It’s clear that after CEO Tim Cook’s announcement that Apple Inc. (NASDAQ:AAPL) will not be launching a cheap iPhone just for the sake of rustling up market share that Apple’s strategy appears to be more complex than any rumor in the mill can fully realize, but that doesn’t mean that the Cuppertino company still doesn’t plan to take Chinese markets by force.
According to CNET’s Don Reisinger, Cook has promised them an iPad mini with cellular functionality by the end of January instead via an interview with the Chinese news outlet “Tencent.” This offer would fit new found Chinese consumer demand well, as Topeka Capital Markets Brian White predicted after the iPad mini with WiFi launched on December 7.
In an investor’s note written last month, White mentioned that the iPad Mini would “be the next big thing in China,” and that “the smaller form factor and lower price point will allow Apple to sell the iPad Mini in more meaningful volumes versus the regular-size iPad.”
It also doesn’t mean that talks with the Chinese government to get web-based services in the hands of consumers there in a timely manner have gone well yet—so this accouncement may be offering far too much to Chinese consumers prematurely if a large number of apps can’t be distributed to a consumer base with devices ready for them.
And the last thing it doesn’t mean is that we have any idea what Cook’s latest talks with China Mobile are all about—they’re definitely not about a cheap iPhone anymore—unless they’ll exclusively offer the Mini with data contracts that will make them worth their while for Chinese consumers. Considering that China Mobile has over 700 million subscribers, this development could put iPad Minis in the hands of a large number of people.
A deal with China Mobile might be tough in coming, however, even if talks are escalating. They’ve been ongoing since 2009. The main issue? It’s rumored that China Mobile is still holding out for a cut of all app download revenues. It’s clearly operating from the leverage standpoint in negotiations, as Apple has so far only been able to penetrate smaller carries. Apple is also likely reluctant to agree to such an unprecedented move unless its hand is forced. It may mean opening the floodgates for demand for revenue from other carriers—and would either create a substantial loss for Apple or a greater cost for consumers everywhere.
In his press conference, Cook also mentioned that Apple will open more than 25 retail stores across China in an effort to get more Apple Inc. (NASDAQ:AAPL) products into the hands of hungry consumers. There’s no projected estimate on how long it will take Apple to realize that goal.