John Paczkowski

Recent Posts by John Paczkowski

iPhone 5, “Simplified iPhone 4” Headed to China Telecom in October?

If Apple hasn’t yet signed an agreement to bring the iPhone to China Telecom, it must be very close to doing so. In July, Reuters reported that long-running discussions between the two companies were moving toward a deal to allow China Telecom, the country’s third-largest wireless carrier, to begin selling the iPhone by the end of this year. Now comes word from Sohu.com, via Ticonderoga Securities analyst Brian White, that the carrier has reached a “preliminary agreement” with Apple to begin selling the iPhone before the end of October. Two versions of it, actually — the next generation iPhone and a pared-down iPhone 4.

“According to Sohu.com, China Telecom will offer two types of iPhone that include the iPhone 5 and a ‘simplified iPhone 4,’” says White. “Essentially, this potential ‘simplified iPhone 4′ would be a more economical version of iPhone to target a broader customer base in developing countries such as China, allowing for an expanded market opportunity.”

Targeting the smartphone market’s upper and lower ends like this could prove a wise strategy. “We estimate the high-end portion of China Telecom’s subscriber base is approximately 13 to 15 million, which represents a current revenue opportunity for the iPhone of $8- to $9 billion,” White says. “We view this as the most reasonable near-term addressable market opportunity for Apple’s iPhone. However, if Apple offers a more economical, ‘simplified iPhone 4,’ the opportunity with China Telecom could be much larger.”

And should Apple extend that dual iPhone strategy to its other carrier partners in China, the opportunity grows larger still. With an estimated 100 million to 125 million subscribers, White figures the high-end mobile phone market in China could present Apple with a $70 billion revenue opportunity. But if the company is able to use that simplified iPhone 4 to tap into the rest of the market as well, it potentially expands to over $200 billion.


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