Analyst: Don’t ‘Over-Exaggerate’ Apple’s China Mobile Deal
Apple’s (NASDAQ:AAPL) long-awaited deal with China Mobile (NYSE:CHL) has been inked, and while that agreement gives the iPhone maker access to more than 700 million new mobile customers, the company’s victory in the smartphone battle in the world’s largest smartphone market is by no means assured.
Apple has been losing market share in China as the number of available lower-cost smartphones grows. According to current rankings, the iPhone maker controls just a 6 percent share of the Chinese market, falling behind Samsung (SSNLF.PK), Lenovo (LNVGY.PK), Yulong, and Huawei, per research firm Canalys.
The comparatively high price of the iPhone has much do with how much market share Apple controls and how competitive China’s three main wireless carriers — China Mobile, China Telecom (NYSE:CHA), and China Unicom (NYSE:CHU) — can be.
In a recent research note acquired by Barron’s, Credit Suisse analyst Colin McCallum noted that the iPhone joining China Mobile’s smartphone lineup will create some changes in the Chinese market: it will raise subsidy costs for all three providers and make the overall smartphone market more competitive; the cost of subsidizing the device will also impact China Mobile’s profit.