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Apple's 'Watershed Day,' Years In the Making (Update 2)

Tickers in this article: AAPL CHL

Updated from 11:08 a.m. EST to include more analysis in the 11th and 12th paragraphs.

NEW YORK (TheStreet) -- If there was any concern about Apple's iPhone not selling well on China Mobile's network, think again.

China Mobile is slated to start selling Apple's iPhones on its network starting this Friday, as the two companies officially kick off their partnership. In an interview with CNBC, China Mobile noted it had taken 1.2 million pre-orders for the iPhone, averaging 60,000 a day since Christmas.

A pre-order of 1.2 million iPhones for the initial shipment to China Mobile is a massive number, considering that Apple only ships about 2 million iPhones to China per month. The deal, according to Canaccord Genuity analyst T. Michael Walkley, could "offset some of the anticipated sharp decline in Western carrier iPhone sales post the holiday selling season."

Walkley, who rates Apple shares "buy" with a $600 price target, noted that his holiday surveys indicated "very strong iPhone 5s sales," and improved the supply level for all colors and sizes.

Not only does this give Apple a boost for iPhone sales, the partnership will run further than that, giving China Mobile customers a chance to look at other Apple products on its network, presumably the iPad. Apple's iPad Air, iPad 2, iPad mini with Retina Display, and iPad mini all come in Wi-Fi and cellular connected options, with the iPad Air and both iPad mini tablets offering LTE (Long Term Evolution) connectivity.

A 16GB iPhone 5s will be priced at 5,288 yuan ($874) China Mobile said, with the 64GB model being priced at 6,888 yuan ($1,139). Apple's mid-tier phone, the iPhone 5c, will be priced at 4,488 yuan for the 16GB model.

Apple shares were sharply higher in Wednesday trading, gaining 2% to $557.47, while China Mobile shares were up 0.46% to $50.71.

A deal between Apple and China Mobile has been months, if not years in the making, until it was officially announced last month. China Mobile has approximately 760 million subscribers, making it the biggest cellular provider in the world by a wide margin, and could boost Apple's iPhone units substantially. A 1.2 million pre-order run rate implies that Apple will be able to sell at least 14 million iPhones on China Mobile's network per year, assuming around 1.2 million iPhones sold per month.

Now that the deal is official, signed and pre-orders are taking place, analysts estimates for iPhone sales will start to come up. Analysts surveyed by Thomson Reuters expect Apple to earn $43.72 per share on $184.71 billion in revenue for fiscal 2014, though the sell-side does not have an official iPhone sales estimate figure.