Apple's Asia Breakthrough (838 hits)

As Apple (AAPL) and Samsung (005930:KS) rumble for leadership in the global smartphone market, the Korean electronics giant has enjoyed a big advantage. In China and Japan, Asia’s two biggest economies, Samsung had deals with the No. 1 mobile operators to sell its handsets—and Apple didn’t. Despite years of trying, the maker of the iPhone couldn’t win over China Mobile (941:HK) or Japan’s NTT Docomo (9437:JP). The two carriers have 821 million customers combined.

Apple’s Asia handicap may soon be a thing of the past. In Japan, Docomo began offering the iPhone in September. Meanwhile, Apple Chief Executive Officer Tim Cook’s shuttle diplomacy may be about to bear fruit in China. Although iPhones don’t work on China Mobile’s homegrown 3G standard, they do on the LTE technology the operator plans to use for its 4G service, which it will likely roll out by early 2014.

The timing of Apple’s breakthroughs in Japan and China is no coincidence. Because of their longtime dominance in their home markets, neither China Mobile nor Docomo felt the need to make concessions to offer the iPhone. Yet smaller rivals, such as China Unicom and SoftBank (9984:JP), that have inked deals with Apple are capitalizing on the iPhone’s popularity to woo customers.

China Mobile still has 62 percent of the Chinese cellular market, but that’s down more than 10 percentage points in the past five years. Docomo has endured a similar decline. A pioneer of the mobile Internet in the late 1990s, Docomo has been steadily losing subscribers to scrappier rivals. While SoftBank started offering the iPhone in 2008 and KDDI (9433:JP) followed in 2011, Docomo stayed loyal to Japanese brands such as Sony (SNE). Since 2005, Docomo’s market share has fallen below 47 percent from more than 60 percent.

China Mobile, which is the world’s largest mobile carrier, with 759 million customers as of Oct. 31, also faces a new threat from WeChat, a mobile messaging app that offers free voice service. Owned by Shenzhen-based Internet powerhouse Tencent (700:HK), WeChat claims 272 million users. China Mobile “is under huge pressure to work with Apple now,” says William Chou, a partner at Deloitte China.

Apple trails well behind Samsung and local brands Lenovo (992:HK) and Coolpad (2369:HK) in China. The company shipped 22.1 million iPhones there in the 12 months ended September 2013, according to Bloomberg Industries analyst John Butler, who figures a deal with China Mobile could add another 18.1 million next year.


Posted By: Sara Elias
Friday, December 13th 2013 at 6:16PM
You can also click here to view all posts by this author...