With China Unicom deal official, Apple turns to China Mobile

[AppleInsider]

When Apple's iPhone enters the Chinese cell phone market later this year in a non-exclusive deal with China Unicom, it could only be the beginning, as the handset maker reportedly already has its sights set on another carrier.

A new report from PC World Business Center states that Apple is in talks with China Mobile, the world's largest cell phone carrier. In a nation with an estimated 700 million mobile subscribers, China Mobile carries the lion's share, with more than 475 million as of March. A spokeswoman for the carrier confirmed the company is in talks with Apple to carry the iPhone, though an agreement has not been made.

The news comes as Apple confirmed Monday that its recently announced agreement with China Unicom is not exclusive, unlike contracts for the debut of the device in other countries across the world. But China is also a much bigger market: With its 700 million subscribers, there are more cell phone customers in China than in the U.S. and Europe combined.

Earlier this year, Apple and China Mobile were in talks, but could not reach an agreement, as the wireless carrier reportedly had issues with the iPhone App Store. At the time, it was said that China Mobile wanted direct control of the App Store, including the collection of payments. In addition, PC World said that China Mobile's proprietary 3G network is not compatible with the current iPhone hardware.

"The App Store and 3G standard snags could remain in any talks," the report said. "The China Mobile download store went online last month and supports handsets including 'Ophones,' or devices that run a China Mobile operating system but have a layout very similar to an iPhone."

Last week, Apple and China Unicom announced they struck a 3-year deal that will have the iPhone on sale in China in the fourth quarter of 2009. The device has been given government regulatory approval for use in the nation of over one billion for five years on China Unicom's network. The approved hardware is a GSM/WCDMA phone without Wi-Fi.

[ View this article at AppleInsider.com ]

[Logisticaldron]

They are the world's largest GSM network. The only caveat is that China Mobile's newly appointed license to build a 3G network will be TD-SCDMA, not W-CDMA, but with 475M subscribers and growing I can't see Apple holding back.

[justbobf]

You know, someone is probably going to bring up the lack of Wi-Fi on the iPhone and attribute that to Chinese censorship. But, I think there must be another reason that Wi-Fi is excluded. Perhaps it is cost, perhaps something else.

I say this because Apple sells the iPod Touch in China. That's Wi-Fi equipped, right? And, computers connect to the internet in China; I know, it is slightly limited internet, but that would be the same type of internet service the iPhone would get. So, I think, there must be another reason. I don't think it is government censorship.

[anantksundaram]

Originally Posted by justbobf

You know, someone is probably going to bring up the lack of Wi-Fi on the iPhone and attribute that to Chinese censorship. But, I think there must be another reason that Wi-Fi is excluded. Perhaps it is cost, perhaps something else.

I say this because Apple sells the iPod Touch in China. That's Wi-Fi equipped, right? And, computers connect to the internet in China; I know, it is slightly limited internet, but that would be the same type of internet service the iPhone would get. So, I think, there must be another reason. I don't think it is government censorship.

This is a very good observation. I too have wondered about this.

[Logisticaldron]

Originally Posted by justbobf

You know, someone is probably going to bring up the lack of Wi-Fi on the iPhone and attribute that to Chinese censorship. But, I think there must be another reason that Wi-Fi is excluded. Perhaps it is cost, perhaps something else.

I say this because Apple sells the iPod Touch in China. That's Wi-Fi equipped, right? And, computers connect to the internet in China; I know, it is slightly limited internet, but that would be the same type of internet service the iPhone would get. So, I think, there must be another reason. I don't think it is government censorship.

Phones are different beasts and legislation isnt always logical or rational, but I have heard that the Chinese gov't require an addition protocol to their WiFi that is outside the IEEE's 802.11 so that might have been an issue.

Also, where in China do they sell the Touch? There may different rules governing between mainland and Hong Kong.

[thanx_al]

So a Chinese citizen in China, a communist country, will have more choice for their iPhone service provider than the supposedly "free market" US. Somebody explain that to me again. Anyone ever heard of monopoly capitalism?

[AllenKids]

Originally Posted by Logisticaldron

Phones are different beasts and legislation isnt always logical or rational, but I have heard that the Chinese gov't require an addition protocol to their WiFi that I outside the IEEE's 802.11 so that might have been an issue.

Also, where in China do they sell the Touch? There may different rules governing between mainland and Hong Kong.

The additional layer China stack upon Wi-Fi is called WAPI. It supposedly improves security. But everybody hates it, it prevents Chinese from getting Wi-Fi enabled phones for years.

On the other hand, iPod touch was on sale from day one, and is doing extremely well. It's not a cellphone so the WAPI rule doesn't apply.

[ivan.rnn01]

Poor Russian iPhone sales force $8.8m lawsuit

By Charles Starrett
Senior Editor, iLounge
Published: Thursday, July 30, 2009
News Category: iPhone

Slumping sales of the iPhone in Russia have forced one of the country’s “big three” carriers to sue a major retail partner, according to a C-News report (Translated link). Mobile Telesystems (MTS) recently won a 279 million ruble (roughly $8.85 million) claim against retailer Euroset, which failed to sell the iPhones it agreed to, and which MTS had given it. To further complicate matters, MTS rival VimpelCom acquired a 49.9% stake in Euroset last autumn. Overall sales of the iPhone in Russia have been disappointing, with the three major carriers—MTS, VimpelCom, and MegaFon—agreeing to sell 3.5 million units within two years, but having collectively sold only 250,000 through the first quarter of 2009. The carriers stopped buying iPhones at the beginning of the year, according to the report, and are working with Apple to renegotiate their contracts.

iLounge

[Gregg Thurman]

This isn't a credible report. The overall size of each of China's carriers is meaningless and most accounts (80+%) are pre-paid subscribers. These are not iPhone customers. What is important is the number of post-paid accounts. China Unicom, though much smaller overall than China Mobile, has nearly the same number of post-paid accounts (80 million vs 92 million respectively). Even among that group (172 million) only 35 million are smart phone users.

China Mobile then offers a scant 18 million potential customers for the iPhone. A whopping 10% share generates fewer than a million iPhone sales per year from China Mobile's customer base.

On the other hand, China Unicom offers 16 million smart phone subscribers AND the high probability of switchers from all other Chinese carriers. In essence Apple will have access to the aggregate of Chinese smart phone users without developing a carrier specific handset (CDMA and proprietary 3G network).

China Unicom's agreement is a de facto exclusive because of technology compatibility issues. http://forums.appleinsider.com/images/icons/icon7.gif

[AjitMD]

China has a huge disjointed bureaucracy... one department probably does not know what the other is doing. There is not way the government can keep standard WiFi devices like the iTouch, or other WiFi smartphones and laptops from coming into the mainland. Anybody who has been there knows they got a very robust and efficient smuggled goods market. I suspect

I suspect that with time this WiFi restriction for the iPhone fade away. More important is Apple sticking to their model of maximizing profits via carrier subsides, and control the App store. It is not in the company's best interest to go into the commodity business.

The Chinese market looks sexy, but it may be a mirage. Their per capita income is low and only a small segment can afford the phones and the service. More important would be figure out how to double market share here via a Verizon deal. Spirnt and T-Mobile too. All with subsidies. Nobody can beat our J6Pak when it comes to spending on gadgets! Even people on 'caid and Seciton 8 get the iPhones!

[anakin1992]

Originally Posted by AjitMD

China has a huge disjointed bureaucracy... one department probably does not know what the other is doing. There is not way the government can keep standard WiFi devices like the iTouch, or other WiFi smartphones and laptops from coming into the mainland. Anybody who has been there knows they got a very robust and efficient smuggled goods market.

ppl are free to bring in any devices they can. but if network inside china requires its own security stack, it would not work for these smuggled devices. current rule is that any cellphone devices have to have its own security scheme if it is wifi capable. what does it have to do with your "disjointed bureaucracy"? in US, i can buy a speed radar device legally, but i will be punished severely if police finds it in my car. is this a "disjointed bureaucracy" as you mentioned?

Originally Posted by AjitMD

The Chinese market looks sexy, but it may be a mirage. Their per capita income is low and only a small segment can afford the phones and the service. More important would be figure out how to double market share here via a Verizon deal. Spirnt and T-Mobile too. All with subsidies. Nobody can beat our J6Pak when it comes to spending on gadgets! Even people on 'caid and Seciton 8 get the iPhones!

mathematically, per capita income number is bullshit. further per capita income has nothing to do with iphone purchases or service. asian tends to spend big on certain gadget and device than those in US. maybe a given chinese or japanese or korean earn much less than a US individual, but they tend to spend big on a trendy phone.

[mesomorphicman]

Originally Posted by justbobf

I say this because Apple sells the iPod Touch in China.

Could be wrong, but I've been to China a few times and when I had my iPod touch none of my friends saw or heard of it before. I think it was only available in Taiwan & Hong Kong, but not mainland.

Now you can get the touch and iPhone in mainland. They are both on Apple's China website:
http://www.apple.com.cn

Maybe someone has more info, beyond my 0.02 cents.

[Spambeano]

There are plenty of iPhones and iPod Touches in China. The vast majority of iPhones were bought on the gray market, while some could be imported via Hong Kong which sells the phones untied to any particular service company.

Regarding the lack of Wi-Fi, this was reportedly to protect China's own wireless standard. If this is the case, the phone loses much of functionality. Unsecure and free wif-fi is rather prevalent in China (free wi-fi at all Starbucks), so not having it would be a major blow. That being said, recently Time magazine reported that the iPhone in China would indeed have wi-fi.

We'll find out in a few weeks.

[ivan.rnn01]

4. India: The absence of 3G network is one main reason customers think the phone is not worth the heavy price they gotta pay. Airtel and Vodafone the carriers in India have underperformed for the iPhone. This was one country Apple heavily banked on to make impressive sales because of the fast growing middle class. The iPhone is available contract free here, but the price is too unrealistic compared to the pricing of the same device in the US. In a country having the second largest population in the world, not even 20,000 iPhones have not been sold till date! [Feb 2009]

iPhoneFootPrint

[SGSStateStudent]

Originally Posted by justbobf

You know, someone is probably going to bring up the lack of Wi-Fi on the iPhone and attribute that to Chinese censorship. But, I think there must be another reason that Wi-Fi is excluded. Perhaps it is cost, perhaps something else.

I say this because Apple sells the iPod Touch in China. That's Wi-Fi equipped, right? And, computers connect to the internet in China; I know, it is slightly limited internet, but that would be the same type of internet service the iPhone would get. So, I think, there must be another reason. I don't think it is government censorship.

I thought there are no changes to the China iPhone?

[flipperfeet]

Originally Posted by thanx_al

So a Chinese citizen in China, a communist country, will have more choice for their iPhone service provider than the supposedly "free market" US. Somebody explain that to me again. Anyone ever heard of monopoly capitalism?

1) I think you may be forgetting some recent history, back when Apple was first shopping the phones around to carriers few thought it was going to be the success it has become. Exclusivity was one of the bargaining chips Apple had to gain what they were after. Now that there is no doubt the iPhone is a market changer, and because it was unintentionally demonstrated in France that Apple could reach much larger market penetration by not having exclusive carrier agreements, Apple will likely be letting its exclusive agreements expire and attempt to sell through multiple if not all carriers in a market.

2) You have been misled, the US is not a free-market economy. Recent blatant evidence of this would be the bail-out of the banking sector, and the large loans to the automobile companies. But those are just the recent headlines, the list goes on and on, like the subsidies provided to energy companies, big pharma, the insurance industry, corporate farming and any number of other special interest business groups as well as specific tax incentives for certain corporate activities. In actuality there is no working example of a free-market economy as envisioned and promoted by the Chicago School of Economics Ph.Ds that came up with the concept. It is a corporate utopian concept that is trotted out by business when it lobbies for deregulation, but is quickly put back in its box when asking for subsidies, loans, tax breaks or protection from "outside competitive forces."