Apple Inc. (NASDAQ:AAPL) investors breathed a sigh of relief after the company’s most recent earnings report, and now the stock has surged up over $450. Just one week ago before the company’s earnings report, it was only worth about $419, and a month ago, it was valued at less than $400 per share.


So it would seem that some investors have almost forgiven Apple for its lack of recent innovation, but there’s one area that most will be keeping an eye on. Competition in the low to mid-range smartphone market could be a problem for the company unless it finds a way to successfully entrench itself in that part of the market..

Gleaning results from carrier reports

This week we received the latest earnings report from Sprint Nextel Corporation (NYSE:S), which provides us with some insight on Apple Inc. (NASDAQ:AAPL). The carrier indicated that it activated more than 1.4 million iPhones during the June quarter. That made up a little over a fifth of the smartphones it activated and is only slightly below the number of iPhones it activated in the same quarter a year ago. This indicates that demand for Apple’s iPhone remains strong in the U.S. in spite of slumping demand elsewhere.

On the company’s investor call, Apple Inc. (NASDAQ:AAPL) Chief Executive Officer Tim Cook said he didn’t believe that the high end of the smartphone market is overly saturated, and since then, there have been some small indications that he may be right. The fact that demand remains strong in the U.S. is likely the result of deep discounts on earlier iPhone models, but the demand is still there. So what would Apple Inc. (NASDAQ:AAPL) have to do in order to keep its U.S. market share humming along while expanding into other markets?

The answer lies, as many analysts have said, in a low cost iPhone. The only question now is how Apple goes about this, and its strategy in China and other emerging markets will be a key focal point for investors over the next six to 12 months.

Apple meets with China Mobile

Of course China remains a key part of Apple Inc. (NASDAQ:AAPL)’s emerging market strategy going forward, and with China comes expectations of a low cost device loaded with features. Apple Inc. (NASDAQ:AAPL)’s latest earnings report showed that it struggled in China, and the company clearly isn’t taking this lying down.

On Tuesday it was revealed that Cook met with senior executives from Chinese Telecom. Today Reuters’ Paul Carsten and Lee Chyen Yee report that Cook met with the chief of China Mobile. The company is the only carrier in China which does not offer the iPhone.

Sources apparently told Reuters that they were discussing cooperation. If Apple Inc. (NASDAQ:AAPL) can secure a relationship with the world’s biggest mobile carrier, investors and analysts would see this as a huge win. Some have been speculating that Apple Inc. (NASDAQ:AAPL) would seal the deal before the end of the year, and if a deal is announced, it could bring upside to Apple Inc. (NASDAQ:AAPL) shares because this is one of the keys to the company’s success in China.