Analysts think that Apple’s successful moves to convince China Mobile to sell its expensive trinkets might turn out to be short-lived.
The Tame Apple Press claimed that Jobs’ Mob would succeed in its push into China now it had made an iPhone agreement with China Mobile.
According to the Tame Apple Press, the deal, which has not been formally announced yet, will give Apple access to 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.
But cooler heads are warning that the deal only opens the door for Apple. It still has to prove to the sceptical Chinese that they should spend all their money on a product which will not last longer than a year.
The company also faces stiff competition from Samsung which is cheaper, established and with products which are at least comparable.
Apple faces intense competition from local players such as Xiaomi making cheaper smartphones.
In any event, China Mobile has to spend billions of dollars to build a 4G network so customers can make full use of their iPhones.
Ben Thompson, a Taipei-based writer on the technology industry at stratechery.com, said that unlike the US where religious enthusiasm and marketing propelled Apple to the top, in China it will be all about old-fashioned competition.
Apple on the other hand is hoping that since availability is not a problem, marketing will become the deciding factor. But strangely in this area, Samsung will have the edge.
Samsung is expected to spend around $14 billion on advertising and marketing this year. According to Reuters, Samsung spends 5.4 percent of its annual revenue on advertising and promotion than any of the world’s top 20 companies by sales. Apple spends just 0.6 percent.
Bryan Wang, a Beijing-based analyst with Forrester Research said that to make a dent in China, Apple is going to have to increase marketing spend.