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Job Ad Triggers Heated Apple-China Mobile Speculation

By John P. Mello Jr. MacNewsWorld ECT News Network
Oct 11, 2013 5:00 AM PT

More evidence that Apple is moving toward cutting a deal with China's largest mobile carrier appeared Wednesday on an Apple website.

Job Ad Triggers Heated Apple-China Mobile Speculation

An employment notice for an engineer with extensive knowledge of China Mobile's homebrew mobile technologies was spotted on Apple's China website by Bloomberg.

The Beijing-based engineer reportedly would support and drive the carrier approval of mobile phones. The new hire also would have to have knowledge of TD-SCDMA, a standard used by China Mobile for handsets on its network.

However, the engineer's job appears to be a broad one. The candidate would need to be familiar not only with China Mobile standards, but also with WCDMA and CDMA -- standards used by Apple's current iPhone partners in China.

Now iPhones are officially offered by two of the country's smaller carriers, China Unicom and China Telecom. However, it's estimated that as many as 10 million China Mobile customers are using iPhones, even though they're limited to 2G connection speeds.

New Opportunities in 2014

Whoever lands the new Apple job in China also would be responsible to all carriers in the Greater China region for the overall management of the technical interface, Bloomberg reported.

That would include obtaining approvals for all Apple hardware and software, supporting carriers with new technology trials, managing carrier-reported technical issues, tracking carrier road maps, and supporting senior level engineering meetings.

Apple's negotiations with China Mobile -- the country's largest carrier, with more than 700 million subscribers -- have been reported for months, and it now appears the companies are near to cutting a deal to bring the iPhone to the carrier.

Another hint that a pact may be close to completion appeared Thursday in a research note by Brian J. White of Cantor Fitzgerald. Although the research focused primarily on the rising sales of companies that do about 50 percent of their business with Apple, White mentioned Apple would have "new opportunities" in China in 2014.

Apple did not respond to our request to comment for this story.

Subsidy Shock

For Apple, a big barrier to cracking China Mobile has been a technological one. The iPhone hasn't supported TD-SCDMA. That changed this week, though, when Apple reportedly received approval for a network access license for a handset resembling the iPhone and capable of connecting to 3G and 4G services offered by China Mobile.

Another barrier could be over the amount of subsidization typically taken on by an iPhone carrier.

For example, in the United States, a US$649 iPhone is sold by carriers for $199 with a two-year contract. The carriers are willing to front the difference in price because they know they'll make their money back on data charges over the life of a two-year plan.

That amount of subsidization may be too rich for China Mobile's liking, especially since the company is still building out its data networks.

"Carriers dislike the amount of subsidy they pay to Apple because they pay a lot more to Apple than they pay to anybody else," Gartner Research Vice President for Mobility Van L. Baker told MacNewsWorld.

"Apple can command that because it's such a popular device," he added. "Apple just happens to be king of the hill when it comes to commanding a premium price."

7 Verizons

Although the pieces appear to be coming together for a deal with China Mobile, Apple may not feel any urgency in putting a bow on a finished agreement. "They're not in a particular hurry to go there," Michael Morgan, a mobile devices analyst with ABI Research, told MacNewsWorld.

"Apple understood before many that the job of the iPhone is to push and sell carrier data services," he maintained. "Operators where the iPhone is successful have found the iPhone helped them push their data services, even to the point of making their networks unstable."

"China hasn't entered that world yet," he said.

That will change as LTE spreads in China. "As that starts to get deployed, China Mobile is going to have to justify the expense of deploying it," Morgan reasoned. "The way you justify the expense is by selling data services. To sell data services, you need a phone to drive that. That has always been the iPhone."

When Apple finally brings China Mobile into the iPhone fold, it will be a great coup for the company, according to Yankee Group Research Director Carl Howe.

"This will be a big deal," he said. "It's like seven Verizons. It would be a major win and dramatically make already-record volumes even higher."

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