China Mobile knocks on Apple's door, seeks preferential treatment

Don't do it, Apple!

Support worldwide standards!

Don't do it, Apple!

Support worldwide standards!

/Agree! Just get a model in China that supports WIFI.
Oh - And hi boards - First Post.

JWS

Welcome.

K

Ah, the wonders of communism.

TD-SCDMA isn't proprietary. In fact, it's been designed to avoid the licensing issues surrounding other 3G standards.

Sounds like the iPhone is doing well in China. I recall reading here that the iPhone would flop there.

I agree with You!

Wellcome!!

Yeah Apple don't do it especially since they pulled the "RIM is doing it" card haha. Next thing you know, North Korea will demand a Kim Jong-Il edition iPhone xD

No mention of the time it'd take for Apple to incorporate this hardware?

Ain't going to happen with 4th Gen iPhone unless Apple has been working on this for a while. China Mobile can't just snap its fingers and say please & Apple somehow able to fulfil their request for a device shipping in the summer. That would be magic

don't do it.... standards are there for a reason! Hopefully China Mobile's 3G issues would convince Apple it's a terrible idea.

This Chinese Company should have a subdivision which supports iPhone... If they think that it's so easy for Apple to do it, why don't they do it on their end? Hey, there are less towers than iPhones! Also, doing that subdivision would allow them to bring their competitors' customers in too...

As to Worldwide Standard, LTE = WiMax, is that gonna be another War for 4G Supremacy, dividing the world markets? How many of those wars do those providers want to go through? Waste of $$, and TIME! But, its probably meant as a tool for protecting their markets from competition etc...

Then 5G will come, after we are all dead and they will be fighting for the best 5G flavor -- same kind of waste!!!

Or will someone be making converters, ala 110/220 Volts, for modems to work on 4G, then 5G?

It would be nice to see a better way!

I'm all for a TD-SCDMA iPhone and I have to wonder if it's more likely to come about before a CDMA/EV-DO iPhone. After all, Verizon and other CDMA/EV-DO networks are mostly moving to LTE while China Mobile's dominance and size will keep it on TD-SCDMA for a long time and have 530M subs that is increasing by about 5.5M subs per month, possibly putting it at 600M subs by the end of the year.. Even with a vastly smaller percentage of smartphone users and people who can afford the iPhone it can't be ignored for too long.

Yeah, while in a way I sympathize with their desire to create a standard without licensing issues, they've taken very much a "command economy" approach with this. Why should any company adopt a standard that has been created largely in isolation and without agreement. Do they really expect Apple to take up the bother and expense of a new standard just for them -- even as they stick to a single standard everywhere else in the world (and even in the US where there are competing standards and the majority of their phone profits?)

Longterm planning suggests that TD-SCDMA is a better choice than CDMA2000. It looks like TD-SCDMA outpaced CDMA last year and CDMA2000 has even less subs as many carriers added 3GSM after CDMA or CDMA2000 to combat their limitations. I'd say that TD-SCDMA is likely to continue to grow and the "isolation" aspect is actually a benefit, not a hinderance, since the "isolation" is so incredibly vast* and looks to have a subscriber count larger than CDMA worldwide count.

* China is the 3rd largest country by land area and likely the largest by inhabitable land area with over 3,700,000 sq miles. China is also the most populace country on Earth with just under 1/5 of the world's population or 1,336,450,000 residents.

They dropped wi-fi to accomodate China so adding that chip might be doable.

Okay, sincere question: How many of you guys who've expressed support for worldwide standards would be opposed to Apple releasing an Verizon iPhone?

I'm not being snarky. I'm totally serious. It's the exact same issue: China Mobile uses a different signaling standard from what the iPhone uses, and so does Verizon.

Me? I wish the damn mobile carriers would just get together on this, so any device can (at least technically) work on any network. But that's kinda like saying that everybody on the planet should drive on the same side of the road. The fact is that they don't, and that changing things so they did would cost a fortune, so it won't happen fast no matter what.

Just to throw another random thought into the mix, ... Apple, like many other companies, has been pursuing the idea of an all software radio for some time.

The very underwhelming technology Apple ended up using in the iPad makes me doubt they have the chops to make this happen, but it would sure be nice. If the hardware could stay the same, and the software merely adjust itself for whatever network it happens to find itself on, then that seems like the Holy Grail of mobiles to me.

Don't do it, Apple!

There are different dynamics at play here. As previously stated China Mobile's subscriber numbers are larger and outpacing CDMA worldwide subscriber numbers.

Verizon pales in comparison to China Mobile's size and potential and they are making the move to LTE which will be part of the iPhone within a few years. China Mobile grew their base by 20% of the US population last year and this single carrier is almost double the size of the US' complete subscriber totals with a lot more growth expected. On top of that, they appear to be willing to work with Apple while Verizon does not.

Plus, I'd expect T-Mobile USA to get the iPhone before Verizon or Sprint simply because they are also GSM-based, only needing an extra radio chip to get the required 1700MHz spectrum for 3G. After that, I'd expect Sprint since they are desperate, with Verizon being last.

However, while I don't think Verizon will get the iPhone this year I would welcome it as it will increase sales tremendously, will shoot the stock price up overnight, will get some people off AT&T's stressed network and we'll get to see how Verizon can handle such a heavy data load.



On paper, it certainly seems better than the Qualcomm World-Mode chip, but I have to wonder how efficient a SW version would be over a HW version.

Maybe you are right about the technical viability of TD-SCDMA.
But Apple doesn't care about how many people live in China or how "superior" TD-SCDMA may or may not be. What they care about is sustainable providing a great user experience to their customers. The Venn diagram of TD-SCDMA customers and potentially profitable iPhone customers does not presently have much of an intersection. A lot of things would need to change before this could change. Apple tends to look at things with an eye to what is possible, desirable and likely, not what might, should, or could be.
Also population is not as important as income and spending habits. China is growing more prosperous, but its still a fairly poor country.

I am torn yet the side of me that is a very long term shareholder leans toward producing a one off phone for their market segment on the ground that there are iron clad numbers promised on the carriers end. You put in writing that you will buy 10 million phones the first year and we have a deal. Seriously it has to be a number that makes it worth apple's while to invest in a branch off of the iPhone, and if that is the case would we see verizon make the same kind of deal.

Let's face it after seeing what Windouche 7 mobile is bringing to the table (basically the same feature set apple first brought but with a shitty zune UI) and the flakiness of android (ask a droid user about their copy / paste haha) (not to mention lawsuits) apple is looking strong and stronger.

(or whatever the number happens to be)

I don't want to waste battery powering a "China chip".

Sounds to me like they're bargaining from a position of weakness, already losing half of their new subscribers. Why should Apple satisfy their demands when it can do nothing and continue selling iPhones to the rapidly increasing customer base of China Mobile's competitors?

For those who don't know how things go in China, China Mobile didn't have a choice to begin with. The government picked China Mobile the market leader to push the home-grown TD-SCDMA standard in the Chinese 3G deployment. The other two smaller carriers, China Unicom and China Telecom, were given the 3G licenses for deploying WCDMA and CDMA2000 systems, respectively.

So, everything was planned. The Chinese government wanted TD-SCDMA to be dominant in China while also supporting other standards to a certain extent (your iPhone 3G data access wouldn't work in China if no carrier deploys WCDMA there). The joke there was that China Unicom picked the best card in the government drawings to deploy WCDMA, the most widely used 3G system worldwide and the one used by iPhone.

I just don't believe that Apple is really refusing to make phones for Verizon or China Mobile just because they want a single set of models for all the world. It just makes no economic sense. Both Verizon and China Mobile are large enough to justify the investment.

I find it much easier to believe that:

1. China Mobile and Verizon are both making other demands that Apple finds unreasonable, either individually or as a package.

or

2. AT&T and China Unicom might have made deals with Apple that are very favorable to Apple and that neither China Mobile or Verizon are willing to match. For example, AT&T's pricing on the iPad data plan is pretty freakin' awesome.

Exactly, that was what I was alluding to when I mentioned the "command economy" approach. The nimble guys will always have the advantage over the BDI (big dumb incumbent.)

I'd be opposed to a Verizon iPhone and Apple bending in any way to utilise the China Mobile TS-SCDMA standard. All of the networks that chosen an outdated technology, need to quietly acknowledge they got it wrong and retrofit their stations to GSM.

One carrier developed their GSM network next to their CDMA infrastructure in around 12 months. Expensive? Sure. But they got on with the job and built a superb GSM network. Was there any interruption in service? No. Is the network far better now? Yes. Did the phone company remain profitable throughout the transition whilst the GSM and old CDMA network were in use before the CDMA one was switched off? Yes again.

The point I make is companies make capital investment decisions and sometimes they're wrong. The ones who customers should back are the ones who make these types of sometimes tough decisions but they do it anyhow because it has to be done.

One more point, it's common for companies to spend 10% or more of revenue on advertising. For Verizon and China Mobile the message is that instead of telling us that your coverage is great and you're a superior choice for millions, try working backwards and back-ending that expenditure into the network. Then let the results speak for themselves.

Apple only cares about money and the "great user experience to their customers" is just a means to that end.

They officially sold 200K iPhones in China last quarter. Now consider that the WiFi issue and gray market allowed many more to be sold unofficially. Now also consider China Mobile's desire for the iPhone and it being over 3.5x larger than China Unicom. Even with the facts you mentioned there is too much potential to ignore forever.

Perhaps you haven't noticed, but Apple has pretty much always only made a few of anything.
A few products-- iPod, iPhones, computers software, services.
A few lines -- Apple TV, Mac Mini, MacBook, MacBook Pro, Mac Pro, Mac Servers
A few SKUs in in each line -- entry, mid, advanced, pro
One OS (with slightly modified for Server, iPhone, iPod)
A small number of shared component families,
etc.

This is not just an esthetic or a marketing strategy (although its that too) its a strategic shoice that allows them to keep efforts focused, costs. confusion, and problems down, user experience and sustainability up, and engineering and support efforts managable.

They will not enter into complexity needlessly.

All true. But respectfully, that wasn't my intended point. To the extent that I had a point — albeit a painfully weak and only tangentially related one —*it was that there does seem to be a little bit of … I'm not even sure what to call it. Calling it racism is absurdly hyperbolic, and calling it nationalism makes it sound quaint … in addition to being hyperbolic. Maybe call it short-sightedness. I was curious whether anybody out there held the position that Apple needs to get on Verizon for the US market, but that China Mobile can go swing, and if so, why.

Not everything is technological in nature. Sometimes the question of whether a company should make compromises to sell into China has social or even political dimensions that dwarf the Mr. Spock logic of the situation.


Not sure who you're referring to here. Are you talking about AT&T? They bought Cingular, which had previously been Southwestern Bell Wireless, which had a CDMA network. I remember it well, because I was a long-time Southwestern Bell Wireless-then-later-Cingular customer when the buy-out happened. It was actually kind of an awful experience. AT&T maintained separate networks (code-named "blue" for GSM and "orange" for CDMA). They had separate price structures for GSM and CDMA customers, would only honor advertised bargains for GSM customers, even had entirely separate customer service databases. There were many, many times I called up with a problem or question and had to sit on hold for many minutes while they went down to the basement and found the musty orange file folder with my name on it, or whatever they had to do.

I wanted out badly, mostly because at the time the whole idea of "rollover minutes" was a new thing, and AT&T was offering the option …*but only to their GSM customers. As a CDMA customer, I couldn't get it. I had to pay more per month for fewer minutes on my account. What about switching to a GSM account, I asked? Not only did they want to charge me full retail price for the new phone I'd have to get, they wanted to charge me a cancellation fee to get out of my then-current CDMA contract! All so I could start another contract with the same company!

It was a mess. I finally got out of it when the iPhone was announced. By that time my contract had finally expired, and AT&T (expecting people to do just what I did) had a system in place to move existing CDMA accounts over to the GSM system. It took several hours, but my iPhone bleeped at me later that day and told me I was all set. I've been a very satisfied AT&T customer ever since.

Transitioning from one established standard to another is hard. But I really wish it could happen across the globe. I mean, the situation right now is like there are two major Internet protocols, and you can't use them both from one computer. You have to either buy this type of laptop or that type of laptop, and neither can connect to the other Internet. And if you happen to move from a town where one type of Internet is most common to a town where the other type is most common, well screw you, you're going to have to buy a new laptop. It stinks.

And that goes for China Mobile as well as Verizon.

Again, you miss the point that sheer numbers of subscribers don't necessarily scale to iPhone customers. Potential iPhone customers will go to the iPhone carrier. Potential iPhone customers are likely to want iPhones that work anywhere. Just as potential iPhone customers are likely to want Wifi (how'd that work out?)
And again, look at the growth trend, not the current size, China Mobile is losing market fast to the little guys.

I totally agree. Companies say all kinds of things about how hard this that or the other thing is and they simply shouldn't be believed for the most part. It's their job to spin the PR, not to give consumers the straight poop on anything.

In Canada for instance, when the iPhone arrived (a year later than the USA), it was only on two of the main five carriers and those two were essentially the same company anyway. Now, less than two years later, the other three companies have changed to GSM from CDMA and the conversion is almost complete. I have a choice of five (technically four) carriers and the iPhone is carried by all.

I don't understand why it takes so long in the USA, but this isn't really that hard of a thing to do IMO.

yes, yes, I know all that. But i'm not talking about introducing 13 SKUs of Performa iPhones in a misguided attempt to appeal to slightly different demographics.

Apple has shown that they are perfectly willing to add products if there's a market for them. Look at the MacBook Air -- that is essentially a niche product. So is the AppleTV. The volume (and revenue and profits) of iPhones that could be sold on Verizon or China Mobile completely swamps what Apple sells in AppleTVs or MacBook Airs.

The cost advantage that you're talking about is just too small to justify giving up the potential profits. There has to be another explanation.

1) I addressed the point by using in-country numbers that will likely scale fairly evenly across the either carrier.

2) You do know the rate and likelihood that a Chinese resident will travel outside their country? It's less than the US yet Verizon is quite popular in the US. How 'bout them Apples?

3) As perviously stated, China Mobile gained an average of 5.5 million subs for each month in 2009. By comparison, Verizon only added an average of 0.7M subs each month for the last quarter.

Yeah, everyone thinks that. Maybe Motorola or Nokia will capitalize on this horrific mistake Apple is making.

Apple's wake is littered with the unprofitable remains of product lines or even whole companies who thought Apple was missing "important potential profits."

If restraint weren't subtle and elusive everyone would have it.

Word!

The increased YoY sales with the next iPhone (even if they lose marketshare), the increased NAND capacities and other products, makes me wonder that if there is a lack of expansion going into the 4th year, that it might be due to the rumoured NAND constraints. I suppose we'll have to wait and see.

1) So you say, but then where's your proof that they will scale?

2) I realize the travel thing is a small factor, but: You do know the "rate and likelihood that a chinese citizen" can afford to buy an iPhone? (it may well coincide with the few wealthy chinese who incidentally are much more likely to travel to Hong Kong, Europe, or the US (or *aspire* to do so.))
I assure you Americans who regularly travel abroad with their cell phones don't choose Verizon for their service.

3a.) Zillions of mobile phone customers do not equal smart phone customers. Stop pretending they do.
3b.) And yet the iPhone with just ATT is pulling down huge profits in the US and ATT is even smaller than Verizon!
Try comparing China Mobile subs growth rate with China Unicom subs growth rate. That's more interesting.

It won't happen. This proprietary version runs counter to Apple's current legal dispute with the non-proprietary consortium.

This won't happen.

1) Prove that it won't, I've already pointed out why it likely would.

2) NOT traveling is a "small factor" yet you claim that 530 MILLION subs won't buy an iPhone on China Mobile because it won't be compatible outside China?!?! Then you are argue that the Chinese can't afford iPhones despite the reported millions that have been sold, their growing 3G networks and economy and middle class? Finally, you jump into some odd argument about Americans and Verizon despite this being about the relevance of China's mobile market?!?!?!? WTF? I used numbers to break it down in more manageable chunks so please stay on topic.

3a) Neve said they do, which is why I also listed sales figures and stats that back up the potential for an iPhone on China's largest carrier. If you have evidence to support that China Unicom customers who use the iPhone are exceedingly likely to travel outside China then by all means post it.

3b) Apple would profit greatly from a CDMA-based iPhone. It's silly for you to think that they wouldn't

4) While g, what is the growth rate? I see China Unicom is adding considerably less new subs than China Mobile. Did you miss the part where they are 3.5x larger than the next largest carrier and are reported to be going 'to' Apple?