Chinese iPhones Could Change Apple's World

Apple (Nasdaq: AAPL  ) is taking the iPhone phenomenon into the world's biggest mobile phone market. In the process, I see hints of a new direction in the American market as well. Bye-bye, AT&T (NYSE: T  ) -- hello, Verizon (NYSE: VZ  ) .

When Apple announced an iPhone distribution deal with China Unicom (NYSE: CHU  ) , it opened a can of worms back home.

For one, Unicom is a low-end carrier in China, which doesn't rhyme with Apple's high-end image elsewhere. If China Unicom can beat out China Mobile (NYSE: CHL  ) , whose subscribers are both more affluent and more numerous, then what's stopping lesser lights from selling the iPhone in other markets? Verizon wouldn't care about this point -- but Sprint Nextel (NYSE: S  ) and T-Mobile might.

But Apple is still talking to China Mobile, too. While AT&T has an exclusive iPhone contract in the U.S., Apple has multiple carriers in markets like France and India, and the Unicom contract isn't exclusive. Apple may have slowly eased into the multi-carrier game, but there's no going back now. And don't forget that Vodafone (NYSE: VOD  ) , which sells iPhones in almost a dozen countries today, is a major ingredient in the Verizon Wireless joint operation.

Finally, the mere fact that Apple still wants to talk to China Mobile is very significant. The iPhone isn't technically compatible with that company's high-speed 3G network, in the same way that Verizon and Sprint have technical issues with the current iPhone models. Perhaps Apple is planning to introduce multiple models for different network technologies. Maybe there's even a multitalented iPhone in the works that could connect to several high-speed network standards. Or, the next-generation wave of 4G networks could pave the way for a global standard across borders and networks.

So Apple is showing signs of an increasingly open attitude to both technical standards and mobile carrier politics. Add in Apple's preference for top-of-the-line markets, Verizon's massive footprint with 87 million subscribers, and Apple's existing relationships with Vodafone, and Verizon Wireless starts to look like the logical next partner.

AT&T needn't panic, of course, but that's a different story. The iPhone has been a success -- but the next chapter in this story will cover a much larger market both at home and abroad. Maybe we ain't seen nothing yet.

Would Chinese success plus Verizon Wireless equal an Apple that's worth every penny of today's seemingly inflated share price? Discuss in the comments below.

Apple is a Motley Fool Stock Advisor selection. Sprint Nextel is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 02, 2009, at 2:52 PM, applebull wrote:

    The current Apple Share Price is not lofty for anyone but the Hedgefunds that are short. During this past very difficult year Apple has posted record earnings both top and bottom plus tremendous growth. Who else is adding 5 Billion Dollars per quarter to their debt free cash hoard? Apple stock will soar once the good news overpowers the bears dedicated to driving it down.

  • Report this Comment On September 02, 2009, at 3:02 PM, fjose wrote:

    Of course you ain't seen nothing yet. You know all too well that the subscription accounting used by apple does not give a true picture of apple's earnings.

    You probably know that the iphone will have blow out numbers. After this quarter. apple would probably have sold a total of 40 million iphones of the 3G and 3GS. The 40 million iphones will contribute about 1.60 to the net based on subscription accounting. Q4 (current Q) will probably have a non-GAAP net of US$5.5 and a GAAP net of US$2.1.

  • Report this Comment On September 03, 2009, at 12:55 AM, pkguitarman wrote:

    I'm very long on Apple. Anyone who has ever had an Apple Computer will never be a PC user again unless required by their employer. The way everything is integrated is just too cool. It makes me feel this way and I am 57 years old. Nuff said!.

  • Report this Comment On September 03, 2009, at 7:43 AM, jdubbau wrote:

    Maybe we're just extra lucky in Australia, but there are 4 carriers selling the iPhone, plus you can buy one unlocked from the Apple store.

  • Report this Comment On September 19, 2009, at 6:53 AM, Beagle2Mars wrote:

    If innovation is a key to investment success, Apple is in the forefront. Are we all waiting for shares to dip in October so that we can buy more?

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