iPhone Mini Release Date in 2013 in China Could Give Apple's iPhone Profits Increase by $2 Billion, Says Analyst

An analyst stated Apple has opportunities to target new demographics in China just as a report shows the country passed the U.S. in smart devices.

Analyst Katy Huberty explained that China is seeing a growth in 3G handsets on carrier China Mobile's TD-SCDMA network, a factor for Apple to capitalize as it reaches 20 percent of the market, on top of the 10 percent concentrated by the iPhone 5.

China Mobile, which is China's and the world's largest cellular provider with over 700 million subscribers as of November 2012, has yet to sell the iPhone 5. China Mobile chairman Wang Jianzhou previously stated that his company has been in talks with Apple to carry the iPhone, especially in hopes to bring 4G technology.

Although China Mobile hasn't carried the iPhone, more than 15 million iPhone users were confirmed with the carrier as of last March, likely utilizing the carrier's 2G network.

With the numbers of subscribers increasing with China Mobile and growth of 3G, Apple could initiate plans to capture the available market.

"We believe Apple could launch iPhone Mini at $330 (about Rmb2,000), in-line with flagship products in China from Lenovo, Huawei, ZTE and Coolpad," wrote Huberty in the note. "Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth), which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars."

If the "iPhone Mini" were to launch this year, Apple's gross profit margin could decline by two percent yet in return boost the Cupertino-based company's iPhone business by approximately $2.4 billion in gross profits.

Huberty's report comes as China topped the U.S. in active smartphone and tablet market shares. As Latinos Post reported, Flurry Analytics' figures concluded China will have 246 million smart devices compared to the U.S.'s 230 million active smart devices.

"We also conclude that the U.S. will not take back the lead from China, given the vast difference in population per country. China has over 1.3 billion people while the U.S. has just over 310 million," wrote Flurry's Peter Farago.

Overall, China is proving to provide Apple new opportunities in the smartphone market.