China Mobile chairman says still in talks with Apple on iPhone deal
(Reuters) - China Mobile Ltd said it's still in talks with Apple Inc to sell iPhones amid mounting industry speculation that the pair are about to announce a deal to net the technology giant hundreds of millions of potential new customers.
Context & Ripple Effects
This negotiation has run since 2007, when China Mobile first entered talks with Apple to carry the iPhone — a deal analysts even then were sizing against China's revenue potential. In 2011 the carrier disclosed it already had 10 million iPhone users, most running devices bought for other networks, which is why the prize is framed as formalizing demand rather than creating it.
The immediate backdrop is a Wall Street Journal report from December 4, 2013 that China Mobile had signed a deal to bring the iPhone to its 700 million-plus subscribers later this month. The chairman's December 18 comment that talks are 'still' underway neither confirms nor kills that report, but the sheer breadth of same-day pickup — Bloomberg, Forbes, AppleInsider, 9to5Mac among others — shows how much rides on an official announcement.
First-order effects
- Apple would move from selling iPhones into one carrier relationship it doesn't have to having formal distribution across the world's largest subscriber base, converting existing off-network usage into subsidized sales.
- China Mobile's rivals — including China Telecom, which was reported back in 2010 to be pursuing its own iPhone arrangement — would see the last major network without official iPhone availability close that gap.
Second-order effects
- China Unicom and China Telecom would face pressure on subsidies and pricing once their largest rival could bundle iPhones into its own contract plans, tightening margin competition across all three carriers.
- Handset makers competing in China's high-end tier — Samsung chief among them — would confront a strengthened Apple distribution channel precisely as the two battle for share.
Third-order effects
- A confirmed deal would mark the maturation of carrier-subsidized distribution in China as the decisive channel for premium smartphones, making operator partnerships — not just retail — the gate through which global device brands reach Chinese consumers.
The trend: Global smartphone growth is increasingly being decided by whether premium-device makers can secure formal distribution deals with China's giant state-owned carriers.