eve of the release of two new iPhones, the Wall Street Journal reports that Apple has asked its Foxconn manufacturing partner in China to plan on shipping its forthcoming iPhone 5C device to China Mobile.
The simultaneous release of the iPhone 5C and getting China Mobile to carry the device represent a renewed push for Apple to reverse its declining fortunes in China and the developing world more generally. The iPhone 5C is expected to be Apple’s first attempt to create a cheaper, lower-end device, which are more popular in the developing world than the expensive high-end models that have been Apple’s trademark to date.
Apple is also expected to release an upgrade to its iPhone 5, the iPhone 5S, this month.
As the WSJ report notes, Apple’s sales in China declined by a yearly 14 percent in the third quarter of this year ending in June. Its market share in China is now just 5 percent, making it the 7th largest company in the coveted market, down one spot from the end of the 2Q.
This comes despite the push from Apple’s senior leadership to strengthen its presence in China. During a trip to China earlier this year, Apple CEO Tim Cook said that he expected China to become the company’s largest market at some point in the future. He did not offer a prediction as to when this may happen. Currently, China is Apple’s third largest market behind the U.S. and Europe, according to the WSJ.
A big part of Apple’s troubles in China have been its failure to reach an agreement with China Mobile, China’s largest carrier.
Cook himself has traveled to China repeatedly and held numerous meetings with China Mobile officials, most recently at the end of July. So far, however, an agreement between Apple and China Mobile has remained elusive.
Reuters cites technology issues as one of the main barriers to nailing down a deal. In order to function on the operators’ inferior TD-SCDMA 3G technology, Apple would need to significantly alter the iPhone’s hardware. As a remedy, Apple has since included Qualcomm Inc chips, that are able to operate even in China’s obscure networks, and more importantly saves Apple the headache of a total redesign.
China Mobile and the country in which it operates in is also improving its broadboad coverage including an ambitious plan to bring 4G to China.
China Mobile has also reportedly objected to Apple’s insistence that it be given sale guarantees. It’s not known how this issue has been resolved between the two companies.
On Tuesday Apple will hold a press conference where it is expected to officially unveil the iPhone 5S and iPhone 5C.