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Apple, China Mobile talks for iPhone break down

post #1 of 13
Thread Starter 
China Mobile will not carry Apple's iPhone after the two companies failed to reach a deal to bring the device to the populous Asian country.

The breakdown has been given only the briefest of confirmations by the Chinese provider, which counts more than 350 million subscribers -- more than the entire US population.

"Our parent has terminated talks with Apple over the iPhone," a China Mobile spokeswoman says.

The news appears to substantiate claims late last year that Apple has been struggling to land deals for the iPhone in China. At the time, Apple was reportedly at an impasse over its insistence that any carrier share its monthly subscription revenues -- an income split that has allegedly encountered opposition in multiple countries but may be particularly insurmountable in China, according to reports.

"The two have very strong egos and, as in any relationship, that often doesn't work," says research firm BDA China's chairman, Duncan Clark.

Concerns may also exist over Apple's tendency towards deals that require a locked SIM (subscriber information) card, which would prevent Chinese iPhone users from jumping between networks either in the country or while traveling.

Apple is not limited to considering China Mobile and may instead entertain a deal with its next-largest option, China Unicom. The firm said last year that it was not committed to the iPhone but was receptive to the possibility of supporting the iPhone.
post #2 of 13
Sheesh, more unwelcome FUD. Talks have been suspended, for now. They can be resumed at any time. Meanwhile, deals are being worked out with other countries and perhaps with China's other carrier. The iPhone will be sold in China--it's just a matter of when, not if.

Hey, it's Macworld eve. Time for Kaspar's automated slave to give it a rest. How 'bout speculating about this "Something in the air" stuff. Is Temporary Insanity active?
post #3 of 13
China is tough to negotiate with when you're selling (not buying). Apple is discovering that. This one might be tougher than US and European telecoms.

It will be really interesting to see how this pans out. Tough to predict. However, if Apple is genuinely playing hardball with China Mobile, that might imply that the 3G version is coming out sooner rather than later.
post #4 of 13
Quote:
Originally Posted by Rolo View Post

Sheesh, more unwelcome FUD. Talks have been suspended, for now. They can be resumed at any time. Meanwhile, deals are being worked out with other countries and perhaps with China's other carrier. The iPhone will be sold in China--it's just a matter of when, not if.

Don't be stupid. It's not FUD. That's actually what happened: the talks have been terminated.

Don't expect Apple to shove down products down the throats of Chinese people like Apple does to Americans. China doesn't need fashion-y gadgets when it has its own industrys' products which cost far less.
Fragmentation is not just something we have to acknowledge and accept. Fragmentation is something that we deal with every day, and we must accept it as a fact of the iPhone platform experience.

Ste...
Reply
Fragmentation is not just something we have to acknowledge and accept. Fragmentation is something that we deal with every day, and we must accept it as a fact of the iPhone platform experience.

Ste...
Reply
post #5 of 13
If word got out that Apple gave another company an easier deal, they would lose clout with other phone companies in the future. They're just trying to leverage their position.
post #6 of 13
I hate protectionist countries. Please buy everything from us [toys, plastics, steel, etc] but ohh we can't let you buy more than 22.348% of this industry or let you sell this product here. I'm not advocating trade war but apple could fight back by hinting that it will not produce or assign products to be made in china but will farm out production of apple products to india? russia? I know, why would china telecom or anyone care about chinese manufacturers-- they won't but some highly place minister should care enough to call someone to the cabin for a talk....



Proud owner of iphone designed by apple in california/assembled in china
post #7 of 13
Quote:
Originally Posted by anantksundaram View Post

China is tough to negotiate with when you're selling (not buying). Apple is discovering that. This one might be tougher than US and European telecoms.

It's true that the Chinese are hardball negotiators, but nothing beats The Steve... nothing.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #8 of 13
Just a negotiation tactic. Look for their talks to resume within a month.
post #9 of 13
share revenue with China Mobile who already owns 70% of the chinese market? Apple is dreaming, and has no bargining power in this negotiation at all. China Mobile does not need iPhone, they will keep gaining its market share with or without Apple.
post #10 of 13
Quote:
I hate protectionist countries. Please buy everything from us [toys, plastics, steel, etc] but ohh we can't let you buy more than 22.348% of this industry or let you sell this product here. I'm not advocating trade war but apple could fight back by hinting that it will not produce or assign products to be made in china but will farm out production of apple products to india? russia? I know, why would china telecom or anyone care about chinese manufacturers-- they won't but some highly place minister should care enough to call someone to the cabin for a talk....

This has NOTHING to do with protectionism. Especially being as the phones are MADE IN CHINA. Verizon said no to the revenue sharing as well, does that make the US protectionist?!? Apple is dealing with China Mobile not the Chinese government. State owned yes, but it is not the state.
post #11 of 13
None of you seem to have much idea about the mobile phone market in China which given that you likely don't live or haven't been here, is not surprising. Some facts that might be helpful for you in thinking about China/iPhone issues:

1. The iPhone can be purchased here now, today - unlocked, jailbroken and preloaded with Chinese character entry capabilities for approximately $550 USD - albeit this is through the gray market. It's become somewhat common place to see iPhones in-and-around Shanghai and other major cities.

2. The contract to prepaid ratio is something on the order of 1:4

3. Almost all phones are largely purchased unlocked and this is done separately from contractual obligations (if they exist at all).

4. For the upper-mid-to-high-end consumer, paying the equivalent of 300+ USD for a phone is not considered an issue and they do this at a stunningly frequent rate - it's a fashion/status statement. This concept has just come to North America in the last couple years (sorry, don't have hard statistics at hand for this)

5. China Unicom is far far far smaller than China Mobile - something like 1/3rd the size of China Mobile - has a split between GSM and CDMA (split something like 2/3 to 1/3 of subscribers) and is in a bit of an unstable situation with possibilities of merger/takeover by one of the fixed line operators.

6. There is no 3G network and other than rolling some sort of service out to support foreign travelers during large events like the '08 Olympics and '10 Expo, there seems to be no rush to do so. All official press I've seen have indicated they'll skip 3G in any meaningful way and/or they're doing something strange with a China-made standard called TD-SCDMA.

7. For comparison purposes, it might be useful to look at how Blackberry service has/has not been rolled out here. You've been able to roam using an international plan since they launched GPRS. After several years negotiation, it finally launched about 1 year ago and featured 1-2 product cycle old phones. Haven't seen any statistics for adoption yet but I don't expect they'd be that high.

Hope this helps a bit.
post #12 of 13
Quote:
Originally Posted by moresmarterthanyou View Post

None of you seem to have much idea about the mobile phone market in China which given that you likely don't live or haven't been here, is not surprising. Some facts that might be helpful for you in thinking about China/iPhone issues:

1. The iPhone can be purchased here now, today - unlocked, jailbroken and preloaded with Chinese character entry capabilities for approximately $550 USD - albeit this is through the gray market. It's become somewhat common place to see iPhones in-and-around Shanghai and other major cities.

2. The contract to prepaid ratio is something on the order of 1:4

3. Almost all phones are largely purchased unlocked and this is done separately from contractual obligations (if they exist at all).

4. For the upper-mid-to-high-end consumer, paying the equivalent of 300+ USD for a phone is not considered an issue and they do this at a stunningly frequent rate - it's a fashion/status statement. This concept has just come to North America in the last couple years (sorry, don't have hard statistics at hand for this)

5. China Unicom is far far far smaller than China Mobile - something like 1/3rd the size of China Mobile - has a split between GSM and CDMA (split something like 2/3 to 1/3 of subscribers) and is in a bit of an unstable situation with possibilities of merger/takeover by one of the fixed line operators.

6. There is no 3G network and other than rolling some sort of service out to support foreign travelers during large events like the '08 Olympics and '10 Expo, there seems to be no rush to do so. All official press I've seen have indicated they'll skip 3G in any meaningful way and/or they're doing something strange with a China-made standard called TD-SCDMA.

7. For comparison purposes, it might be useful to look at how Blackberry service has/has not been rolled out here. You've been able to roam using an international plan since they launched GPRS. After several years negotiation, it finally launched about 1 year ago and featured 1-2 product cycle old phones. Haven't seen any statistics for adoption yet but I don't expect they'd be that high.

Hope this helps a bit.

THANK YOU!!!!!

Finally someone clears the conjecture with the truth.

Except I'll argue with point #3. 100% of phones in China are sold unlocked, not "almost all". As the article says this may be a sticking point in the negotiations. China Mobile knows the Chinese public won't accept this, so they think the phone will sell far less than Apple thinks if it's sold locked.
post #13 of 13
Quote:
Originally Posted by tonton View Post

THANK YOU!!!!!

Finally someone clears the conjecture with the truth.

Except I'll argue with point #3. 100% of phones in China are sold unlocked, not "almost all". As the article says this may be a sticking point in the negotiations. China Mobile knows the Chinese public won't accept this, so they think the phone will sell far less than Apple thinks if it's sold locked.

Sorry - was a bit unclear in what I wrote - was referring more to the contract issue than the locking as there are some phones offered only at China Mobile retail stores that were subsidized w/ a contract commitment.

Also, one other thing to consider that I didn't mention is the current LACK of number portability. This is a big disincentive for people who would be faced with a change of carrier to get the iPhone. People put a lot of value on having "a good number" and will not give it up easily.
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