Speculation Of Partnership Between Apple And China Mobile Heightens
It seems that Apple (NASDAQ: AAPL) is hosting not one, but two significant media events next week. One day after issuing invitations for a 10 September event at its headquarters in Cupertino, California, the company issued identical invitations for an event to be held on 11 September in Beijing. At this point, it is unclear whether the media event in Beijing will cover China specific business or will be a recap of the Cupertino event, which is expected to launch two new products: the iPhone 5S and the more lower cost iPhone 5C.
Speculation that a deal to launch the iPhone with China Mobile (NYSE: CHL) has been rife for the last few months. In July, Apple CEO Tim Cook went to China to meet with China Mobile Chairman Xi Guohua to discuss what was described at the time as ‘matters of cooperation.’ Despite being the world’s largest mobile carrier, the majority of China Mobile’s client base does not even utilize 3G technology. The iPhone and 4G licensing by the Chinese government could be a game changer for both companies.
If the news does concern the long awaited iPhone penetration of the Chinese market, the new devices on China Mobile could account for penetration of 25% and 35% in iPhone 5S and iPhone 5C shipments, which translates into around 1.5 to 2.5 million devices. That prediction is for the third quarter alone.
There is more at stake here than just a new partnership with a giant carrier. Apple’s business in China saw a significant setback in the last quarter. As a result, it has been working hard recently to bring special focus to its operations in the country. The company is actively recruiting new hires from the Chinese labor pool as well as considering building a new research and development facility in Taiwan. It is well aware that the Chinese government’s media agencies prefer home grown tech companies over foreign, outside influences. Greater investment in local presence creating a strategically larger footprint in China appears to be priority with Apple, along with building friendly relations within the country. A media event will go a long way towards addressing the wants and needs of the Chinese populace.
Whether a partnership with China Mobile happens remains to be seen. What is certain is that Apple has always seemed content to let China grow as a market key to its business organically. Now, the company appears to be more interested in taking a proactive role in shaping that side of the business. It will be interesting to see what the rare media event on Chinese soil brings.
Shares of both Apple and China Mobile traded up on Wednesday on the heels of the announcement of the upcoming September 11 occasion.
