Apple Might Be Closer to iPhone Deal with China Mobile

The China Apple Crystal BallApple and China Mobile, the world's largest carrier, could be closer to an iPhone deal. Reporting out of Singapore and Hong Kong, Reuters said that several factors may be coming together to overcome the hurdles that have prevented such a deal for many years.

In particular, Qualcomm's one-chip-to-rule-them-all is available for the next round of iPhones; Apple is expected to release a mid-market iPhone (the long-rumored low-cost iPhone that leaked product images have dubbed the iPhone 5C) that will play well in emerging markets such as China; and China Mobile and other Chinese carriers are in the process of deploying 4G networks.

The most important factor pointing to a deal would be comments from China Mobile Chairman Xi Guohua, who said on Thursday, "We [Apple and China Mobile] are actively negotiating and both sides are keen. There are still some commercial and technology issues that need time to resolve."

Reuters noted that Chairman Xi did not further elaborate on what those issues might be or what kind of time frame he meant.

"The circumstances and the issues that were a hindrance in the past seem to be getting resolved. So I think there's a higher probability that potentially there's something in the works," Anand Ramachandran, a telecoms analyst at Barclays in Singapore, told Reuters.

The importance of the Qualcomm chip mentioned above is that it supports most of the world's tangle of wireless networks, including all of China's various 3G and soon-to-be-4G networks. Heretofore, Apple would have had to make an iPhone specific to China Mobile's 3G network, which is unique in the world.

Qualcomm's new superchip eliminates that need—Apple's next round of iPhone should work on China Mobile's network out of the box. China Mobile already has millions of gray market iPhones on its network that are limited to 2G access

It's also important to remember that China Mobile is larger than every nation on the planet except China and India. The firm claims 740.1 million customers, a little more than twice the total number of people in the U.S.

That makes China Mobile a plum prize for apple to pluck. Apple CEO Tim Cook has repeatedly identified China as an important market for his company, a statement that has always assumed to include China Mobile sooner or later.

Apple is important to China Mobile, too. As noted above, millions of its customers have already adopted gray market iPhones despite being limited to 2G speeds. And though China Mobile has more customers that Carter has liver pills, only 138 million of them are 3G customers. Moving more of them to the higher priced 3G or 4G networks means more Renminbi in China Mobile's vast coffers, and the iPhone will help make that happen.