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 in 2014 revenue, or nearly one-quarter of Apple’s projected revenue growth in its current fiscal year.
Renault, which has a long-standing alliance with Japan’s Nissan Motor Co (7201.T) with whom it shares technology, plans to manufacture 150,000 cars a year in Wuhan and set up a jointly run network of retail stores.
The carmaker’s investment is a boon to Wuhan, located about 700 km (430 miles) west of Shanghai and where the Yangtze and Han rivers intersect. air max 90 The city, with a population of 17 million including its surrounding suburbs, is home to Dongfeng, China’s second-biggest automaker.
“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.
The Wuhan government is aiming to transform itself into a major automotive manufacturing and a logistics hub in China by attracting global automakers and their Chinese partners to open shop, which some say has turned the city into a dust-ball due to the frenzied construction activity.
To build a Chinese presence, Renault has been forced to rely on imports from South Korea. Now with Dongfeng, it will invest 7.76 billion yuan ($1.28 billion) to build a factory in the central city of Wuhan, Nike Lebron James X with the first car due to roll off the production line in 2016.
“Within half an hour, I had a big conviction that he had the skills to lead the bank to where it needed to go,” recalls McMorrow, who discreetly contacted billionaire investors Prem Watsa and Wilbur Ross to join him in accepting Boucher’s deal.
ONE-TWO PUNCH
For China Mobile, the payout will have to wait as it pumps billions of dollars into its 4G network roll-out and iPhone subsidies eat into profit margins.
It will take at least one year before an iPhone deal is profitable for the carrier, according to Delta Partners, a global telecoms, nike running shoes media and technology advisory and investment firm based in Dubai.
Another problem for Apple is consumer habits in China, where smartphone buyers tend to prefer cheaper handsets. More than 88 percent of people buying smartphone handsets in the third quarter spent less than $500, according to data from Canalys.
The latest iPhone 5S costs $868 inChina while the 5C fetches $737, according to Apple’s China website.
“Between Renault and Nissan in this three-city triangle of auto-manufacturing operations, we plan to use commonized vehicle underpinnings and major parts,” a senior Nissan executive in Yokohama said. He declined to be identified because he is not allowed to speak to the media.
To be sure, even winning over a tiny percentage of China Mobile’s 759 million subscribers would be a boon for Apple.
“The absolute number of people who are rich and can afford an iPhone is quite large. It’s a big deal,” said stratechery.com’s Thompson.
“Wuhan has a reputation of being the Oriental Chicago. nike free run 3.0v4 The city’s developed transportation and logistics systems give it an advantage,” Peng said. “We can easily deliver vehicles and auto components via the Yangtze River to consumers in Shanghai, for example.”
The French carmaker’s venture will also benefit Nissan, which has been operating in Chinain a joint venture with Dongfeng since the early 2000s. Japan’s second-biggest carmaker has two manufacturing centers within a 470-km radius of Wuhan in the cities of Zhengzhou and Xiangyang.
Moody’s Investors Service expects China Mobile’s capital spending as a percentage of revenue will be about 30 percent in 2014, due to 4G spending. That works out to about 196 billion yuan ($32.28 billion), air max 95 running shoes based on Thomson Reuters data on revenue forecasts from 29 analysts.
China Mobile’s existing iPhone users can only use the company’s slower 2G wireless speeds because its proprietary 3G TD-SCDMA standard is not compatible with iPhones.
The company hopes the one-two punch of high-speed 4G mobile Internet and Apple iPhones will bring back customers who abandoned the carrier for China Unicom Hong Kong Ltd and China Telecom Corp, both of which already offer the iPhone. China Mobile also hopes to get current subscribers to upgrade to premium product and service.
Analysts estimate operators pay about $400 subsidy for each iPhone they sell, compared with about $250 to $300 for other smartphones.
While carriers take an initial margin hit, they typically recover the subsidy cost over the two-year contract because iPhone buyers typically tack on pricy data plans.
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