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What China’s Shift to 4G Means for Nokia Corporation (ADR) (NOK), Apple Inc. (AAPL)

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China boasts more than 1.3 billion  people, many of whom live without high-end smartphones, tablets, and stable high-speed mobile computing connections like 4G — In other words, “the necessities” to many of us. All those people, and the opportunity that upgraded infrastructure represents, explains why investors applauded the news that Nokia Corporation (ADR) (NYSE:NOK) has partnered with China Mobile Ltd. (ADR) (NYSE:CHL), the largest mobile carrier in the world by total subscribers.

Nokia Corporation (ADR) (NYSE:NOK)For the same reasons, Apple Inc. (NASDAQ:AAPL) fans cheered CEO Tim Cook’s most recent trip to meet with China Mobile executives, in an effort to expand Apple Inc. (NASDAQ:AAPL)’s existing relationships in the market. Thanks to China Mobile, what was already a growth market for mobile device makers is getting even better.

What’s the big deal?
China boasts a large population that high-end smartphone manufacturers have just begun to reach, making the country a particularly appealing market for Nokia and Apple Inc. (NASDAQ:AAPL), among others. Considering its population, the 260 million mobile phones sold in China in 2012 seem paltry. Of the total number of phones sold in China last year, about half were smartphones.

So, where does China Mobile fit into Asia’s mobile computing market picture? As measured by subscribers, China Mobile – with more than 700 million customers – is the largest wireless carrier in the world . But of all those China Mobile customers, nearly 11% of them connect their mobile devices via its 3G wireless network. Thankfully for mobile manufacturers, that standard is quickly becoming passé.

Apple Inc. (NASDAQ:AAPL) is already partnered with China Unicom and China Telecom, the next two biggest wireless carriers in the market. Problem is, the two carriers combined have barely half the number of subscribers that China Mobile has. That explains Cook’s trips to the land of the rising sun: Growth in China requires a deal with China Mobile, plain and simple.

China Mobile leading shift to 4G
Though many Chinese are tuned into mobile computing, faster 4G connections haven’t been an option for customers. That’s about to change. According to a report issued by research firm IHS, by 2017, there will be 440 million mobile computing users connected in China via a 4G network. For China Mobile, its early commitment to building infrastructure has given it a huge head start in shifting to 4G.

As per IHS, China Mobile is expected to capture more than half of those 440 million 4G customers by 2017, again dwarfing the competition. For Nokia and Apple Inc. (NASDAQ:AAPL), let alone Chinese market-leading Google Inc (NASDAQ:GOOG) and its Android OS, China Mobile’s commitment to 4G should have their respective management teams salivating. Can anyone say upgrade?

Nokia, Apple, and China Mobile
Last year was the year of the Android OS phone in China, at least by market share. With so many mobile computing alternatives available with Android, research firm Informa Telecoms & Media estimates it was the OS of choice for two-thirds of the phones sold in China in 2012. China Mobil’s leadership position in the shift to 4G isn’t going to change the inroads that Android devices have made overnight, but it opens the door for both Nokia and Apple to make significant strides.

Nokia’s certainly gotten a jump-start on Apple, at least in terms of its relationship with China Mobile. The agreement to offer Nokia’s made-for-the-Chinese market Lumia 920T was a coup, and Cook is trying to make a similar deal happen for Apple. What sets Nokia apart was China Mobile’s decision to subsidize the Lumia 920T with a two-year contract. Instead of asking customers to pony up nearly $740 for a new Lumia 920T — the initial unsubsidized cost — now, a single Yuan (about $0.16) will do the trick.

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