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Apple Needs China Mobile Deal or Else...

Thursday, 10 Jan 2013 | 5:54 PM ET
Apple's China Push
Apple CEO Tim Cook may be cooking up a plan to help further tap into the huge market in China, reports CNBC's Jon Fortt. David Pearl, Epoch Investment Partners, and Leena Rao, TechCrunch, weigh in.

Apple doesn't just want a deal with China Mobile, the iPhone maker needs it, said David Pearl, an analyst at Epoch, on CNBC's "Closing Bell" Thursday.

If Apple doesn't land a deal with China's biggest wireless carrier, it will stand to lose crucial market share to competitors that will impact its future growth.

"To really grow they'll need the dominant carrier, which is China Mobile. And really China will be their biggest market in a few years and they need this outlet to get there," Pearl said.

Apple's stock is already being punished for having a slowing growth rate and peaking margins, so a deal with China Mobile is very important to the company even if margins go down a little, Pearl said.

"They are better off getting more volume. Remember once you even sell a low-end iPhone, that customer is going to buy apps and they'll be a customer probably for the rest of their life, so you're really motivated to keep market share and gain market share."

The days of Apple selling products for ridiculously high margins and growing faster than competitors are being challenged and it will have to gain more market share of it is going to successfully compete with mobile devices running Google's Android in the future, Peal said.

"Today's customers of even low-end iPhone if they make a cheaper version will eventually trade up and buy the premium products and then they're in the Apple ecosystem forever," he said. "So they're really worried about market share because once you go to Android, you may not come back to Apple."

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.