Apple Inc. (AAPL) To Benefit Immensely From China Mobile Deal

Apple Inc. (AAPL) To Benefit Immensely From China Mobile Deal
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China Mobile Ltd. (NYSE:CHL) (HKG:0941)’s Suzhou Life Network Web portal published an advertisement suggesting the reservation system of Apple Inc. (NASDAQ:AAPL) iPhone 5S and 5C. According to the RBC Capital Market analysts (Amit Daryanani, Mitch Steves, Mark Sue and Karl Ackerman) the reservation system is not direct, but instead customers need to reserve an appointment.

Analysts note that the ad also gives weight to a report from China news source Xinhua claiming that China Mobile would launch its 4G network on December 18th.

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3G holds big potential for Apple

China Mobile Ltd. (NYSE:CHL) (HKG:0941) has a customer base of 755 million and a 3G customer base of 170 million, which would be very beneficial for Apple Inc. (NASDAQ:AAPL). Analysts believe that the additional subscribers could bring in revenue of $10 billion for Apple. The iPhone maker would derive major benefits in the March quarter, during the Chinese New year when demand would surge along with market opportunity.

Compared to China Mobile Ltd. (NYSE:CHL) (HKG:0941), China Unicom and China Telecom together have a subscriber base of 454 million and 208 million 3G customers. The 3G segment is the most significant, and China Mobile is expected to add an extra 17 million 3G customers in the next fiscal, which represents a 10% penetration rate.

Notably, total 3G subscribers continues to grow with the September quarter seeing total China 3G sequential unit growth of 16%.

OS a key differentiator

Apple Inc. (NASDAQ:AAPL) is well known for its ability to develop hardware and software together, which is helping the company to reap larger profits compared to any of its rivals. Apple not only differentiates itself on hardware, but also enhances its profits by developing operating systems, processing manufacturing and retailing the product.

Analysts feel that Apple Inc. (NASDAQ:AAPL) has an edge over other players not only because of its hardware, but also its ecosystem, iOS. The operating system of Apple provides users with an integrated, scalable and seamless experience that would tough to compete with.  Its wider customer base attracts more application developers to an operating system, which in turn enhances the customer base that increases the data and usage through iOS on Apple devices.

According to analysts, Apple Inc. (NASDAQ:AAPL) has many catalysts that would enhance its revenue. Gaining ground in emerging markets would increase the revenue for the company over the next several years, and success and growth in Enterprise markets would open up a higher margin segment. New products like iTV, iWatch and others would also contribute significantly.

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