Apple Inc. 1Q Greater China Sales Hit Record High

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Apple Inc. (NASDAQ:AAPL) CEO Tim Cook said in a statement that with the deal with China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941), the company would be able to enhance its sales of iPhone, which hit a record high in Greater China in the fiscal first quarter, says a report from the Wall Street Journal.

“We’ve gotten to know each other…today is a beginning, and I think there are lots more things our companies can do together in the future,” Mr. Cook said.

Pre-orders flowing in

Xi Guohua, chairman of China Mobile, said that millions of iPhones have already been ordered, which reflects the rock solid demand for the Apple Inc. (NASDAQ:AAPL) devices. The Cupertino-based company will start offering iPhone through China Mobile from Friday.

There was not much information on the first quarter sales of Apple, and the company is preparing to release results for the period later this month. Back in October, Apple reported fourth quarter revenue for Greater China including Hong Kong and Taiwan of $5.73 billion, an increase of 6% over the year.

Tim Cook said that he is “incredibly optimistic” about the deal with the Chinese carrier.

CEO Cook wants Apple Inc. (NASDAQ:AAPL) to penetrate deeper in the Chinese market by offering iPhones through China Mobile. He said that there are more than half a million people designing apps for the United States company’s iOS operating system.

Multiple challenges for Apple

Apple faces multiple challenges in China due to lack of mid-priced and low-priced phones in its portfolio, and no subsidies from network carriers.  Chinese customers have the option of buying low priced phones running on Google’s Android.  On Apple Inc. (NASDAQ:AAPL)’s Chinese website, the price of a 16 GB iPhone 5S is 5,288 yuan (US$874) and an iPhone 5C with the same storage capacity cost around CNY 4,488 (US$742).

“Apple has always been about making the best products, not the most products, so that’s always our North Star and that’s not going to change ever,” Mr. Cook said.

Apple’s iPhone is seen as status quo by some of the Chinese customers, but a majority of the customers are turning to low-priced phones produced by local companies such as Xiaomi Inc and Huawei Technology.

According to the analysts, Apple Inc. (NASDAQ:AAPL) would not be able to achieve its  target of ruling the Chinese market through China Mobile deal though it could give the company a little upside. Apple would be able to offer its devices to more than 700 million subscribers through China Mobile, which is seven times the subscribers of Verizon Wireless, the largest carrier in the United States. Sales of iPhone could reach nearly 15 million to 39 million through China Mobile in 2014.

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