Subsidy war likely as iPhone finally comes to China Mobile

Apple's long-awaited launch of its iPhone on China Mobile's vast network yesterday opens the door to the carrier's 763 million subscribers, but doubts have been cast on the longer-term benefits for both parties.

Apple chief executive Tim Cook was on hand as the carrier's flagship store opened in Beijing's financial district. With China Mobile chairman Xi Guohua alongside, Cook gifted signed iPhones to a handful of customers.

The deal could trigger a limited turnaround for Apple, whose fortunes have wavered in China in the face of stiff competition from market-leader Samsung Electronics and up-and-coming local rival Xiaomi Tech.

Samsung had a 21 per cent share of China's smartphone market in the third quarter of last year, with Apple trailing in fifth place with just 6 per cent, according to research firm Canalys.

The arrival of the iPhone could be a double-edged sword for China Mobile, with some analysts predicting a subsidy war as rival carriers compete to lure customers.

"I don't see a price war coming where Apple is engaged in the war, but I do think you're going to see a subsidy war coming," said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.