Apple's China Expansion Stalled by Tech: Munster

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Dec. 4 (Bloomberg) -- China Mobile won state approval to start commercial service on the world’s largest fourth-generation wireless network, clearing a key hurdle to offering Apple’s iPhone to its 759 million subscribers. Piper Jaffray Senior Research Analyst Gene Munster speaks on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

To reaching a distribution deal since september according to sources familiar.

I want to bring you one of the leading authorities on apple who has been covering the company for almost two decades.

A senior research analyst and has an overweight rating on apple scale of debt shares.

How much closer is a deal between apple and china mobile because of this?

Cory summed it up well.

From a technology standpoint, they are passed a big hurdle.

We are getting close.

Ultimately, we think something will probably happen in the march quarter.

We thought it was going to be the fault.

It is march.

It is close.

What is holding it up?

Part of it is, some of the technical things cory talked about.

Another part is just the coverage of td lte, the new standard cory was talking about.

It is hard for them, china know -- china mobile, to do a deal with apple if they sell these phones and they do not work.

They are putting up towers and antennas and trying to put up coverage, the classic coverage map here they need to build that out for china.

It is a combination that we do not think what is holding it up is important -- and interest from china mobile to do this.

They are willing to do this.

It -- we do not think it is related to price.

We think there are technology hurdle slowly overcome that will make is a reality.

What is interesting is chinese users, if they start using the fewer -- 4g network, will have to get new phones.

They probably will still have a dual standard, just like, if you remember when lte came out, you can still use three g. a lot of the same antennas are still up and active.

You will still use those.

If you have a 4g phone like the iphone would be, that would not work.

That is one of the things china mobile wanted to push people to.

People will still be able to use it but if you want a better performance, the ability is now opened up, which took life owners -- iphone owners want.

They have subscribers, but some of the higher-end users have migrated to china telecom where they already offer the iphone.

Our higher end users going to come back to china mobile?

How many china mobile customers will actually buy iphones?

Like you said, it is a huge number.

The one we focus on more is the number of three g subs they have ear that is 170 million.

It is a smaller part of their overall number.

Just from apple's perspective, a slightly different question, that is the low line to go after.

We think they could get 10% of those in a year.

In the u.s., with verizon and at&t, they have about 65%. it is a much lower share because of economic differences.

Ultimately, even though they have lost china unicom, there is still a huge five.

Compare that to verizon and at&t, round 110 million total.

Big opportunity, as you have outlined.

How big an opportunity is it for apple?

We know apple's market share has been lagging in china.

Will this give them a huge advantage now?

Or is it still an uphill battle given all the low- cost competitors?

Yesterday, we went through and look at the phones selling on china mobile.

All of the smartphones that cell, about 80 different smartphone models.

A lot of options for phones.

The average price is about 250 dollars.

The average price of an iphone five in china is around 750 out -- as a starting price.

The five s's close to 900. we are talking close to a four x multiple.

Because of that, the opportunity gets watered down.

It is still a huge opportunity and can move the numbers.

That is why we expected this 10% market share versus 50 or 60 that they have in the u.s.. if you want to boil it down to just one take away, if they get 10% share of this high-end three

This text has been automatically generated. It may not be 100% accurate.


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