Does Apple need a big deal or does it need new products instead?
During the height of the Web 1.0 bubble, venture capitalist Guy Kawasaki warned businesses to avoid using “Chinese math”. That’s when a company tells investors about its plans to break into the largest country in Asia, saying, “If we get just 1% of China to buy our product, we’ll have 13.5 million customers!”
One company that has managed to graduate to advanced Chinese calculus has been Apple, Kawasaki’s old employer. The tech giant had 9% of China’s growing smartphone market in Q1 2013, according to a recent study by IDC. Consumers in that country purchased 78 million smartphones in the first three months of 2013.
Getting 9% of any part of the world’s second-largest economic market would be cause for celebration for any practitioner of extrapolation. But that’s until they find out that Apple is ranked fifth. First-placed Samsung had 19% of China’s first-quarter smartphone sales. What’s more, China’s share of Apple’s revenues is down, too, though it was at $5 billion this past quarter.
What’s Apple to do?
Well, it seems the company has dusted off its first grade Chinese math books and decided it’s finally time to figure out a way to work with the planet’s largest mobile carrier, China Mobile. With over 710 million users, it’s the biggest fish in a big pond of over 1 billion Chinese cellphone users.
But, there’s a problem for China Mobile: while high-end 3G users may spend more money, they’re also less profitable than the lower-end users.
So, does Apple even need a deal with China Mobile or does it need new products instead?
We ask CNBC contributor Steve Cortes, founder of Veracruz TJM, to the math on Apple. And, we ask Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, to look at the charts. Does it all add up for Apple?
To see Cortes and Ross analyze Apple, watch the video above.
[Disclosure: Cortes is long Apple.]