IPhone 5 hits Chinese mainland

TD-LTE: STILL DISTANT

Cutting a deal with a Chinese state-owned carrier may be less optimal than the deals Apple is used to in other markets, and analysts note that China Mobile wouldn't necessarily open the flood gates for Apple.

Ovum's Putcha believes Apple and China Mobile will eventually strike a deal - though this would be for an iPhone running on China Mobile's next-generation network rather than its current 3G network.

An Apple iPhone 5 phone is displayed in the Apple Store on 5th Avenue in New York in this Sept 21, 2012 file photo. [Photo/Agencies]

Of China Mobile's 704 million subscribers, only 79 million are on its 3G network, and Apple has been reluctant to sign up to China Mobile's under-utilized, homegrown TD-SCDMA technology. "Apple likely doesn't see the return-on-investment in extending themselves for TD-SCDMA," Putcha said.

China Mobile is currently trialling its next-generation network, TD-LTE, which could be of more interest to Apple, but full-scale commercial use - and an iPhone tie-up - could still be years away.

ANDROID THREAT

Meanwhile, rivals are circling, eating away at Apple's smartphone market share. Samsung Electronics, Lenovo Group and Chinese brand Coolpad held the top three slots in the third quarter, according to IDC.

All three have relationships with China Mobile and offer smartphone models at different price points. Apple competes exclusively at the high-end, and even there, rivals are rolling out models with China Mobile. Last week, Nokia said it planned to release its latest Lumia smartphone with China's top carrier, which is also expected to launch Research in Motion's new Blackberry 10, analysts predict.

"The threat will still come more from the Android camp where they have many vendors already working with China Mobile and offering high-end phones," said TZ Wong, a Singapore-based IDC analyst.

While these smartphones don't generate the buzz of a new iPhone, Chinese buyers are not known for their brand loyalty, and this could siphon away users considering an Apple upgrade.

"I've used a Blackberry, Android and iOS and, personally, I want to try the Windows 8," said Andy Huang, a 37-year-old fund manager, who owns most iPad models, an iPhone 4 and a 4S. "I think the Windows 8 is very innovative."

With a China Mobile deal looking some way off, Apple could always boost market share by offering cheaper models - the basic iPhone 5 will cost 5288 yuan ($850) without a contract - though this appears an unlikely route for a high-end brand.

"If they want to expand market share, probably the only way to do it here dramatically would be to put out a lower cost phone," said Michael Clendenin, managing director at RedTech Advisors. "It's really uncertain if they'd decide to go that route ... Apple's a mystery in that regard."