New Chinese deals could bring 57m new sales for iPhone
Morgan Stanley believes Apple could achieve AT&T levels of penetration if it can sign China Mobile and Telecom this year
Published: 31 January, 2012
READ MORE: Metrics | China | Apple | iPhone
Apple is once again looking to conclude iPhone distribution deals with China Mobile and China Telecom, and success could bring it as many as 57m additional sales in the country by 2014, according to one estimate.
Morgan Stanley's Katy Huberty, in a client note quoted by Fortune, thinks that, if Apple made deals with all three cellcos this year, it could increase its unit sales by between 24m and 36m in 2013, which would add $6.50 to the company's bottom line.
Huberty's calculation is based on the assumption that there are about 150m high end subscribers in China (defined as those paying at least RMB100 or $16 a month for mobile service), and Apple's only carrier, China Unicom, currently has 10% of these. Of Unicom's 15m high end customers, 20% choose the iPhone.
A similar uptake might be expected, the note argues, at China Mobile, which currently has 120m high end users, and China Telecom, which has 15m. That would equate to about 27m units, not factoring in the growth in the smartphone market in China, where 3G coverage is expanding and the middle class is on the rise.
In fact, Mobile already has about 10m iPhone owners, though these just use 2G and Wi-Fi as there is no Apple device for the cellco's TD-SCDMA technology. Apple has been widely rumoured to be readying a model for Mobile's future TD-LTE network, but talks over a 3G offering have repeatedly stalled over issues of branding and control of the software platform, according to insiders.
Eventually, says Huberty, the iPhone will reach penetration levels comparable to those at AT&T, where 63% of smartphone customers currently choose the Apple device. In Morgan Stanley's most optimistic scenario, all these factors would generate an additional 57m Chinese iPhone sales per year within two years.
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