Alibaba is going public as early as next week and is expected to raise as much as US$24 billion, making it the largest initial public offering in United States.
It is reported that Alibaba’s Jack Ma has invited Tim Cook, chief executive of Apple, to grace the IPO ceremony. Does this signal the start of an alliance between the two technology giants?
Apple, maker of the once-best-selling smartphone, is facing fierce competition in China. Its iPhone has been eased out of the top five by domestic brands.
Local smartphone brand Xiaomi has surpassed Apple in sales in the last two quarters. Four of the five best-selling smartphones are local brands, including Xiaomi, Lenovo, Coolpad and Huawei. Samsung is the only foreign brand that made it to the magic circle.
The local brands were able to pull down iPhone partly because of their high price-to-value. Another reason why iPhone is losing its shine is its limited sales channels.
Apple is selling over 80 percent of its iPhones through network carriers’ channels, while its concept stores and online selling platform account for the remaining 20 percent.
This has become a risky strategy after the country’s three biggest carriers – China Mobile, China Telecom and Unicom — scaled down or even cut their subsidies on smartphones.
It is urgent for Apple to figure out new ways to boost its sales in the country.
The company has opened its online store on Tmall.com this January. Tmall can help Apple boost sales in lower-tier cities, but this is not enough.
Apple has to do more marketing projects on its online shopping platform. It could, for example, give out red packets for the Lunar New Year and launch other activities to suit Chinese customers’ taste and practices.
Apart from beefing up its online sales channels, Apple can collaborate with Alibaba on the mobile payment segment.
There’s also iTunes. Through the platform, Apple sells digital content such as music, movies and software to over 800 million iTunes users worldwide, although most of these users are not from China.
And since iTunes provides millions of customer and payment information, Apple can use the platform to expand its mobile payment business.
China is like a virgin territory for Apple’s iTunes. If the company wants to explore the mobile payment market in the country, Alibaba would be the best partner for the business as its Alipay is China’s most popular mobile payment platform.
The iPhone maker has cooperated with global payment technology companies Visa, MasterCard and American Express on its mobile payment business. Alipay is likely to become its next business partner in this segment.
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