Tech

Japan success shows why Apple badly needs China Mobile

Toshifumi Kitamura | AFP | Getty Images

As Apple's revenue growth in the Americas and Europe flatlined during the July-September quarter, Japan proved to be a bright spot for the consumer electronics giant.

Japan was the company's fastest-growing region in terms of revenue with 41 percent on-year growth last quarter, significantly higher than revenue growth of 6 percent in Greater China.

Sales growth in Japan was driven by Apple's tie-up with NTT DoCoMo – the country's largest carrier – which highlights the consumer electronics giant's dire need for a deal with China Mobile, analysts said.

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"Japan has been a strong market for Apple for some time on both iPhone and iPad. This quarter was particularly strong as Apple added NTT Docomo as a carrier," said Carolina Milanesi research vice president, Consumer Technologies and Markets, at Gartner.

NTT Docomo began selling iPhones to its 60 million customers in September. The company provided heavy subsidies for the device, forcing rivals KDDI and SoftBank to boost their incentives for iPhone buyers, all to the benefit of Apple.

Apple accounted for 34 percent of the country's 2.8 million mobile phone sales in September, up from 14 percent in both July and August, according to Counterpoint Research.

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Tom Kang, managing director, Mobile Devices at Counterpoint Technology Market expects solid revenue growth in Japan to continue for the next two quarters.

"There are two factors - the pull factor is that the minimalist design of the iPhone really resonates with Japanese consumer tastes," said Kang. "And the push factor is Docomo made a big deal with Apple where they are trying to sell as many iPhones as they can, and KDDI and SoftBank are making sure their users don't turnover to Docomo."

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"Strong revenue growth is going to continue until everyone who wanted an iPhone gets an iPhone and that's probably going to be next March," he said, noting that January to March is traditionally the gift giving season in Japan.

In order for Apple to increase its addressable market in China, it needs to lower the price of its devices and add China Mobile as a carrier of its products, said analysts.

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Apple was expected to announce a partnership with China Mobile, the world's largest mobile carrier with 750 million subscribers, during a launch event in Beijing in September. However, no deal has been confirmed.

"China Mobile is a way to open up a whole new market. Partners are critical to driving sales volume. All handset makers operate that way," said Alberto Moel, senior research analyst at Sanford C. Bernstein.

Melissa Chau, senior Research Manager at IDC Asia Pacific agrees that a deal with China Mobile is critical to Apple's success in the mainland, but points out that the company is running out of partners to tie up globally that will drive huge jumps in revenue.

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"Apple's biggest growth comes with tying up with new partners, and as long as they can do so, they are on a good growth path," said Chau.

"(However) they have covered most partners. China Mobile would be a feather in their cap, but what then?," she said.

—By CNBC's Ansuya Harjani; Follow her on Twitter@Ansuya_H