Is Apple Already the Preferred Luxury Brand in China?
After several years of negotiations under two different chief executive officers, Apple’s (NASDAQ:AAPL) latest iPhone models are now available at China Mobile’s (NYSE:CHL) expansive network of retail stores.
The deal is a “watershed day,” according to Apple CEO Time Cook, as it provides another venue for the company’s ecosystem to spread. Analysts disagree over the size of the impact China will have on Apple, and some even say Apple’s growth will be thwarted by the iPhone’s screen size. However, Apple is already finding success in China, and it is considered to be one of the nation’s most luxurious brands.
Apple received a significant boost in China during the previous quarter. In the three months ended October 28, the tech giant’s revenue for greater China reached $5.7 billion, up 24 percent from the previous quarter. The China Mobile deal will certainly add to that success, as the world’s biggest cellphone network has more than 760 million users, about seven times the size of Verizon (NYSE:VZ).
Analyst Brian White from Cantor Fitzgerald is the most bullish on Apple and expects the China Mobile deal to add 20 million to 24 million iPhone sales in 2014, with earnings per share impact of around $4. Piper Jaffray’s Gene Munster has a more conservative estimate of 17 million iPhones, which could add 5 percent to consensus revenue estimates. Preorders for the iPhone 5S and iPhone 5C through China Mobile reached more than 1 million units in about three weeks.