Reuters is telling us that the Apple deal with China Mobile for the iPhone is a done deal: unfortunately they've not got one detail in this quite right. They, along with a lot of other commentators, are thinking that the success of the deal, or at least how quickly it will make a difference to Apple, will depend upon the rollout of the company's 4G network. And that's not really quite true:
For all the hype, Apple Inc's long-awaited iPhone agreement with China Mobile Ltd may deliver little more than a fleeting revenue jolt for the U.S. giant.
A deal with the world's largest mobile carrier, expected as early as this week, nets Apple 759 million potential new customers that could generate $3 billion in 2014 revenue, or nearly one-quarter of Apple's projected revenue growth in its current fiscal year.
That may or may not be true: we're rather expecting to get the announcement on Wednesday about the deal. However:
China Mobile, which says it already has 45 million iPhone users, could gain 17 million new activations and the deal should generate at least $3 billion in revenue for Apple in 2014, according to Forrester Research.
That part is true: and that 45 million people are willing to use an iPhone as what is essentially a featurephone, not a smart one, shows that the country and the network could be fertile ground for Apple.
China Mobile's existing iPhone users can only use the company's slower 2G wireless speeds because its proprietary 3G TD-SCDMA standard is not compatible with iPhones.
The company hopes the one-two punch of high-speed 4G mobile Internet and Apple iPhones will bring back customers who abandoned the carrier for China Unicom Hong Kong Ltd and China Telecom Corp, both of which already offer the iPhone.
And it's in there that Reuters and those other commentators are overlooking one small point.
Yes, it's true that current iPhones can only work in 2G mode on China Mobile's current network. And it is also true that it going to take time for China Mobile to get that 4G network up and running. My source tells me perhaps March or April in Shanghai and Beijing with the rest of the country following after that. The new iPhones, the 5c and 5s, can indeed work on that TD-LTE 4G network. So, an expansion of Apple's sales on China Mobile will depend upon the speed of the roll out of the 4G network. That's what is being implied here.
Except that's not all of the information we have. And that extra info is that Apple has versions of both iPhones that will work on that 3G TD-SCDMA network:
“Yes, the missing models are A1516 (a version of 5c that works on TD-LTE and CHL’s 3G TD-SCDMA) and A1518 (a version of 5s that works on TD-LTE and TD-SCDMA). Neither show up (yet) on the 5s and 5c model listings on Apple’s website. Both have received network access licenses for China Mobile’s network (permit numbers 00-8573-139033 and -139036, respectively).”
My thanks to the commenter here "Chaka 10" for having pointed that out originally. My other sources tell me that the chipset that Apple is using will support TD-SCDMA and that it's more a matter of playing around with aerials than anything else.
The point of all of this is that the effect of a China Mobile deal upon Apple will be, assuming that the deal actually happens at all, rather more immediate than many seem to currently think.
