Despite negotiations between Apple and China Mobile over the past six years, China’s largest wireless phone operator still isn’t offering the iPhone to its customers. Discussions have progressed slowly between the two companies, and were dragged on even more over disagreements regarding subsidies and China Mobile wanting a cut of App Store app sales made over its network. Up until now, Apple and China Mobile have each held significant bargaining power. Apple’s power obviously comes from the popularity of the iPhone itself. China Mobile has a huge subscriber base, making it the world’s largest wireless carrier and offering the iPhone would mean a huge financial benefit to Apple. In other words, they both have something the other wants, which has delayed any real progress between the two companies.
This could all be about to change though. According to Evercore Partners analyst Rob Cihra, China Mobile’s traction in the 3G market is starting to slip, and this could be because the company still isn’t offering the iPhone while other major carriers in China are. Here’s what Cihra had to say:
“We think China Mobile could be starting to ‘need’ the iPhone more, since it has seen its 3G market share erode by -7 percent to 37 percent since 2011 vs. China Telecom+Unicom having gained +7 percent to 63 percent. China Unicom also has added nearly 2 million more 3G subs that China Mobile year-to-date despite being almost 1/3 the size, and overall share losses look to correlate with introduction of the iPhone in Mainland China.”
Based on these numbers, Cihra believes Apple has more bargaining power now than it did a few years ago and thinks Apple could probably get a pretty good deal out of China Mobile in the second half of this year, which would mean a huge payoff. With 20 percent penetration of the carrier’s 3G and 4G subscribers, China Mobile offering the iPhone could mean a 16 million iPhone opportunity in its first year.
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