updated 10:15 am EST, Mon January 30, 2012
Number hinges on China Mobile compatibility
Apple will likely sign iPhone deals with both China Telecom and China Mobile "over the next year," adding up to 40 million more iPhone sales in 2013, argues Morgan Stanley analyst Katy Huberty. The iPhone is already available on China Unicom, but Huberty suggests that the carrier can only offer Apple 10 percent of a group of about 150 million "high-end Chinese subscribers," those being people who pay more than 100RMB ($16) per month. Of that selection, about 120 million are said to be with China Mobile, and a remaining 10 percent with China Telecom.
The extra 40 million in iPhones is considered a "bull" case, generating an extra $10 in earnings per share, but as a base Huberty expects at least 26 million. The risk may be China Mobile, since while an iPhone 5 is "likely to be compatible" with the carrier's TD-LTE network, it's "still too early to know for sure," says Huberty. She adds that she expects the next-generation device to ship in Q3 2012, with a China Mobile launch taking place sometime in late 2012 or early 2013.
The carrier could theoretically give Apple about 24 million iPhones in 2013, assuming a 20 percent share of subscribers, as with China Unicom. Because 3G and smartphones are noted to be "increasing at a fast clip" in China, though, it's believed that Apple could sell as many as 36 million phones. China Telecom is expected to get the iPhone much sooner, "in the next few months," as compatible models have already passed many certification hurdles. The carrier could contribute about 2 to 4 million units in 2013.
China Mobile already has over 10 million iPhones on its network, all unlocked devices bought by customers of the gray market. Current iPhone limitations restrict Mobile subscribers to 2G, but the carrier is the largest in the world, likely making for a substantial pool of people who don't demand high-speed cellular access.
Apple is said to have just a 30 percent penetration of cellular carriers worldwide, comapred with RIM's 79 percent, giving the former plenty of room for growth. Huberty's bull case calls for as much as 60 million in iPhone sales "in a few years," assuming a two-year lifecycle, however, and marketshare similar to high-end American subscribers.