Thursday, 01 August 2013 10:07

Scratch my back … Apple’s Tim Cook meets with China’s biggest telco

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Apple CEO Tim Cook has had an important meeting with the Chairman of China Mobile. They did not meet to discuss the weather,

China Mobile is the biggest telco in China. Indeed, measured by the number of subscribers (740 million), it is by far the largest carrier on earth.

But it is the only Chinese carrier not to offer the Apple iPhone – its strength is in rural areas, where it offers a GSM network and has 79% market share. In 3G is market share is much smaller, with ‘only’ 60 million subscribers.

Apple is struggling in China. Its recent disappointing financial results revealed Chinese sales a massive 43% lower than they were a year earlier. So you can pretty well work out what Apple CEO Tim Cook and China Mobile Chairman Xi Guohua were talking about at their meeting in Beijing.

It would be to both companies’ advantage if China Mobile started to offer the iPhone to its customers. It could then do better in 3G, and in 4G, which is about to be introduced to China. Their meeting was reported by Reuters, which said that when it asked China Mobile about the meeting it got back a short email saying only that the two companies were “discuss matters of cooperation.” You can bet they were.

“Any deal between China Mobile and Apple, combined with the Chinese government issuing 4G licenses later this year, could turn around both companies' fortunes with wider product distribution and faster Internet speeds attracting new smartphone adopters,” said the Reuters report.

Reuters also reports that Cook also met with China Telecom, which owns 10% of China Mobile (which spun out from China Telecom in 1999). Both companies are owned by the Chinese Government.

China still accounts for 13% of Apple’s total sales, a substantial figure but down from a peak of 19%. Apple’s weak financial results are almost solely the result of the drop-off in sales in China – the rest of the world, and especially the US, is doing fine. Little wonder that Tim Cook is spending more time there.

The visit comes as Chinese suppliers Huawei and ZTE are introducing new 4G-ready models. To maintain momentum Apple needs to succeed in the world’s largest market, especially when the 4G wave hits later this year. Where is that iPhone 6?

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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