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No talks held between Apple, China mobile over current iPhone

post #1 of 16
Thread Starter 
Contrary to earlier reports, Apple and China Mobile have not yet entered into negotiations to bring the iPhone to the world's largest mobile network, suggesting such talks are only likely closer to the release of a 3G version of the touchscreen handset later this year.

"We have not yet officially begun talks with Apple over the iPhone problem," China Mobile Chief Executive Wang Jianzhou told a group of reporters this week. "As long as our customers want this kind of product, we will keep all options open."

In January, Reuters cited a spokesperson for the Chinese carrier as saying that the two firms had "terminated talks," a notion later disputed by Apple chief executive Steve Jobs, who insisted that those reports were simply untrue.

Separately, AppleInsider has heard rumblings that such negotiations are only likely to manifest closer to the release of a 3G-equipped iPhone, as Apple will reportedly forgo any plans to launch the slower, first-generation handset in the vast and competitive Chinese market at current pricing.

As of last month, China Mobile maintained a subscriber base in excess of 375 million -- more than the population of the United States and by far the largest in the world. Additionally, its said to be providing service to some 400,000 first-generation iPhones that have been unlocked and smuggled into China for those subscribers unwilling to wait on official availability.

Still, several obstacles are expected to stand in the way of an official iPhone rollout in China, mainly that the device currently fetches more than twice the monthly salary of the average Chinese worker, and that Chinese carriers such as China Mobile are unlikely to see eye-to-eye on Apple's revenue sharing demands.
post #2 of 16
Oh boy. 375 mil. I didn't realize....wow.
post #3 of 16
What kind of networks do they currently have?

Do they also stream television like the Japanese networks?

Do they offer unlimited data for a reasonable price?

Does the vast size of the market indicate Apple is more likely to give in -or- that fact that 1/10th of all iPhones sold last year were run on China's network mean the carriers are more likely to give in?

While the majority of population can't afford such a device, what percentage of the population can?

How important are status symbols to the Chinese?

I think Nvidia2008 is in China. Anyone else with knowledge of the market abel to answer my questions?
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post #4 of 16
In other news:

No brown iPod nano announced
iTouch not released
No further delay on iPhone SDK

post #5 of 16
Quote:
Originally Posted by solipsism View Post

• What kind of networks do they currently have?

• Do they also stream television like the Japanese networks?

• Do they offer unlimited data for a reasonable price?

• Does the vast size of the market indicate Apple is more likely to give in -or- that fact that 1/10th of all iPhones sold last year were run on China's network mean the carriers are more likely to give in?

• While the majority of population can't afford such a device, what percentage of the population can?

• How important are status symbols to the Chinese?

I think Nvidia2008 is in China. Anyone else with knowledge of the market abel to answer my questions?

While I don't remember the details about the service I read in a WSJ article a few weeks ago about this, I do remember that it said that the Chinese buy very expensive phones, and that price is not much of an issue. We can see the truth of that by the fact that over 400,000 iPhones are already in their hands. That's without the 3G, and at much higher prices than they would otherwise cost if imported legally.

I wouldn't be surprised if the Chinese could (would?) be the largest market for them.

As far as negotiations go, from my own experience in business over 35 years, I can say that companies negotiate informally all of the time, and then deny they are in talks. That's easy to do if the talks haven't risen to a formal level. It's very doubtful that they and Apple haven't also been informally talking. There is no way that both could wait until just before a 3G model comes out before commencing talks. That would put too much pressure on both sides to come to a quick agreement.

As both do know that this 3G model is coming out, and no doubt have communicated about when it will happen, there isn't even a reason not to have been talking. I simply don't believe either side if they say they haven't been feeling each other out about this, as it would be a very large deal for both. I also believe the report that said that China Mobile didn't revenue share. This will likely be the sticking point.

Status symbols are very important there. At this point in time, with a rapidly increasing middle and upper middle class, an expensive phone is one of the cheapest status symbols available. Foreign products are desirable, as they are everywhere, and because they are exotic. The Chinese are only, in the last few years, seeing large amounts of foreign products. Interestingly enough, even though they are made there, they are still an american product, and the Chinese are fascinated by America. Other than the Cold War, the US has not had the adversarial relationship with China that other world powers had over the past few centuries, so thinking about the US is different than it is for the Colonial Powers.
post #6 of 16
To support my contention that Apple and China mobile have been talking, despite denials, this article in ARs has a quote from a CM official, Chief Executive Wang Jainzhou (who should know):

"We have not yet officially begun talks with Apple over the iPhone problem."

Note the word "officially".

Article:

http://arstechnica.com/journals/appl...open-to-iphone
post #7 of 16
I personally think that Apple should not even bother with China. It will just be one more step towards China overtaking the world market and America's economy going in the toilet.
post #8 of 16
Quote:
Originally Posted by Crtaylor View Post

I personally think that Apple should not even bother with China. It will just be one more step towards China overtaking the world market and America's economy going in the toilet.

The US selling a Chinese-made cell phone back to the Chinese at a highly inflated price will do this?
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post #9 of 16
Quote:
Originally Posted by Crtaylor View Post

I personally think that Apple should not even bother with China. It will just be one more step towards China overtaking the world market and America's economy going in the toilet.

That's a serious remark?

On what logic is it based?

You do realize that if Apple doesn't sell there, everyone else will anyway, no matter where they come from. With Apple selling there, the profits come back here.

It's the same thing that Japanese, and European auto makers do. They make a good deal of the cars they sell here, here. But the profits go back to where they are incorporated.
post #10 of 16
I am surprised the story said the phones are "smuggled" and a poster said illegal phone. Why is the iPhone contraband or is this a case of more FUD
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post #11 of 16
Quote:
Originally Posted by AppleInsider View Post

Contrary to earlier reports, Apple and China Mobile have not yet entered into negotiations to bring the iPhone to the world's largest mobile network, suggesting such talks are only likely closer to the release of a 3G version of the touchscreen handset later this year.[/url][/c]

Considering China has no 3G, and hasn't awarded any licences* to even built a 3G network yet I doubt this is the case. The 3G version of course will work there but will fall back to EDGE speeds.

China may skip 3G and commercially launch LTE (4G) in 2010, considering China Mobile is conducting trials next year with Vodafone and Verizon. AT&T has also chosen LTE as well as all of Europe's carriers.

And of course, Apple is on the GSM-LTE roadmap too.

Quote:
Originally Posted by solipsism View Post

• What kind of networks do they currently have?

THe have two nationwide GSM-standard networks (the current iPhone works on these). They also have a CDMA network.

* They have given out one license to cover central Beijing before the Olympics start. (So visitors can use it)
post #12 of 16
Quote:
Originally Posted by Crtaylor View Post

I personally think that Apple should not even bother with China. It will just be one more step towards China overtaking the world market and America's economy going in the toilet.

As others have noted, this is an absurd notion.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #13 of 16
Quote:
Originally Posted by retroneo View Post

* They have given out one license to cover central Beijing before the Olympics start. (So visitors can use it)

Speaking of, it would be a sorely missed opportunity if Apple wasn't selling the iPhone in the China before August 08th.
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post #14 of 16
Quote:
Originally Posted by solipsism View Post

What kind of networks do they currently have?

2 x GSM, 1 x CDMA. GSM is vastly more popular, specifically China Mobile's service. There is GPRS data access altho it's unclear at what speed. The view of 3G seems to be one of "support it enough to let traveler roam here" but that's about it at this point.

Quote:
Do they also stream television like the Japanese networks?

No.

Quote:
Do they offer unlimited data for a reasonable price?

No, although there are some somewhat acceptable packages for bulk usage.

Quote:
Does the vast size of the market indicate Apple is more likely to give in -or- that fact that 1/10th of all iPhones sold last year were run on China's network mean the carriers are more likely to give in?

China Mobile - the largest network - does not have a history of doing collaborations with phone manufacturers with the exception of RIM which just began to offer native Blackberry service last year. Keep in mind that the vast majority of phones are sold through non-carrier stores and channels. You buy an unlocked phone, put in a SIM card, there you go.

Quote:
While the majority of population can't afford such a device, what percentage of the population can?

I don't have an exact number on this but I would enough to make it a larger market than any of the EU markets.

Quote:
How important are status symbols to the Chinese?

Very.

Quote:
I think Nvidia2008 is in China. Anyone else with knowledge of the market abel to answer my questions?

There you go. I wrote some stuff in another China Mobile thread here about a month ago - that has more statistics if that's your thing. Don't have the time to look for the link but you can look it up.
post #15 of 16
Thanks, Moresmarterthanyou. As well as Melgross and Retroneo.
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post #16 of 16
Clearly, 375 million Chinese can't all afford an iphone but neither can 350 million Americans but that's not really the issue - the issue is that China is MASSIVE. I was in Shanghai and we went out to the country/the small city for the weekend - 6 freakin' million people live in the "small city" So, even if only 50 million CHinese can afford an iphone this year, you can do that math.

Right now, it is a status symbol on two levels, it's expensive and it's not quite kosher (it's not really illegal) and not even technically "smuggled" though that adds cachet to it.

In most places, Apple had the upper hand in negotiations, most places are growing cell users at a slower rate - mostly cannabalizing from others so of course, if Apple (or anyone's device) can bring in 10% more users, they're willing to shell out a few ticks of the monthly take because the opposing viewpoint is ZERO plus the bump in revenue ... in China, that's not really the case - the new middle to upper middle class is growiing in leaps and bounds so they don't really want to shell out anything because people are lining up to buy ... while there is some protectionist feelings (why Japan & Korea cell companies have not signed up), it's not as strong of a reason why Japan & Korea have not.

And yea, in China, a bunch of the internet is blocked so EDGE-like speeds or 3G is not the dealbreaker here ... when I say blocked, it's hard to quantify, it's not obvious in most cases - things just give the appearance of loading and then not so you could balme the line itself ... the bottom line is really - they don't Apple just yet and frankly, they have to do work also - visual voicemail, link to itunes, blah, blah blah ...
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