New China Unicom iPhone model, sans Wi-Fi, given approval

[AppleInsider]

Reports of regulatory approval of a new model of the iPhone in China seem to confirm that Apple's hardware will appear on the China Unicom network, and also suggest that a new model was created for the country of over 1 billion.

The new iPhone is reportedly a GSM/WCDMA model that operates on the 900MHz, 1700MHz and 1900MHz bands. It also includes Bluetooth, but no Wi-Fi. It was approved on May 7, according to a China's State Radio Regulatory Commission filing discovered by Engadget. The phone has been approved for use in China for the next five years.

This week, reports surfaced that suggested a deal had been reached between Apple and China Unicom, but officials close to the matter quickly intervened to say the deal was not final.

News on the phone from China, as translated by iPhoneinChina.com, suggests the new model could fall under the Unicom WCDMA standard.

China Unicom runs a GSM/UMTS 3G mobile network using the same signaling technology at AT&T in the U.S. and most other carriers worldwide. Existing iPhone models are already compatible with China Unicom's network, though WCDMA is a third-generation GSM technology.

Pictures of the new Chinese iPhone show a 16GB model that operates on the 3G spectrum. The Hong Kong model includes English text on the back, and says the model is WCDMA .



Details of the China Unicom deal leaked this week reportedly set a minimum threshold of CNY 5 billion ($731 million) in iPhone sales, guaranteeing orders of one to two million devices per year. The source said China Unicom could begin selling the iPhone as early as late September. China Unicom is also rumored to pay Apple 3,000 CNY ($439) per unit and price it below that for customers, Unicom promises to sell a minimum 1 million units per year, and the Chinese iPhone will access "Apple's China App Store."

In February, China Unicom was fingered as Apple's most likely partner by British consulting firm Ovum, followed by a leak of iPhone information inadvertently posted by China Unicom's website and an admission by the company that it was in talks with Apple in March. Earlier this month, Analyst Shaw Wu of Kaufman Bros. similarly claimed that China Unicom would be the frontrunner in marketing Apple's phone in the country.



With over 135 million subscribers as of February 2009, China Unicom is 170% larger in terms of users than AT&T in the US, but it is still China's second largest mobile carrier after the state-owned giant China Mobile, which boasts 471 million subscribers, making it the world's largest carrier by number of subscribers.

The vast size of the Chinese market has kept observers intently interested in how and when Apple would officially enter the market with the iPhone. On its recent earnings call, Apple executives only said they planned to begin selling the iPhone within the next year and described the negotiations as a "priority project." That may have been cover to keep its negotiations productive as Apple pitted the Chinese carriers against each other to gain the best deal.

In addition to phone network compatibility, China Unicom may be more open to allowing Apple to run its own software store and retain control over iPhone features such as WiFi and Bluetooth. In contrast, China Mobile has expressed an unwavering demand to exclusively operate its own mobile software store, a stance also adopted by Verizon in the U.S.

[zunx]

Excuse my ignorance, but why not Wi-Fi?

[Chilli]

Because they don't want to let people sharing informations in P2P mode.
This decision is political... sms, email, everything should be filtered.

Originally Posted by zunx

Excuse my ignorance, but why not Wi-Fi?

[digitalclips]

I am thinking AAPL might benefit from a billion sales ...
Also will be nice to see a US product (albeit made in China) sell in China in volume. Maybe Apple can help close that trade gap.

[AjitMD]

I am wondering if it makes sense to invest in China Unicom ADR (CHU). Right now, China Mobile has the largest customer base with its GSM network that will be upgraded to their version of 3G called TD-SCDMA. This standard is used in China only and was created to bypass QCOM CDMA and UMTS patents. I am not sure the network tech is stable enough, especially the handsets. More likely, the selection of handsets will be limited and at a higher price.

It does look like CHU would have the technology advantage and now they are likely to go with the iPhone. As we know, the iPhone has been driving subscriber growth at ATT and other carriers. It could do the same for CHU. Like the article says, CHL has 3.1x the subs of CHU. PSR for CHU is 3.5, versus 1.45 for CHU. Also big difference in gross margins.

I know I am missing something... any opinions here?

[Virgil-TB2]

Originally Posted by Chilli

Because they don't want to let people sharing informations in P2P mode.
This decision is political... sms, email, everything should be filtered.

I wonder how much fascism will creep into the "China App Store"?

For instance even though the developers have yet to make any decent programs that use it, iPhones are aware of each others existence and could easily exchange information over bluetooth if the software was written for it. In the case of a government crackdown a sort of daisy-chain among sympathetic iPhone carriers with the right software could transfer information and pictures out of the massacre and distribute them widely.

Total dumb-ass move from a "we need to develop our country" point of view forcing Wi-Fi off the device also. If millions of citizens used Wi-Fi it would drive the adoption of the technology and sales of routers etc.

[Virgil-TB2]

Originally Posted by digitalclips

I am thinking AAPL might benefit from a billion sales ...
Also will be nice to see a US product (albeit made in China) sell in China in volume. Maybe Apple can help close that trade gap.

A billion is a bit high to expect. It's not like every single person in the USA has an iPhone, it will be the same in China. Great sales but not a billion.

[JeffDM]

Originally Posted by Chilli

Because they don't want to let people sharing informations in P2P mode.
This decision is political... sms, email, everything should be filtered.

You mean in an ad-hoc network? Because China filters the internet too.

[Maestro64]

Originally Posted by digitalclips

I am thinking AAPL might benefit from a billion sales ...
Also will be nice to see a US product (albeit made in China) sell in China in volume. Maybe Apple can help close that trade gap.

Nope will not help, since the product are not made here nor sold out of the US no $ flow back the US. Apple like most large companies set up off short companies so they do not have to recognize international sales in the US. Apple Parks all this money in the Cayman Islands

[AjitMD]

Originally Posted by Chilli

Because they don't want to let people sharing informations in P2P mode.
This decision is political... sms, email, everything should be filtered.

I am wondering if the China Unicom phones will be crippled via software or hardware? If it is a software block, it could be hacked. I think it is idiotic for the bureaucrats in Beijing to think that just because they cripped WiFi in the iPhone, it will keep people from doing P2P or even connecting with news outside the country. I got to believe that they got to have a thriving smuggling business in phones and other equipment that incorporates WiFi plus other internet tech.

They got as much chance of keeping WiFi from their country as we got in keeping pot from coming into the country or even being grown here. It is about supply, demand and price.

[anantksundaram]

Without wifi, I doubt that it's going to sell that well. Perhaps this is just a foot-in-the-door type move - there's always hope of a newer version down the road that may include the functionality.

In the meantime, there'll still be a huge market for the regular, hacked iPhone.

[Chintan100]

FYI:

Just to add, Twitter and Blogspot are also blocked in China.

[aaarrrgggh]

Originally Posted by AjitMD

I am wondering if it makes sense to invest in China Unicom ADR (CHU). Right now, China Mobile has the largest customer base with its GSM network that will be upgraded to their version of 3G called TD-SCDMA. This standard is used in China only and was created to bypass QCOM CDMA and UMTS patents. I am not sure the network tech is stable enough, especially the handsets. More likely, the selection of handsets will be limited and at a higher price.

It does look like CHU would have the technology advantage and now they are likely to go with the iPhone. As we know, the iPhone has been driving subscriber growth at ATT and other carriers. It could do the same for CHU. Like the article says, CHL has 3.1x the subs of CHU. PSR for CHU is 3.5, versus 1.45 for CHU. Also big difference in gross margins.

I know I am missing something... any opinions here?

My guess is that qcom is the bigger winner, if Apple intends to pay royalties. I think CHU has big infrastructure upgrades needed to handle the iPhone, if they get a few million on their network.

[Constable Odo]

Is a million iPhone unit sales a year in China too much to hope for? The Chinese love using the internet. Millions of Chinese have their own internet connections. There is plenty of cybercafe usage. Younger Chinese love playing games. It does seem there is very good potential for the iPhone to gain traction if it's not priced too high. Singaporeans seem to like the iPhone.

What was bugging me yesterday, was an article I saw about how poorly the iPhone was doing in Russia. That sort of surprised me, but I'm hoping it was due to the poor economy rather than them just not liking the iPhone. I'm guessing that China has a better economy than Russia and the people are much more interested in the internet and have the infrastructure to exploit it. I'll be happy even if the iPhone is just a moderate success. Even 1% of China Unicom subscribers is a decent goal which would equal just over a million iPhones sold a year. I've heard conservative estimates much higher than that, but I'll take them with a grain of salt.

[AjitMD]

Originally Posted by aaarrrgggh

My guess is that qcom is the bigger winner, if Apple intends to pay royalties. I think CHU has big infrastructure upgrades needed to handle the iPhone, if they get a few million on their network.

I agree that on paper, QCOM should be the company benefiting the most from the smart phone and even 3G trend. Their standard royalty is about 5.5% of the ASP for CDMA phones and even UMTS/WCDMA phones. My understanding is that Apple pays that royalty plus what they pay to the GSM IPR holders.

However, QCOM share of royalties has been diluted for several reasons. Nokia fought them in court and got the rate reduced in return for GSM IPRs that QCOM needed. Another similar deal with TXN, BRCM. China got a reduced royalty rate for domestically made phones of local use. A lot of side deals. Meanwhile, the overall Average Selling Price (ASP) of the CDMA/EVDO, UMTS/3G phones has been falling. The hypergrowth, except for smartphones is over with... so QCOM revenues and profits have not been impressive.

I have some issues about their management. They keep on making scatter brain "investmetns" that have to be written off. They are still reporting "proforma earnings". They make great gross and net margins (at least proforma). No debt and hi cash flow. The problem is that issue a lot of shares via stock options to management. Management is always selling shares. This has been going on for years. The buy backs of shares by the company are nothing but transfer of wealth from shareholders to management. Last but not the least, Jr got to run the company. I had quite a few shares starting in Oct-1998 and it was a huge run and did ok, but did not sell at the best price. Apple has been a better investment and they are in tornado.

[NasserAE]

I am not surprised. Apple has been selling the iPhone in Egypt without GPS because you are not allowed to have GPS there. However, they disabled GPS by software not by hardware. But why no WiFi?

[shiyifan]

There is not a good credit score system in china, so it is very easy for people to buy subsidized iPhone and break contract immediately. With Wifi removed, China Unicom doesn't need to worry about that ---- you don't buy an iPhone for phone calls only. However, it will be a heavy test for China Unicom's 3G network. People love internet.
I'm interested to see what the price will be.

[KennMSr]

Originally Posted by AjitMD

I am wondering if the China Unicom phones will be crippled via software or hardware? If it is a software block, it could be hacked. I think it is idiotic for the bureaucrats in Beijing to think that just because they cripped WiFi in the iPhone, it will keep people from doing P2P or even connecting with news outside the country. I got to believe that they got to have a thriving smuggling business in phones and other equipment that incorporates WiFi plus other internet tech.

They got as much chance of keeping WiFi from their country as we got in keeping pot from coming into the country or even being grown here. It is about supply, demand and price.

IMHO I think the restriction was orchestrated by the Government and it's Gov't run carrier China Mobile. It might be a big brother issue wanting to restrict the populace from truly communicating with the outside world. But in reality it's China Mobile trying to get it their way, Gov't controlled App Store, Phones that only work in China using China Mobile's government-supported TD-SCDMA, and killing the competition by forcing it to overtax it's wireless network by allowing cellular connection. Jjust look at what has happened to AT&T, and they allow WiFi to the extent of providing FREE WiFI hotspots across the country. Can anyone say bring China Unicom network to it's Knees and frustrate all CHU subscribers. If AT&T can't readily upgrade it's Network to meet the demand of a couple Million iPhones how is a country that is just emerging into the 20th century going to handle possibly 10's of millions of subscriber demands. Result - Network meltdown.

[Logisticaldron]

Originally Posted by iPhoneinChina

There are some reports that the hardware for the Chinese iPhone is customized for China. While the rest of the world gets the 3G with the factory codename of 82, 3GS codenamed 88, the China iPhone gets a separate codename of 90. This leads me to believe that it is indeed not a software cripple. I suspect mainly because the Chinese are already experts at and accustomed to jailbreaking the million or so iPhones already available.

I’d wager it is a specialized HW build. Since the price is listed as around $440 USD for the 16GB Model, which is more around $600 USD for the rest of the world, I’d also wager that at least some of the other HW aspects are likely “inferior" to the 16Gb iPhone 3GS. It’ll be fun to see the tear down and comparison of parts.

[Dlux]

Originally Posted by JeffDM

You mean in an ad-hoc network? Because China filters the internet too.

As long as the 'internet' runs through state-owned routers, it's not exactly ad-hoc.

Pure (encrypted) peer-to-peer networks operating over wireless would evade the ISP monitors, but the mere presence of a WiFi signal could be all that's needed to run into trouble. And it's not like that is difficult to detect.

[Logisticaldron]

Originally Posted by Dlux

As long as the 'internet' runs through state-owned routers, it's not exactly ad-hoc.

That is what JeffDM said. P2P almost always runs through the internet so that would be filtered. Ad-hoc is what Chilli was actually referring to as a bad thing since there would be no router involved so information could be passed freely without scrutiny.

[yuusharo]

This story brings one simple idea to mind - Apple is willing to sell iPhones with different hardware depending on its needs. While obviously making a new phone that works in China is far more profitable than making changes here in the States, it seems that Apple isn't necessarily so strong on its "one-spec fits all" stance.

Could this mean CDMA iPhones may actually be a possibility after all? Hmm....

[tommychan]

I live in Hong Kong and travel to China frequently. There are many information from Hong Kong and Taiwan that the Chinese government want to be banned. Especially sensitive news and lottery numbers from Hong Kong (Underground gambling is a serious problem in China, they use official lottery results in Hong Kong for gambling.), in China, I'm not able to access most Hong Kong online newspaper and even Yahoo Hong Kong.

What I can do, however, with my iPhone 3G bought in Hong Kong, I am able to receive all those information via apps when I am using wifi. apps developer has create many different apps to let me reading news and lottery results in Hong Kong. I am not able to use my iPhone 3G as a regular phone (yet) in China, because the 3G coverage is still very very limited. But I'm sure that because data flow is much more easier to control via mobile network that's why they decide to remove the wifi when iPhone officially hits China.

I don't understand, however, why don't they disable wifi in iPod touch as well? iPod touch is being sold everywhere in China too.

[anakin1992]

Originally Posted by tommychan

I don't understand, however, why don't they disable wifi in iPod touch as well? iPod touch is being sold everywhere in China too.

ipod touch is not controlled by a service provider, but iphone is solely the deal btw apple and china unicom. so in order to force chinese iphone subscriber to use exclusively china unicom's network, they should ask apple to disable wi-fi. so subscriber will be charged more. china cellphone system is pay-as-you-go, not like those monthly subscription in US. this will add more money for china unicom and apple.

further to support wifi on iphone the efforts are much tougher in china than that in US for service provider. and for those who knew tech, they would have had the full fledged iphone with wifi already and they don't need tech support; for those relying on tech support from china unicom, it would be tough for them to provide adaqued support. this will reduce china unicom operational cost.

maybe without wifi chips iphone will be cheaper to a point both apple and china unicom can accept to make a deal. maybe just $4-5 dollars, but it is enough to break it or make it. for china unicom, Y25( $4 ) is a big deal. for apple, this will guarantee that not many will like to export chinese iphones to US or any other countries because of lack of hardware property.

if both apple and china uncom can still make lots of money while providing a reduced version iphone, why are people obsessively on knowing how come chinese iphone lacks of wifi?

[anakin1992]

Originally Posted by KennMSr

IMHO I think the restriction was orchestrated by the Government and it's Gov't run carrier China Mobile. It might be a big brother issue wanting to restrict the populace from truly communicating with the outside world. But in reality it's China Mobile trying to get it their way, Gov't controlled App Store, Phones that only work in China using China Mobile's government-supported TD-SCDMA, and killing the competition by forcing it to overtax it's wireless network by allowing cellular connection. Jjust look at what has happened to AT&T, and they allow WiFi to the extent of providing FREE WiFI hotspots across the country. Can anyone say bring China Unicom network to it's Knees and frustrate all CHU subscribers. If AT&T can't readily upgrade it's Network to meet the demand of a couple Million iPhones how is a country that is just emerging into the 20th century going to handle possibly 10's of millions of subscriber demands. Result - Network meltdown.

att has about 80 millions of wireless users while china unicom has about 150 millions and china mobile has at least double on unicom's user number. network meltdown? not likely.

[SGSStateStudent]

Originally Posted by Chintan100

FYI:

Just to add, Twitter and Blogspot are also blocked in China.

Really? Why?

[kotatsu]

Originally Posted by SGSStateStudent

Really? Why?

The Chinese regime blocks many sites. Most likely someone mentioned democracy or human rights on Twitter, a red flag went up, and it joined the official censor list.

I think it's rather sad how China is largely accepted into the world community, as if it's a normal country. We in the west do business with them as easily as we would any civilised country. It's a sad failure of the UN that their shocking human rights abuses go unchallenged, and there are no trade restrictions against them. They're really not much better than the likes of Iran, and I really feel sorry for anyone stuck living in such an oppressive place where something as simple and fundamental as freedom of speech can land you in jail.

[SGSStateStudent]

Originally Posted by zunx

Excuse my ignorance, but why not Wi-Fi?

China is probably not fully ready for WIFI yet IMO.

[SGSStateStudent]

Originally Posted by shiyifan

There is not a good credit score system in china, so it is very easy for people to buy subsidized iPhone and break contract immediately. With Wifi removed, China Unicom doesn't need to worry about that ---- you don't buy an iPhone for phone calls only. However, it will be a heavy test for China Unicom's 3G network. People love internet.
I'm interested to see what the price will be.

Lol. I guess the richer will be able to afford the REAL iPhone, not the 100s out there which are all fakes.

[mesomorphicman]

I returned last week from vacation in China and this is old news there, BBC World was talking about the iPhone & Unicom. Everyone seemed fascinated with my iPhone, I think it will sell well there.

While there, I could not get on Facebook, it seems all U.S. social networking sites are blocked there. I think the only way to use Facebook in China is via a smartphone mobile app, 'cuz I do know one American guy there who uses Fb.

Also, all blog sites are blocked in China from CNN Political blog sites to Fortune blog sites to normal joe citizen blogs.

Gotta love the openness Communism (sarcasm). But the people are very nice, food is good, ancient history is cool to learn, and the women are beautiful.

[mesomorphicman]

Originally Posted by zunx

Excuse my ignorance, but why not Wi-Fi?

My guess is because they may have trouble controlling what people access via wifi and difficulty tracking what sites people view/use and read. With regular internet access they can track and control everything (i.e. block sites and see what you're looking at).

[SGSStateStudent]

Originally Posted by kotatsu

The Chinese regime blocks many sites. Most likely someone mentioned democracy or human rights on Twitter, a red flag went up, and it joined the official censor list.

I think it's rather sad how China is largely accepted into the world community, as if it's a normal country. We in the west do business with them as easily as we would any civilised country. It's a sad failure of the UN that their shocking human rights abuses go unchallenged, and there are no trade restrictions against them. They're really not much better than the likes of Iran, and I really feel sorry for anyone stuck living in such an oppressive place where something as simple and fundamental as freedom of speech can land you in jail.

Thanks!