Apple inks China Mobile deal

CNN's Pauline Chiou has a look at the effects of the Apple China Mobile deal.

China's largest telecom operator, China Mobile, has 740 million customers, a subscriber base more than twice the population of the United States. It's the country's most extensive network known for its wealthy customers. But China Mobile hasn't sold an iPhone until now.

Many operators, I think, have been skeptical about the economics of an Apple deal. And China Mobile has been quite clear that they want to be a better or a different set of economics. They are cautious about providing big hands of subsidies.

The deal with China Mobile could open up a huge section of the market for Apple. Cantor Fitzgerald estimates that China Mobile could sell between 20 and 24 million iPhones next year, boosting Apple's overall earnings by 4 dollars per share.

Apple's been loosing market share in China faced with steep competition from Samsung and from cheap Chinese smart phone makers like Xiaomi and Huawei.

A special welcome goes out to those joining us in Beijing.

Though Apple still dominates the high ... where most of the profits are made.

The companies had PR problems in China as well. Apple CEO Tim Cook issued a rare apology in April after State Media accused the company of arrogance and unfair warranty practices. Some analysts believe that China Mobile deal would help the company create more Apple loyalists in China.

Globally, iPhone users go out to purchase iPads and Mac books at a much higher rate than others.

I would surely say as an iPhone customer, I think, that's true in many markets. I'm not sure that is relevant in China. Let's keep in mind that Apple is not allowed to run a full app store in China because of concerns around copy right. A lot of materials are not necessarily available through that store. And in general, Chinese consumers are not comfortable paying up in the same way we do in many western markets for copy right content.

The upside for China Mobile? The deal should help the operator to monitize its new expensive 4G network. Even though China Mobile hasn't previously sold iPhones directly, 40 million of its subscribers already have one grounding from Hong Kong or another market. These great market phones can only be used of a wifi, not the ... data network, a situation that has severely limited profits for the company. With millions of new iPhone customers unleashed into the network, China Mobile hopes China's traditionally stingy data users will start downloading and paying up.

Pauline Chiou, CNN, Hong Kong.