Weak iPhone 5c sales may be the reason behind no deal between Apple and China Mobile

iphone-5s-vs-iphone-5c-2510:15 AM – When the iPhone 5c was launched, analysts, investors and customers alike were less than impressed.  It was originally thought that Apple would introduce a low-cost iPhone in the $300 to $400 range off-contract.  Instead, Apple priced the smartphone at $549, which is the starting price.  This disappointed many individuals, and even damages Apple’s stock price for quite a while.  KGI analyst Ming-Chi Kuo, who has a positive track record for Apple information, (via AppleInsider) also believes that iPhone 5c is the reason behind no deal between Apple and China Mobile.

Up until the iPhone 5c, Apple had some leverage against carriers because the iPhone is quite popular.  With weaker-than-expected iPhone 5c sales, even lower than what Apple had originally estimated, this is perhaps the reason why Apple and China Mobile may had to renegotiate terms.  A big part of why the iPhone 5c was introduced is to attract the budget market.  Kuo also believes that China Mobile has decided to play hardball with Apple now that it’s seen that the iPhone 5c isn’t holding strong ground in emerging markets that many analysts had been expecting.

“We believe that weak sales of iPhone 5C may trigger a re-negotiation of the Apple-China Mobile partnership,” Kuo writes. “However, the indications are that the deal is nearing an end. While recent market speculation calls for the deal to boost 1Q14 iPhone shipments to 45-50mn units, we think this is overly optimistic.”

More customers are now turning their attention to the iPhone 5s, which has been the most popular so far.  In fact, even Apple shifted production from the 5c to the 5s due to the fact that the company wasn’t able to meet the iPhone 5s demand.  Only recently is when Apple posted “ships in 3-4 business days” on their website.  Before that, it was usually “ships in 3-4 weeks.”

China Mobile has a 750 million subscriber base, which is a huge potential for Apple.  Negotiations are rumored to be nearing end between the two companies.  It was expected that the iPhone would go on sale this week, however that has not pulled true.

What are your thoughts?

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Hamza Khalid

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