Apple is partnering with China Mobile on a multi-year agreement to sell the iPhone, expanding sales to the world's largest network raising the question of how the hardware maker can boost its sales abroad when its competitors sell less expensive devices.
The iPhone 5S and iPhone 5C become available for sale to subscribers of China Mobile's mobile network, beginning on Jan. 17, 2014, the companies announced on Sunday.
"China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world's largest network," said Apple CEO Tim Cook.
Apple created the iPhone 5C in an effort to expand into new markets with more affordable phones, but those devices were not as successful abroad as the company hoped. Without a wireless contract the iPhone 5S costs $649, and the 5C costs $549, so those devices can be very cost-prohibitive in overseas markets. Devices by Samsung and other smartphone makers are often less expensive, so Apple may decide to drop its prices to compete more effectively for overseas customers, says Van Baker, the lead Apple analyst at technology research firm Gartner.
"They might drop the price of the iPhone if they see a continued challenge for sales to the 5C," Baker says. "We have to wait and see if component costs get more expensive. If manufacturing costs get better they could have more wiggle room to lower their prices and keep their margins up. The implications are that if you drop the price of the phone in China, you have to drop the price everywhere."
For years Apple existed as a premium hardware developer using state-of-the-art consumer designs on the iPhone, iPad and iPod to justify high prices. The company could stay competitive in 2014 by lowering prices or with a breakthrough update to a device like a smart watch to once again show consumers a product they didn't know they needed.