By Paul Mozur
BEIJING-- Apple Inc. Chief Executive Tim Cook said Wednesday its
deal with China Mobile Ltd. to offer iPhones will help bolster
sales of the device that hit a record high in Greater China in the
fiscal first quarter.
China Mobile Chairman Xi Guohua said millions of Apple's iPhones
already have been ordered by the carrier's customers, signaling
strong demand for the device. Sales of the iPhone through China
Mobile, the world's largest carrier by subscribers, are set to
begin Friday.
Speaking at a small media briefing to Chinese media and The Wall
Street Journal, Mr. Cook said he is "incredibly optimistic" about
the outcome of the cooperation with the Chinese carrier. The deal
won't be limited to handsets and entails broad cooperation between
the two companies, Mr. Xi said, but he declined to give further
specifics.
"We've gotten to know each other...today is a beginning, and I
think there are lots more things our companies can do together in
the future," Mr. Cook said.
He didn't provide further details about Apple's first-quarter
sales. The company is scheduled to release results for the period
later this month. In October, Apple posted fourth-quarter revenue
for Greater China, which includes Hong Kong and Taiwan, of $5.73
billion, up 6% on the year.
The deal with China Mobile is the last piece of the puzzle for
Apple in the country, the world's biggest smartphone market,
officially making the iPhone available through all three of China's
state-run telecom service providers. Though neither Apple nor China
Mobile would comment on the exact terms of the agreement, the U.S.
company is likely to get a considerable bump from China Mobile,
which analysts expect will spend generously on marketing and
handset subsidies to sell the iPhones.
The pact also massively expands the reach of Apple's sales
channels in China, making the iPhones available in China Mobile's
thousands of stores nationwide.
"As of this weekend we will be selling iPhones in more than
3,000 additional locations," Mr. Cook said. "China Mobile already
has a reach to many cities that Apple does not have a reach
to."
Still, Apple faces headwinds in China as high prices for the
smartphones and a lack of significant carrier subsidies has led
consumers to buy cheaper options that run Google Inc.'s Android
operating system. According to Apple's China website, the
unsubsidized retail price of a 16-gigabyte iPhone 5S is 5,288 yuan
(US$874), while an iPhone 5C with the same storage capacity costs
CNY4,488 (US$742).
Mr. Cook said that Apple wants to reach as many Chinese
consumers as possible by offering iPhones through China Mobile, and
added that the country has more than half a million people writing
apps for the U.S. company's iOS operating system.
"Apple has always been about making the best products, not the
most products, so that's always our North Star and that's not going
to change ever," Mr. Cook said.
While the iPhone remains a highly coveted product for many
Chinese consumers, more customers are opting for cheaper options,
many of which are produced by local companies like Xiaomi Inc. and
Huawei Technologies Co.
Analysts say the latest deal would be no panacea for Apple's
sales in China, though it could give it a healthy shot in the arm.
The agreement will give Apple access to China Mobile's more than
700 million subscribers--roughly seven times the customers who use
Verizon Wireless, the largest carrier in the U.S. Analysts project
the deal could bring Apple anywhere from 15 million to 39 million
iPhones through the carrier in 2014.
Write to Paul Mozur at paul.mozur@wsj.com
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