Apple to see sharp rise in China sales

Reuters

Apple (Cupertino, Calif., U.S.A.) is set to exponentially grow its China business as the country's number one and number three telecom operators’ fight to finalize deals to sell iPhones in the world's largest mobile phone market, with more than 900 million subscribers.

China Unicom (Beijing, China) is the sole operator offering Apple's smartphones, but it is only a matter of time before the number one operator, China Mobile (Beijing, China), and number three, China Telecom (Beijing, China), follow suit, analysts said.

"The biggest winner will be Apple. While the operators may be forced to subsidize the iPhone to users, Apple will still get the price it wanted from all the operators no matter what," said Alex Chau, a senior research manager at research firm IDC Asia Pacific.

Apple's Chief Operating Officer Tim Cook said last week that the maker of the iPhone and iPad was merely "scratching the surface" in China. Smartphones still account for a fraction of the total market.

Asia Pacific -- which now accounts for about one-fifth of Apple’s total revenue -- and Greater China in particular, helped the company’s revenue surge 82% to $28.6 billion in April-June.

"We believe the success in China, and other emerging economies, has been fueled by iPhone growth," PiperJaffray analysts said in a note. "Apple is succeeding with the iPhone in markets where they have not found great success with the Mac; moreover, we expect the company to extend this success with the iPad as the product line matures."

Though China has a massive growing mobile market, only 80 million are 3G users, with the rest low-end 2G subscribers who mainly own cellphones to make calls only. At the end of June, China had 907 million mobile phone users, larger than the entire population of Europe.

Apple only has four stores in China, from where it sells iPhones and other products, besides selling through more than a hundred resellers, and China Unicom.

"China is a potentially huge market for Apple products like iPhones as more people are able to afford such high-end smartphones," Jane Wang, a Beijing-based analyst from UK research firm Ovum.

Morgan Stanley said in a report that Apple's China sales could exceed $9 billion in the year ending September 2012, up from just $2.9 billion in the previous fiscal year, as more Chinese purchase iPhones and iPads.

Apple has about 9% of China's smartphone market, ranking behind Nokia, China's Yulong and Samsung Electronics, Gartner said.

(Editing by Anshuman Daga)

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