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January 11, 2013

Report: Tim Cook Says China Likely to be Apple's Biggest Market

By Steve Anderson, Contributing TMCnet Writer

When the CEO of Apple (News - Alert), Tim Cook, says something about Apple, it's a safe bet that whatever he's said is likely to come to pass. So what Tim Cook recently told the Xinhua News Agency in a recent interview may prove unsettling for some. Specifically, Cook reportedly "believes strongly" that Apple's biggest market will soon be not the United States, but China.

Cook delivered these remarks while in Beijing to meet with the management and regulators of China Unicom (News - Alert) Ltd., which was the first carrier in China to offer the iPhone. While there, he also met with the chairman of China Mobile Ltd., which is not only the largest carrier in China, but also in the world. Yet at the same time, China Mobile (News - Alert) doesn't have an agreement with Apple to carry the iPhone, something that Apple has been trying to set up for some time, though not without a note of controversy in the process. According to a statement from China Mobile, chairman Xi Guohua and Cook carried on discussions including "bilateral cooperation," though the specifics of the conversation could not be revealed thanks to confidentiality agreements forged between the two companies.

Cook has good reason to believe this projection of China's rise to the top market. After all, China has roughly three times the population of the United States, making the theoretical maximum much larger than the United States could generate, even if everyone bought multiple devices. Additionally, past sales indicate growth in the Chinese market, as sales from 2010 and 2011 doubled, but while growth has slowed for 2012, there was still growth in the market. Given the current economic climate, any growing market takes on a new significance. Apple has also recently been spotted opening a multi-story flagship store in Beijing, bringing the total count of Apple Stores on the mainland to 11, with independent retailers also reselling Apple products. Cook even responded to concerns about labor relations at the Foxconn plant.

Yet China has somewhat the same dichotomy that the United States is facing. While China's highest earners are falling in love with Apple hardware, China's smartphone market in general is finding most of its growth in the Android (News - Alert) phone class, as most Android devices are far more competitive in terms of pricing than Apple's mobile device lineup. Since growth is already slowing, there may be some issues in China's rise to the top Apple market. A low-cost iPhone, as some have projected may be in the works, would likely make a huge difference.

Trying to figure out the exact growth pattern of the Chinese mobile device market is a tough call. Since much of its economic development is comparatively recent, it's hard to use standard projection models. Three years of growth is terrific, but it's no pattern. iPhones have only existed for around five years, so the entire market is difficult to project for. Using what we know so far, though, it's reasonable to suggest that when lightning strikes in the same place three times, a fourth time isn't out of line. If Apple can get China Mobile involved, that ups the ante still further.

The market for iPhones is going to be one to watch over the years to come, as Apple releases new versions and brings them to new places. It's also likely to be an incredibly volatile market, so Tim Cook's projections may well come to pass by the time it's all said and done. They also may not, so having a reasonable backup plan would also be prudent.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Brooke Neuman
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