leaked-poster-suggests-apple-is-about-to-sell-the-iphone-on-china-mobile-the-worlds-biggest-carrier.jpg

Why, all of a sudden, does the world seem to care about the iPhone coming to China Mobile? If you scan the latest out of the tech press, that is all you see. I have been following this story for quite some time. It has been in the making for years. Honestly, I didn't care then, either. And I am having a hard time figuring out why it matters to any other, semi-normal human. Before giving you my guesses, allow me to catch you up on the particulars:

It comes as no surprise that China is a very important market to Apple. More than a market of potential customers, it houses Apple's most important manufacturing partner. It is fair to say that, without China, we would not have iPhones and iPads as they exist today. It is only natural that Apple would want to save on shipping costs, and actually sell products into the market where they are built. 

China Mobile is not only the largest carrier in China, it is the largest carrier in the world. At well over 700 million subscribers, it serves more than twice the number of people than the population of the United States. By far, the US is Apple's biggest market. Now that China Mobile will be carrying the iPhone, China could quickly become Apple's largest market. Obviously, that means huge, upside potential for Apple and their shareholders. Apple already prints money. The deal with China Mobile means they will print even more.

The only potential for this to effect the average consumer is availability. Already, Apple has a very hard time meeting demand for every new product it puts out. Increased demand in China will constrain supply even more, causing even more delays in order fulfillment. If you don't like waiting a month for your new iPhone, imagine how it will feel to have to wait two months, or more. The launch of the latest crop of iPhones marked the first time that China was a launch country. Usually, they have to wait until second or third round. The supply for the iPhone 5S, especially in gold, was greatly constrained in the US. That was without any orders from the largest carrier in the world. 

One might assume Apple would just increase supply when they feel the pinch. Unfortunately, Apple cannot increase supply simply by placing a bigger order. They are already making as many iPhones as they can. The iPhone 5 and 5s are, perhaps, the most complicated and difficult consumer electronics devices ever made. Apple didn't just have to design the phones; they had to design the machines and the process that produce the parts and assembles the phones. Every factory big enough, equipped enough, and with skilled labor enough to build iPhones, is doing so at full capacity. They cannot just flip a switch and produce an extra 10 or 15 million devices per quarter. Ramping up production is slow because Apple has to build more factories, and train more workers, somehow, without their partners running afoul of human rights violations. For Apple, expansion into China Mobile is also a risky proposition. 

For fans, there is also the matter of bragging right. Though, I'm not sure how selling a boatload of iPhones on China Mobile changes that equation very much. Apple is never going to be the top manufacturer in China. Their population is just not economically capable of being huge consumers of premium products. It is the largest, budget market in the world. Eventually, mid-tier phones will become more popular. But iPhones are at the top of the spectrum. There are simply not all that many people who can afford them. And there is nothing wrong with that. Cheap, Android phones will always rule the roost in China, at leas, for the foreseeable future. 

As a fan of Apple products, I am not validated by how much money they make. I don't own Apple stock, nor am I ever likely to do so. I do not live in China. Nor, am I likely to visit. This deal is not necessary to make Apple the #1 brand in the world. They are already there. It is not needed to make Apple the largest company in the world by market-cap. Already done. This will not make Android fans respect Apple fans more, nor the reverse. It might make new iPhones harder to get at launch. Otherwise, the world rolls on. For all the coverage it has gotten, there is surprisingly little to see here. Time to move on.

David Johnson

Comment