A $330 iPhone Could Increase Apple’s Market Share In China
As we got to know from the latest report of the analyst Katy Huberty, it seems like Apple will have the chance to cover a new demographic area in China. She stated that the costs are in a stabilization process, and this could represent a new opportunity for Apple company, even though the Chinese smartphone square is contracting. To sustain her affirmation, she pointed out the fact that China has an historical tendency to buy new Apple products. The analyst also stated, that first time when Apple launched on the market a cheaper than $1000 notebook ( more precisely in October 2004), was the exactly same year when the price of personal computers reestablished after an almost 10 percent decrease.
The network TD-SCDMA from China, increased recently the shipments of 3G devices. Considering that this is the largest telecommunication provider in the world, Apple could increase their overall coverage by adding another 20 percent to their existing market, after those 10 percent already won with iPhone 5. Even though in March 2012 we found reports that showed us that nearly 15 million Apple devices were already used in this network (but with 2G), there is still a long way until TD-SCDMA will officially carry the iPhones on their careers.
If we take a look at what Huberty says in her note, it is a big possibility that Apple would release iPhone mini at a price of $330. This would place Apple in the same position with other important brands such as Huawei, Lenovo, CoolPad and ZTE. In this case, even though in the first place Apple will invest a little bit more, the iPhone mini will finally increase the revenue and the gross profit of the company.
So, if Apple choose to release the iPhone mini during this year, they will face a decrease in their revenues from 2 percent to 49 percent. This means a lot, but they expect that the gross profit will increase after the release with about $2.4 billion. In our opinion this is a risk worth taking.
More than this, Huberty let us know, that the risks they assume, are sustained and accelerated by some factors, such as improved TD-LTE licences, the entrance of a low priced iPhone mini smartphone, the free transition of numbers due to portability legislation and last but not least, the desire of China Mobile to carry the new devices that should appear after a TD-LTE release.
Even though in the present moment, there are no Apple devices (iPhone models), able to stand the existing protocol, the company stated that almost 40 percent of all 3G smartphone devices shipped in China are TD-SCDMA. This means almost 15 percent per year, which is not bad at all.
There were some discussions related to a carrier partnership between Apple and China Mobile since 2009, as China Mobile stated. But they are still debating and waiting for a friendly contract in order to sign an official partnership. All we could find related to this subject, is the visit of Apple CEO Tim Cook in China. Last month the CEO met China Mobile, and they probably discussed the details of this agreement, but we don`t know yet, the character of the discussion.