Apple to Invade China
Official word was released before the weekend that the Apple iPhone (as Steve Jobs had hinted at a while ago) is finally entering the massive Chinese market, with a deal with China Mobile.
Reuters is carrying the following quote:
But there is no timetable for when China Mobile would bring the iPhone to mainland China, a spokeswoman said. “Apple is no longer insisting on a revenue-sharing policy, so the biggest hurdle for China Mobile to bring in the iPhone has been cleared, but there are practical issues still to be resolved,” said China Mobile spokeswoman Rainie Lei.
Apple has decided to stop requiring that wireless network companies pay it part of the subscription fees they get from iPhone users. Instead, they will subsidize the devices up front to make them cheaper.
With no revenue sharing deal, it is quite likely that Apple will be just breaking even, if not losing money on this deal. However, I can easily see it as a prestige issue for Apple, as well as a move to try and block some surprisingly successful competitors, such as the Samsung Instinct or HTC Touch Pro, from stealing the largest phone market in the world. Certainly a good business move, no matter the short term cost.
What does this mean to iPhone buyers outside of China? Quite likely a shortage of iPhones due to the sudden inclusion of all those Chinese users. If the Russian market is also signed soon (as has been rumoured), supplies could get pretty thin on the ground. If there are any hiccups at all in Apple’s supply train on these devices, we could be seeing some interesting headlines by the end of the summer. Both in terms of resources and profit margin, Apple may be cutting this one very very close.
As for that groaning noise you hear in the background, that was the thousands of iPhone knockoff makers throwing themselves off the Great Wall.
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Every article that has been written, and there are probably a dozen, that says Apple is going to make about $300 or more up front on iPhones sales, so it seems this article is incorrect in saying Apple will lose money on iphone sales. The author gives no reason as to why Apple will lose money. it just doesn’t make sense. Apparently the author does not know what he/she is talking about.
No way will Steve Jobs make a deal that doesn’t make money for Apple. He will not do it just for prestige purposes. He is Scotch. There’s just no way at all that’s going to happen. Analysts are showing Apple making all sorts of profit on their new deals with AT&T which does not have a revenue sharing deal any more.
They want to make it the iPod of phones…sounds like clever business to me.
Z
Then how do you explain the cost breakdown of the iphone to be at $170….
Add in a $200 subsidy from AT&T…
That’ $370 minimum gross for apple on each IPHONE sold… or over a 50% profit margin.. how’s that LOSING MONEY???
You really think they’ll sell the IPHONE to China.. cheaper than they sell it to AT&T???
stupid article. do some research first.