Will Apple Finally Nail Down China Mobile Deal?

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Sept. 6 (Bloomberg) –- Bloomberg Contributing editor Paul Kedrosky discusses the impending deal between Apple and China Mobile. He speaks with Emily on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

This lower-priced iphone, would you say this is a big shift in apple strategy?

I think we are going to hear so much talk in the coming days, the debate over whether indeed apple is taking a new view on how it sells product, at what price.

I think on the side that no, they are not making change, people will say they already have lower-priced products on the market.

If you don't when the iphone 5, you can get the four -- 4as s or 4. thinking about how competitors from the market, to offer so many phones at semi-price points, for apple to have one phone at a lower price does raise the question, is it a major shift or not?

Especially if there is this opportunity to get it to hundreds of millions of customers.

Jon erlichman, thank you.

Will apple's asian asterisk -- efforts pay off?

I want to begin paul kedrosky, an early-stage venture investor.

He joins me from san diego.

I want to start with china first.

We all know this would be a huge deal if apple finally nails china mobile.

What a deal like this seal apple's fate in china?

I don't think it sealed its fate, but if it hadn't -- let's put it the other way.

If it didn't do something that involved some sort of distribution with china mobile, it is very difficult to be optimistic about apple's long- run prospect in china.

It is such a massive hole in their distribution given the numbers for china mobile versus other carriers.

You have to have them as a distributor.

As a result, apple was looking for the right to the contract -- entree and the much rumored 5c is a lower end product.

I am assuming china mobile has eaten some of these concerns with respect to volume guarantees.

You put those two pieces together and you got yourself a deal.

What do you think is apple's fate in china?

Given that apple is really a luxury brand, yet we are expecting them to release a cheaper phone as well.

In some ways, this has been a mistaken notion in the first place.

That the only thing that would drive apple's success was a cheaper product.

That underestimates the chinese appetite for luxury products.

We have seen this across the host of other products where there has been incredible appetite in a rapidly urbanizing and more wealthy china.

Products that aren't just commoditized generic stuff that they have seen historically, products that have the luxury brand cachet.

Apple has long had that reputation worldwide.

It is one of the reasons you pay a 30% or 40% premium on laptops over laptops that are comparable size from other manufacturers.

The same is going to apply for apple in china on the phone front.

There is no question that the chinese consumers have the same appetite for luxury purchasing that they do in other categories.

It was silly to think otherwise.

Yet, in terms of -- apple is slipping in the ranks in china.

We are speaking with xiaomi ceo lei jun later.

Xiaomi is now above apple when you look at the smartphone rankings.

This is a company that sells cheap phones and just started three years ago.

I think that is true.

But this is kind of a blip along the way.

There is no doubt that apple -- china is going to move as quickly to smartphones at the rest of the world has.

One of the things missing was distribution outside major urban areas.

Apple has done fairly well in beijing and shanghai but poorly outside of those major urban centers.

This changes all of that.

You have the distribution, the numbers are going to change dramatically afterwards.

They haven't -- they are not racing past everyone, but they will be back to some sort of comparability with respect to numbers.

Looking at this potential china mobile deal along with a potential docomo deal, put this into context with us.

Apple and samsung are neck and neck worldwide.

What happens if apple does finally now both of these deals?

I think people are going to surprise people in china.

They are also looking at tripling the numbers of stores over the next year or so if every member the numbers correctly.

Apple is a pretty open marketplace -- it is also a really open marketplace in terms of the luxury halo effect that samsung does not get.

This is an attribute that samsung does not bring to the marketplace.

Apple is an aspirational product.

That is going to stand over the next couple of years.

You will see it become if not the dominant brand, number two in that market is.

Our sources are telling us this is not going to be announced next week, but it is

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


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