Despite having multiple rounds of talks over the past few years, Apple still hasn’t got China Mobile, the world’s largest carrier, on-board to carry the iPhone. This time, though, it seems the two parties have finally struck a deal, as Apple gets ready to announce the cheaper iPhone 5C with a special event in China.
So why was it that the two companies couldn’t agree to sell the iPhone since all these years? According to Bloomberg, the negotiations weren’t anything like Apple’s previous carrier talks, where the company dictates terms to carriers:
“In this relationship, China Mobile has all of the power,” said Edward Zabitsky, chief executive officer of Toronto-based ACI Research. “China Mobile will offer the iPhone as soon as Apple gives in on price.”
“Apple’s unwillingness to provide meaningful concessions and China Mobile’s unwillingness to subsidize a high-cost device have inhibited a deal until now,” said John Bright, an analyst at Avondale Partners LLC. “A lower-cost iPhone, financially accessible to a greater proportion of China Mobile’s customer base, could be a middle ground.”
Apart from the cost, China Mobile also wants in on Apple’s revenue earned through its 30 percent App Store commission. The carrier wants a “part of the content pie,” according to an HSBC analyst quoted in the Bloomberg report. This seems like a very strange request, given that Apple’s 30 percent commission covers payment and hosting costs, and that it hardly makes any profit off of this money. We wonder how the company tackled this issue when negotiating with China Mobile.
China’s a huge untapped market for Apple, and a major portion of its future growth lies in there, which makes China Mobile, with its 740 million subscribers, a crucial component of Apple’s business strategy. Samsung and local manufacturers have pushed Apple’s marketshare down to the sixth position, but an iPhone 5C on China Mobile could boost the number by 36 percent.
With the rumored $400 price-point of the iPhone 5C, do you think Apple would be able to reclaim its lost marketshare in China?