A Million China Mobile iPhone Preorders: Off to the Races?

Telecom & Wireless

Published: January 15, 2014 6:40 am

While Apple Inc. (NASDAQ: AAPL) CEO Tim Cook was in Beijing to meet with Chairman Xi Guohua of China Mobile Ltd. (NYSE: CHL), the latter company announced that preorders for the iPhone had reached 1 million units. Sales of the iPhone officially start at the carrier’s outlets on January 17.

Apple reached a distribution agreement with China Mobil, the world’s largest phone company by number of users, last month. The carrier said in a statement Wednesday that the multiyear agreement offers “broad potential” for future cooperation. Details of the agreement were not disclosed, but both companies are looking to bolster declining share in the market of 1.2 billion wireless subscribers.

The agreement between Apple and China Mobile was delayed by a lack of network structure. Of China Mobile’s 763 million customers, only 181 million were 3G subscribers at the end of November. That means 582 million subscribers were still on the company’s 2G networks. Apple needed a commitment from the Chinese firm that it would build out its 4G network before iPhones would be available. By the end of 2014, 4G coverage is expected be available in 340 Chinese cities.

Also by the end of 2014, China Mobile is expected to have 350 million 3G (TD-SCDMA) and 4G (TD-LTE) customers, or nearly double the number of current 3G subscribers. Apple very likely will pick up a significant percentage of those new customers.

The question for Apple is how many iPhones it can expect to sell in China. A million preorders would seem to be a good start, but some analysts have forecast up to 30 million iPhone sales. We should know by this time next week whether that looks likely.

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