The China Mobile iPhone is specific to China Mobile

Posted on Author by Ben Thompson

The China Mobile iPhone deal is official. From Apple’s press release：

Apple® and China Mobile today announced they have entered into a multi-year agreement to bring iPhone® to the world’s largest mobile network. As part of the agreement, iPhone 5s and iPhone 5c will be available from China Mobile’s expansive network of retail stores as well as Apple retail stores across mainland China beginning on Friday, January 17, 2014. iPhone 5s, the most forward-thinking smartphone in the world and iPhone 5c, the most colorful iPhone yet, will be available for pre-registration from China Mobile’s official website (www.10086.cn) and customer service hotline “10086” beginning on Wednesday, December 25, 2013.

“Apple’s iPhone is very much loved by millions of customers around the world. We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network. We are delighted that iPhone on China Mobile will support our 4G/TD-LTE and 3G/TD-SCDMA networks, providing customers with high-speed mobile service,” said Xi Guohua, China Mobile Chairman.

“Apple has enormous respect for China Mobile and we are excited to begin working together. 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,” said Tim Cook, Apple CEO. “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.”

In my earlier post about the impact of this deal, I wrote that Apple would make a new iPhone model specifically for China Mobile:

The China Mobile iPhone will be a BIG upgrade – and it will only be available in China. There have been reports that there are as many as 45 million iPhones on China Mobile’s network, and every single one of those runs at EDGE speeds thanks to China Mobile’s use of the aforementioned TD-LTE/TD-SCDMA networking. It’s fair to wonder how much customers value LTE>3G, but LTE>Edge is a massive upgrade indeed; all of those 45 million customers are prime candidates for the China Mobile iPhone.

Moreover, calling it the “China Mobile iPhone” is not an accident. This is a third version of the iPhone that will only be available for sale in China. There will be no gray market undercutting iPhone sales as is the case for China Unicom and China Telecom. At the very least, this fact alone will provide a nice boost to Apple’s quarterly China numbers.

Some on Twitter challenged this assumption, and I backtracked a bit in a follow-up piece I wrote. However, a little birdie has told me this is indeed a new set of SKUs that is specific to China Mobile.

Part of the confusion comes from the fact iPhone 5C Model A1529 and iPhone 5S Model A1530 do cover bands 38-40 and are already being advertised as working on China Mobile’s 4G network:

A sign in a China Mobile store that says 4G service is available for iPhones 5S/5C bought in Hong Kong (Models A1530/A1529). Image from Lawrence Li.
A sign in a China Mobile store that says 4G service is available for iPhones 5S/5C bought in Hong Kong (Models A1530/A1529). Image from Lawrence Li.

However, full coverage requires band 41, and contrary to the Forbes article that I referenced in my follow-up, that does necessitate a new model, not just a baseband upgrade. For those counting, that’s 19 more SKUs.

Some other notes:

  • I never noticed before that Apple uses the ‘®’ in all their press releases. They famously eschew it elsewhere
  • I’m pretty sure China Mobile is the only carrier “Apple has enormous respect for.” Of course, for China watchers, the only thing exceptional about that statement would be its absence
  • Tim Cook noted the upcoming Chinese New Year, which this year falls on January 31. It’s great that the iPhone will be available, but while Chinese New Year is often compared to Christmas, it does not entail exchanging gifts; rather, money is given (in traditional red envelopes). Of course, said money could certainly be used on a new iPhone
  • As I noted in my first article about China Mobile and the iPhone, this is a big deal for demographic reasons alone. It doesn’t matter that a large percentage of Chinese can’t afford it; a huge absolute number can
  • I presume this deal is already priced into the stock. It’s been obvious it was coming for some time now. I wouldn’t expect a big jump

UPDATE: Brian Klug dug up the iPhone’s network approval, which references two new model numbers:

These were from back in September, and were the primary reason I’ve been certain about this deal’s imminent arrival.