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China's 3G subscribers grow 88% year over year to 222M

post #1 of 19
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The total number of 3G subscribers in China reached 222 million in November, up 88 percent year over year, giving yet another indication why the market is so important for continued growth of Apple's iPhone.

iPhone 5


Analyst Brian White with Topeka Capital Markets offered a closer look this week at the latest stats on mobile subscribers in China. In particular, he noted that China Mobile's 3G subscriber growth has been hurting because the carrier does not offer Apple's iPhone.

Even though China Mobile has 707.3 total wireless subscribers, making it the world's largest carrier, the telecom has just 82.4 million 3G customers. China Mobile represents 64 percent of the total wireless subscribers in China, but only 37 percent of China's 3G users ? and its share shrunk from 41 percent of 3G users a year ago.

"China Mobile is the only major carrier in China that does not have a relationship with Apple to sell the iPhone," White said in a note to investors. "We still expect Apple and China Mobile to announce an agreement for the iPhone in 2013."

The two carriers that do offer the iPhone ??China Telecom and China Unicom ? saw their 3G subscribers double year over year in November. Both also launched the iPhone 5 on Dec. 14, moving a record setting 2 million units in the device's opening weekend.

White expects 3G growth in the month of December will accelerate even further for both China Telecom and China Unicom thanks to the iPhone 5 launch.

He expects that the total number of 3G subscribers in China will reach at least 230 million by the end of 2012. He projects between 325 million and 350 million 3G subscribers will be in the market by the end of 2013, a huge increase from the just 127.5 million 3G subscribers China had at the end of 2011.
post #2 of 19
Please correct me if i'm wrong, but i believe the only reason that android has a larger marketshare compared with iOS is because apple leaves uncovered huge world markets. Every place they both compete in more or less equal terms (some US carriers, for example), IOS is much more popular.
And that lower marketshare may be due to: a) unable to timely produce the stock for those markets, or b) a soon to be finished agreement with the main supplier (Samsung) to leave undeveloped countries for them, and so assuring a non compromised production commitment for Apple.
If a), the huge increase in capex of the last Q's is about to change this.
If b), the legal battles, investment in chip design and production, etc., may be the signs of this kind of agreement to be finished sooner than later.
post #3 of 19

I can't see Apple playing the Chinese market any differently than it plays other markets. Lower market share (except in the USA) but higher profits.

 

I'm beginning to think more and that this business plan will not have long term viability.

 

This is not to say that I think that Apple should join in the race to the bottom.

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post #4 of 19
Quote:
Originally Posted by mieswall View Post

Please correct me if i'm wrong, but i believe the only reason that android has a larger marketshare compared with iOS is because apple leaves uncovered huge world markets. Every place they both compete in more or less equal terms (some US carriers, for example), IOS is much more popular.
 

Unfortunately you need correcting.  Europe, for example.

post #5 of 19
Quote:
Originally Posted by island hermit View Post

I can't see Apple playing the Chinese market any differently than it plays other markets. Lower market share (except in the USA) but higher profits.

 

I'm beginning to think more and that this business plan will not have long term viability.

 

This is not to say that I think that Apple should join in the race to the bottom.

As long as market share is enough to provide a viable marketplace for app developers, I think apple should be just fine with lower share.  I don't know what the tipping point is, where developers will start deprioritizing iOS, but so far they are making more money there despite a smaller market to sell to because of the better security of the marketplace and (apparently) a different user profile that is willing to pay for good apps.

post #6 of 19
Quote:
Originally Posted by mieswall View Post

Please correct me if i'm wrong, but i believe the only reason that android has a larger marketshare compared with iOS is because apple leaves uncovered huge world markets. Every place they both compete in more or less equal terms (some US carriers, for example), IOS is much more popular.
And that lower marketshare may be due to: a) unable to timely produce the stock for those markets, or b) a soon to be finished agreement with the main supplier (Samsung) to leave undeveloped countries for them, and so assuring a non compromised production commitment for Apple.
If a), the huge increase in capex of the last Q's is about to change this.
If b), the legal battles, investment in chip design and production, etc., may be the signs of this kind of agreement to be finished sooner than later.

The primary reason for Android's share in China is the fact that the iPhone is not available on China Mobile yet (600+ million subscribers). And the reason for that is Apple refuses to bend to CM's demands for special treatment. They've been negotiating for at least four years now.

When it finally happens -- it's a question of when, not if -- it will be Android's (and by extension, Samsung's) worst nightmare. I am predicting that it will be sewn up in time for iPhone 6 (or 5S, whatever the next one is called).
post #7 of 19
Quote:
Originally Posted by cameronj View Post

As long as market share is enough to provide a viable marketplace for app developers, I think apple should be just fine with lower share.  I don't know what the tipping point is, where developers will start deprioritizing iOS, but so far they are making more money there despite a smaller market to sell to because of the better security of the marketplace and (apparently) a different user profile that is willing to pay for good apps.


The big question in my mind is whether or not Apple can supply all markets with enough phones.

 

China could easily be a market that doubles Apple's required units.

 

Too much demand and not enough supply could easily create a tipping point very fast.

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post #8 of 19
Quote:
Originally Posted by island hermit View Post

 

Too much demand and not enough supply could easily create a tipping point very fast.

I think that's why Apple was so insistent on getting the iPhone 5 into as many countries as they could as quickly as possible. Not only to satisfy customers around the world who wanted the newest device, but also to see what type of supply chain modifications they might need to work on before attempting to supply China Mobile's customer base along with all the other carriers they already partner with. 

post #9 of 19
"Even though China Mobile has 707.3 total wireless subscribers"

Think there is an M missing there. Either that, or they are the worlds smallest wireless company and I'm curious as to 0.3 of a person.
post #10 of 19
Quote:
Originally Posted by cameronj View Post

Unfortunately you need correcting.  Europe, for example.

Yes. But in Europe would be a case of Blackberry and Symbian, not androids particularly successful, isn't?. Given that both of them are in almost terminal status, the preeminence of IOS would be more or less open there in the future, eventually competing with Nokia's Lumia. Even more, Asymco documented that the non-covered markets for iphone are a little more than 50% of the total smartphone world's market size. I doubt Android has any less of 90% of the market covered already.

post #11 of 19
Quote:
Originally Posted by mieswall View Post

Yes. But in Europe would be a case of Blackberry and Symbian, not androids particularly successful, isn't?. Given that both of them are in almost terminal status, the preeminence of IOS would be more or less open there in the future, eventually competing with Nokia's Lumia. Even more, Asymco documented that the non-covered markets for iphone are a little more than 50% of the total smartphone world's market size. I doubt Android has any less of 90% of the market covered already.

You're correct that Android has nowhere near 90% of the EU market like they do in China. The highest share report I've seen put Spain at over 80%. Other countries tho are nowhere near that high, with one of the lower Android marketshare percentages being Italy at around 50%. I also think those numbers may have been before the iPhone5 was released, or perhaps very shortly thereafter.

 

There's lot of room for movement throughout Europe. Apple is doing well.

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post #12 of 19
Quote:
Originally Posted by realwarder View Post

"Even though China Mobile has 707.3 total wireless subscribers"
Think there is an M missing there. Either that, or they are the worlds smallest wireless company and I'm curious as to 0.3 of a person.

AI always seems to report China Mobile's numbers a month off. I am guessing they are pulling it from a previous article. CM posts their numbers on their homepage. As of the end of November they have 707,269,000 subscribers. They are likely over 710 million as of today as they typically add about 4 to 6 million subscribers per month.

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post #13 of 19
Quote:
Originally Posted by cameronj View Post

Quote:
Originally Posted by island hermit View Post

I can't see Apple playing the Chinese market any differently than it plays other markets. Lower market share (except in the USA) but higher profits.

 

I'm beginning to think more and that this business plan will not have long term viability.

 

This is not to say that I think that Apple should join in the race to the bottom.

As long as market share is enough to provide a viable marketplace for app developers, I think apple should be just fine with lower share.  I don't know what the tipping point is, where developers will start deprioritizing iOS, but so far they are making more money there despite a smaller market to sell to because of the better security of the marketplace and (apparently) a different user profile that is willing to pay for good apps.

 

Quote:
Originally Posted by island hermit View Post

Quote:
Originally Posted by cameronj View Post

As long as market share is enough to provide a viable marketplace for app developers, I think apple should be just fine with lower share.  I don't know what the tipping point is, where developers will start deprioritizing iOS, but so far they are making more money there despite a smaller market to sell to because of the better security of the marketplace and (apparently) a different user profile that is willing to pay for good apps.


The big question in my mind is whether or not Apple can supply all markets with enough phones.

 

China could easily be a market that doubles Apple's required units.

 

Too much demand and not enough supply could easily create a tipping point very fast.

 

I think we may be seeing Apple's business plan changing before our very eyes...

 

And, they may be doing it in such a way that increases overall manufacturing capacity....

 

Consider:

 

1)  Apple currently offers 10 models of new iPhones for sale (not including 2 color options):

 

2012 New iPhones

64 GB

32 GB

16 GB

8GB

 

 

 

 

 

iPhone 5 Locked

$399

$299

$199

 

iPhone 5 Unlocked

$849

$749

$649

 

 

 

 

 

 

iPhone 4S Locked

 

 

$99

 

iPhone 4S Unlocked

 

 

$549

 

 

 

 

 

 

iPhone 4 Locked

 

 

 

$0

iPhone 4 Unlocked

 

 

 

$450

 

 

2) Apple seems to be moving towards a 2-release per year release cycle

 

3) Apple seems to be expanding manufacturing to the US and other countries

 

4) Apple is building data centers

 

 

Assumably, the manufacturing capacity restraints are for only the latest iPhone models -- they could continue manufacturing older models on older lines/facilities and dedicate new facilities to the new models.

 

Apple could "flesh out" the older models by offering more storage options (and decrease the incremental price bump) and still maintain margins for older technology.

 

I expect that the next iPhone will have a 128 GB storage option and/or a competitive iCloud option.

 

I expect that Apple will continue to support the latest iOs on all the current iPhones +1 -- albeit all features are not supported on some older models (e.g. Siri).

 

 

I would not be surprised to see the next iPad Mini (rumored March 2013) added to the iPhone matrix above...  possibly the full iPad too!   I think quite a few people would carry an iPad Phablet where they could -- instead of both an iPhone and an iPad.... and yet still buy both devices.

 

IOW, Apple has quite a few options to maintain and increase manufacturing capacity without resetting the entire line once per year --- kind of a rolling upgrade, instead.


Edited by Dick Applebaum - 12/26/12 at 9:25am
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post #14 of 19
Quote:
Originally Posted by Dick Applebaum View Post

 

IOW, Apple has quite a few options to maintain and increase manufacturing capacity without resetting the entire line once per year --- kind of a rolling upgrade, instead.

 

I think that updating older models is a great idea to increase Apple's share of the market.

 

It makes me wonder, though, what the costs would be to change the processor in a 4, for example, as compared to introducing a completely new model.

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post #15 of 19
Quote:
Originally Posted by island hermit View Post

Quote:
Originally Posted by Dick Applebaum View Post

 

IOW, Apple has quite a few options to maintain and increase manufacturing capacity without resetting the entire line once per year --- kind of a rolling upgrade, instead.

 

I think that updating older models is a great idea to increase Apple's share of the market.

 

It makes me wonder, though, what the costs would be to change the processor in a 4, for example, as compared to introducing a completely new model.

 

I wasn't suggesting adding newer processors to older iPhones -- as I think that would exacerbate the manufacturing capacity problems.  

 

Rather, offer more of the prior storage options in the older iPhones -- as they could be built on existing, highly efficient manufacturing lines using older parts (cheaper/higher yield).

 

So, rather than updating -- just continue manufacturing more, older, models at lower prices.

 

Say, Apple releases an iP5S in March... continue selling the iP5, iP4S (and maybe the 4) with current storage options except  $50  for each bump and lower unlocked prices.

 

The iPhone 5S would have the latest processors and 128 GB max storage.

 

Apple could continue to outsource the older processors/parts to Sammy, et al -- and choose/invest in different (less deceitful) partners for the latest tech...  

 

Then rinse and repeat with the new iPhone 6 (and other iDevices) in September.

 

Sammy would be gone form Apple's critical path within a few years...

 

 

I like the way that would play out!

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post #16 of 19

If the Chinese carriers didn't require a number change to move to 3G, they might get even more customers. I've lost track of a few friends because they switched to 3G while I was out of the country and missed their SMS with their new number.

 

For example, the numbers assigned by my carrier are as follows:

 

130-xxxx-xxxx China Unicom GSM
131-xxxx-xxxx China Unicom GSM
132-xxxx-xxxx China Unicom GSM
155-xxxx-xxxx China Unicom GSM 
156-xxxx-xxxx China Unicom GSM
185-xxxx-xxxx China Unicom WCDMA
186-xxxx-xxxx China Unicom WCDMA

 

So if you want to move to 3G from 2G, you will have to change to a 185 or 186 number.

post #17 of 19
Quote:
Originally Posted by mieswall View Post

Yes. But in Europe would be a case of Blackberry and Symbian, not androids particularly successful, isn't?. Given that both of them are in almost terminal status, the preeminence of IOS would be more or less open there in the future, eventually competing with Nokia's Lumia. Even more, Asymco documented that the non-covered markets for iphone are a little more than 50% of the total smartphone world's market size. I doubt Android has any less of 90% of the market covered already.

The fact is there are plenty of cases where Android is beating the iPhone despite iPhone being widely available.  Verizon, for instance.  And yes, some countries in Europe.  And I'm sure many many others.  You don't get to the kind of dominant market share that Android now has by just inching out a few wins where Apple is not competing.  For one, Android phones are almost entirely cheaper.  Even in America where there are subsidies that equalize it, the carriers make so much more money off Android phone/contract sales that you see salespeople really being obnoxious in pushing customers away from iPhone.  

post #18 of 19
Quote:
Originally Posted by Dick Applebaum View Post

 

I wasn't suggesting adding newer processors to older iPhones -- as I think that would exacerbate the manufacturing capacity problems.  

 

Rather, offer more of the prior storage options in the older iPhones -- as they could be built on existing, highly efficient manufacturing lines using older parts (cheaper/higher yield).

 

So, rather than updating -- just continue manufacturing more, older, models at lower prices.

 

Say, Apple releases an iP5S in March... continue selling the iP5, iP4S (and maybe the 4) with current storage options except  $50  for each bump and lower unlocked prices.

 

The iPhone 5S would have the latest processors and 128 GB max storage.

 

Apple could continue to outsource the older processors/parts to Sammy, et al -- and choose/invest in different (less deceitful) partners for the latest tech...  

 

Then rinse and repeat with the new iPhone 6 (and other iDevices) in September.

 

Sammy would be gone form Apple's critical path within a few years...

 

 

I like the way that would play out!

 

I've always felt that Cook will start to play a much different game than what we've seen in the past. Maybe he's more concerned about market share.

 

As you say... it seems that it may have already begun.

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post #19 of 19
Quote:
Originally Posted by island hermit View Post

Quote:
Originally Posted by Dick Applebaum View Post

 

I wasn't suggesting adding newer processors to older iPhones -- as I think that would exacerbate the manufacturing capacity problems.  

 

Rather, offer more of the prior storage options in the older iPhones -- as they could be built on existing, highly efficient manufacturing lines using older parts (cheaper/higher yield).

 

So, rather than updating -- just continue manufacturing more, older, models at lower prices.

 

Say, Apple releases an iP5S in March... continue selling the iP5, iP4S (and maybe the 4) with current storage options except  $50  for each bump and lower unlocked prices.

 

The iPhone 5S would have the latest processors and 128 GB max storage.

 

Apple could continue to outsource the older processors/parts to Sammy, et al -- and choose/invest in different (less deceitful) partners for the latest tech...  

 

Then rinse and repeat with the new iPhone 6 (and other iDevices) in September.

 

Sammy would be gone form Apple's critical path within a few years...

 

 

I like the way that would play out!

 

I've always felt that Cook will start to play a much different game than what we've seen in the past. Maybe he's more concerned about market share.

 

As you say... it seems that it may have already begun.

 

Yes, I think it has...

 

I think that Tim likes being in the cat-bird seat.  With today's technology,  a new product category like the iPhone-style smart phone or the iPad, likely , would take 3-5 years to develop.  A sub-category like the iPad Mini, 1-2 years. Then, refinements can be done in 6-12 month cycles.

 

Historically, Apple's secrecy, breakthrough product solutions, pricing, ecosystem, economies of scale and patents (to some extent) have given Apple a 1-2 year lead time... and Apple has used that lead time well.

 

I believe that Apple always thought that, if needed, it could release a smaller less-expensive iPad.  With the ripples being made since last year by 7" tablet competitors,  Apple decided the time was right to release the iPad Mini at a profitable price point.  There is a small price umbrella under the iPad Mini -- but realistically, no competitor can make a reasonable profit with a quality product in that space.

 

I think that, with 6-month refresh cycles on its tech-leading, competitively-priced products -- Apple can maintain its momentum.

 

Then, periodically, it will release a major refresh or a new product/category as the technology permits. 

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