Apple Inc's long-awaited iPhone agreement with China Mobile Ltd may deliver little more than a fleeting revenue jolt for the U.S. giant.
A deal with the world's largest mobile carrier, expected as early as this week, nets Apple 759 million potential new customers that could generate $3 billion (1.8 billion pounds) in 2014 revenue, or nearly one-quarter of Apple's projected revenue growth in its current fiscal year.
But after the initial haul, Apple will find itself in a familiar, expensive battle with its main smartphone rival, South Korea's Samsung Electronics Co Ltd, to win over customers, one wallet at a time.
And China Mobile will likely have to wait at least a year for its payout as it spends billions of dollars to build a 4G network so customers can make full use of their iPhones.
"The easiest way to grow iPhone sales was always distribution. This was the pot at the end of the rainbow and now that we're there, it's going to be an old-fashioned slog it out over customers," said Ben Thompson, a Taipei-based writer on the technology industry at stratechery.com.
China is Apple's second-largest market after the United States. Net sales in China for the fiscal year ended September 2013 rose 13 percent to $25.4 billion, accounting for about 15 percent of Apple's $170.9 billion in total net sales.
But its performance has been mixed. Where once there were lines around the block for the newest iPhone, now Apple faces intense competition from Samsung plus a host of local players such as Xiaomi making cheaper smartphones.
China Mobile, which says it already has 45 million iPhone users, could gain 17 million new activations and the deal should generate at least $3 billion in revenue for Apple in 2014, according to Forrester Research.
Analysts expect Apple's revenue to increase by $13.2 billion in its fiscal year ending.
Source: Reuters
