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What did Apple have to concede to get the China Mobile deal?

Photo: David Paul Morris/Bloomberg

Bloomberg is running an interesting piece speculating that Apple may be having to concede far more than it might wish in order to sign the all-important deal with China Mobile.

“In this relationship, China Mobile has all of the power,” said Edward Zabitsky, chief executive officer of Toronto-based ACI Research. “China Mobile will offer the iPhone as soon as Apple gives in on price.”

It is, as the piece observes, rather an unusual position for Apple to find itself in: the weaker party in negotiations with a carrier.

Speculation has encompassed significant discounts, a contribution to marketing spend and even a share of App Store revenue.

“China Mobile certainly believes they should be able to get a part of the content pie,” said HSBC’s Tucker Grinnan in Hong Kong. “Apple is going to have to be a bit more flexible on how they approach that.”

We’d be pretty astonished if Apple were willing to go that far, but it does need to bring this deal home, and its press event in Beijing on 11th September (the day after its global media event) creates a deadline it has to hit.

Other possibilities are offering exclusives on new models for a limited time, or exclusive colors. Neither would be at all likely in normal circumstances, but these circumstances are far from normal.

We may never get to learn the precise terms of the deal, but one thing will be very visible: the cost of the handsets. In a country where low-cost handsets proliferate, the expectation is that China Mobile wants price concessions not to boost its margins, but rather to make the iPhone 5C in particular sufficiently attractive to local buyers.

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Comments

  1. hisdudenessman - 11 years ago

    This all sounds like speculation to me. Apple is not known for having a weak spine in carrier negotiations, so I don’t think they’re going to start now. And a share of App Store revenue?! Forget about it, man.

  2. Boughelam Lahcene - 11 years ago

    The answer is iPhone 5C that will be exclusively for China mobile and not for all the world as people thinking. C as China not Cheap… Sorry but only 5S will be announced 10th and 5C will be announced at second keynote 11th in china… Oops don’t tell anyone I told you that O_o

  3. I’ve been wondering about this as well. And what about censorship?

  4. rahhbriley - 11 years ago

    I don’t think that China Mobile has as stong of a position as some might think. Was reading reports earlier about how China Mobile’s growth has slowed and is facing pressure to carry the iPhone. Pressure from customers, investors/owners, and from their competitors. I’ll agree Apple needs them very much as well. I imagine they actually had a fairly even negotiation. Regardless, content concessions do not seem like one of the particular areas Apple would compromise in. After all, if China Mobile wants to block web content or traffic, couldn’t that be done on their end on the network??

    However, with as young as this deal is, and as long as the 5C has been in development, I highly doubt China Mobile gets an exclusive of the 5C. The China only rumor for the 5C is slightly more plausible but I still doubt it. For as much development, and sure desire from around the globe (from economies similar to China’s and the US’s), I’d highly doubt this would be the case. In addition, Apple is really good at managing rumor expectations if they get out of control. I can’t remember if it was the 4S (thinking it was?), or the 5, but it was assumed that Apple was responsible for a leak that more or less put to rest the fingerprint and NFC rumors a few weeks before launch. They know people were expecting it, and didn’t want the press and consumes to get let down on the day it was announced. I would have expected a really firm leak to have surfaced saying that the 5C was China only if that was the case. Otherwise, a lot of people around the globe will be sadly disappointed the 10th/11th.

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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