December 22, 2013: After months of false starts, Apple finally announces it has secured a deal with China Mobile to bring the iPhone to the world’s largest telecom company.
With 760 million potential iPhone customers in the offing, the deal is Apple’s most important yet in growing its brand in China — a market that Tim Cooks says will soon be Apple’s biggest.
“China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network,” Tim Cook said in a statement at the time the news broke. “iPhone customers in China are an enthusiastic and rapidly growing group, and we can’t think of a better way to welcome in the Chinese New Year than getting an iPhone into the hands of every China Mobile customer who wants one.”
It was a move that had been long in the making. Apple had been negotiating with China Mobile since the iPhone first launched, but talks reportedly collapsed over Apple’s terms, which required revenue sharing.
The demand from customers was certainly there, though. As early as 2008, one year after the iPhone was first announced, BusinessWeek reported that 800,000 to 1 million iPhones had gone AWOL after legitimate purchase — and it was later claimed that 400,000 of those iPhone were being used, unlocked via hacks, on China Mobile.
Provided these figures were accurate, this represented around 10 percent of iPhones sold thus far — and more than were being used in the entirety of Europe at the time.
Negotiations between Apple and China Mobile dragged on and, in 2013, finally started moving as Tim Cook met with China Mobile Chairman Xi Guohua to discuss “matters of cooperation” between the two companies.
Big in China
The China Mobile deal coincided with a renewed push into China on Apple’s behalf.
Tim Cook noted publicly that new devices were being designed with the Chinese audience in mind, and this was arguably most obvious with Apple’s decision to turn its back on Steve Jobs’ dislike of larger phones (which he complained “you can’t get your hand around“) in favor of the 5.5-inch iPhone 6 Plus — which fell into the phablet category popular among Asian smartphone makers.
In addition, Apple committed to an astonishingly rapid expansion program with its Apple stores, with the ambitious (and successful) goal of having 40 stores in the country by 2016.
Not everything has been smooth sailing for Apple, of course. 760 million possible customers sounds like (and is!) a giant number, but only a fraction of these people were in the position to be able to afford an iPhone.
While the iPhone 5c and SE are nods to the lower end of the market, Apple has never truly embraced the idea of creating a phone aimed at taking on the plethora of cheap device-makers, which has allowed one-time Apple ripoff artists Xiaomi to capitalize on the market of people who want iPhones, but can’t afford them. As a result, it’s increasingly lost market share in the country in the years since.
Apple has also run into various problems with the Chinese government. In 2014, national security concerns raised in the state-controlled Chinese media resulted in Apple switching to China Telecom’s servers instead of its own to power iCloud for Chinese customers.
Apple was also forced to accept the Chinese government’s demands that it run network safety evaluations on all Apple products before they can be imported into the country, as well as being booted off the list of approved state purchases in favor of Chinese-made products.
In addition, the government shut down the iTunes Movies and iBooks Store, and has recently singled Apple out as a company which could suffer should Donald Trump-sanctioned tariffs be placed on Chinese imports to the U.S.
Not all the news has been mad, though. The China Mobile deal got more iPhones into people’s hands as planned, and China now makes up Apple’s most profitable market for apps worldwide. According to an October 2016 report, China accounted for $1.7 billion in total iOS revenue during Q3 this year.