Saturday, June 1, 2013

How China Mobile called Apple?s bluff

China Mobile iPhone Deal

Apple and China Mobile have been locked in bitter contract negotiations for years. Apple wants the same kind of deal it has with Verizon or Vodafone. China Mobile wants something much, much sweeter. But as months slide by, Apple?s position weakens and China Mobile?s grows stronger. In April, China Mobile hit 730 million subscribers, growing by another 4 million subscribers in just one month. China Mobile is now adding more 3G subscribers per month than its smaller rivals China Unicom and China Telecom.

[More from BGR: Not afraid to fail: Google Glass spat highlights clashing cultures at Apple and Google]

Most importantly, China Mobile?s month-on-month 3G subscriber growth is the fastest in China. China?s leviathan has demonstrated it does not need the iPhone to remain the fastest growing 3G player in the biggest phone market in the world. Tim Cook thought that he could force China Mobile into making some concessions by showing that its subscriber growth would slow without the iPhone. This was a dreadful miscalculation and possibly another sign that Cook still has much to learn.

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Now China Mobile has demonstrated it does not need the iPhone, while annualized iPhone volume growth dropped to under 7% in the March quarter. The balance of power at the negotiation table has shifted. If Apple opts to launch a new budget iPhone this summer, it simply has to get China Mobile on board if it hopes to gain ground in China. Having China Mobile?s marketing muscle behind a mid-priced device that is given out for free for contract customers is invaluable right now.

Samsung is sizzling in China, racking up sales of?12 million smartphones in the first quarter of the year. That was twice the iPhone?s volume in China. Lenovo and Huawei sold 8 million smartphones each in China and are also threatening to pull away. China?s portion of global smartphone sales is growing far faster than was expected?just a year ago. North America?s portion is shrinking faster than projected, and North America is turning into a drag on Apple as it rapidly matures and China?s global weight grows each month.

It is highly likely that sometime over the next few months, Tim Cook will have to accept whatever terms China Mobile is now offering him. Those terms may be far worse than what Apple could have extracted in early 2012 or 2011. But that is the price you pay for letting the biggest operator in the world to call your bluff.

This article was originally published on BGR.com

Source: http://news.yahoo.com/china-mobile-called-apple-bluff-185518312.html

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