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Originally published Monday, December 23, 2013 at 6:47 PM

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China deal for iPhone may extend Apple’s foothold

Apple, however, will still face stiff competition from Samsung and other companies, many that use Google’s Android software and make lower-cost smartphones.


The Associated Press

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SAN FRANCISCO — A long-sought deal to sell the iPhone through China Mobile should enable Apple to boost its profits and build customer loyalty in an important, growing market.

China Mobile, the world’s largest wireless carrier, boasts more than 750 million mobile accounts, an audience that had been mostly walled off from the iPhone until Apple and China Mobile hammered out a multiyear sales agreement after years of thorny negotiations. The companies announced the deal Sunday (Monday in China).

Analysts doubt the China Mobile breakthrough will prompt Apple to introduce an extremely cheap iPhone as the company based in Cupertino, Calif. clings to a higher standard of quality.

That approach is likely to ensure that smartphones running Google’s Android software remain the top-selling devices in China.

Even so, investors are pleased to see Apple fill a gaping hole in the iPhone’s sales network. Apple’s stock rose more than 3 percent Monday, propelled by analysts projecting that the China Mobile deal could lift iPhone sales and Apple’s earnings by more than 10 percent next year.

But the iPhone still faces significant hurdles. Apple’s smartphone is already available in China through two smaller carriers, China Telecom and China Unicom.

Although it is popular, the iPhone is losing market share to lower-priced smartphones from Samsung and local brands.

Most of the less-expensive iPhone rivals rely on Android, which Google launched five years ago as an alternative to Apple’s smartphone.

Now, more than 80 percent of the smartphones sold around the world run Android, compared with 13 percent for the iPhone, according to International Data Corp. That pecking order isn’t likely to change, even if analysts prove correct in their predictions that the China Mobile deal will help Apple sell anywhere from 10 million to 40 million iPhones next year.

Those numbers should help Apple increase its iPhone sales volume from 150 million devices in its last fiscal year, but it won’t make that much of dent in overall market share.

More than 1 billion smartphones were sold in 2013 alone, including 528 million in Asia, according to IDC.

Apple and China Mobile didn’t announce pricing or the terms of the deal.

The average price of the iPhone in Apple’s most recent quarter stood at $577, likely to be more expensive than most Chinese consumers can afford.



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