KGI’s Mingchi Kuo has suggested in a note to investors that the mystery of the apparent delay in the iPhone launching on the world’s largest carrier, China Mobile, may be due to last-minute renegotiations with Apple on volume discounts across the two new models.
We believe weak sales of iPhone 5C may trigger a re-negotiation of the Apple-China Mobile partnership. While previously we estimated that Apple originally planned the TD-LTE version would account for 30% of total iPhone 5C shipments, our latest survey indicates that demand for the TD-LTE iPhone 5C has declined dramatically due to 5S being far more popular than 5C among China Mobile subscribers [...]
We believe this would necessitate a re-negotiation of the Apple-China Mobile deal and therefore defer its finalization …
The implication here appears to be that China Mobile agreed separate volume breaks with Apple for both iPhone 5c and 5s, expecting demand for the 5c to be significantly higher. The iPhone 5c was the lower-cost handset created in large part specifically for markets like China and India. In practice, demand for the more expensive handset appears to have been far higher even in developing markets.
This may make sense if China Mobile had focused its negotiations on volume sales of the 5c, worrying less about deals on 5s sales levels it never expected to achieve. I would say it’s the best theory I’ve seen to date, but in truth it’s the only theory that seems to make any kind of sense.
Kuo is predicting sales of a relatively conservative 38M iPhones in the first quarter of 2014, while others expect the China Mobile deal to have a far greater impact.