China Mobile (CHL) beat Apple (AAPL) to the punch on a PR announcement, something which rarely happens. The world’s largest cellular carrier said it would not cut a deal to market the iPhone.
According to Reuters "news of talks over the device’s potential launch in the world’s largest telecoms market helped Apple’s stock climb more than 10 percent on November 13." Those shares can go back down now.
China Mobile did hold all of the cards. In the US and Europe, carriers need a hot new model like the iPhone. Subscriber penetration in developed markets is near a peak. Many new customers at places like AT&T (T) are simply switching from other services.
In China, CHL has 360 million subscribers, but the country has 1.4 billion people. In other words, the company does not need a new product to help it gain share.
Apple’s model probably put off the Chinese as well. The Mac and iPod company gets a cut of cell subscriber fees. China Mobile probably felt it did not need to give that up. It was the power player in the talks. Apple is not used to that.
Apple needs China to hit its long-term sales goals of the iPhone. And, China has told Apple "no".
Douglas A. McIntyre
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