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A long-awaited deal between Apple (NASDAQ:AAPL) and China Mobile (NYSE:CHL) may finally be close after chief executive Tim Cook and the wireless provider’s chairman, Xi Guohua, discussed cooperation during a meeting in Beijing.
China is one of Apple’s most important markets and holds a huge potential for growth. The iPhone maker’s sales from the country totaled $5.7 billion for the fiscal quarter ending in September, making up 16 percent of its global total. But China Mobile, with its 707 million subscribers and 64 percent of the country’s domestic mobile phone market, is critical to those growth plans. Apple has wireless partnerships with the other to main carriers in the country: China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA).
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Some are worried that the biggest hurdle is the technical incompatibility of China Mobile’s network with the iPhone, but according to some analysts, Apple may end up offering a TD-SCDMA version of the device. The carrier has also been testing its LTE network in some cities, raising expectations. There are financial concerns as well.
“Apple is keen on the China market for sure as it is facing rising competition in developed markets,” CLSA analyst Elinor Leung told The Wall Street Journal. ”But the key is whether Apple and China Mobile can agree on the commercial terms, including shipment commitment and handset subsidy.”
Cook is on his second visit to China in less than a year after visiting in March 2012. Apple has been facing growing competition in the country from domestic phone manufacturers that offer low-cost Google (NASDAQ:GOOG) Android devices. In the third quarter of last year, Apple was the sixth largest smartphone seller in the country with a 6.9 percent share. Samsung (SSNLF.PK), the largest, held a 16.7 percent and was followed by Lenovo with 14.8 percent.
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