No Apple iPhone released in China in 2009?

The following articles highlights the difficulty to introduce legal iPhone in China.

From http://tmt.interfaxchina.com/news/1295

Beijing. February 9. INTERFAX-CHINA - China Mobile's insistence on administering the online sale of iPhone applications caused the breakdown of the operator's talks with Apple over bringing the iPhone to China, a source at the China Mobile Research Institute told Interfax recently.

The source, who wished not to be identified, said that Wang Jianzhou, president of China Mobile, revealed details of China Mobile's talks with Apple on a recent visit to the institute.

Wang said China Mobile had undergone three rounds of talks with Apple officials, including Apple CEO Steve Jobs and COO Tim Cook, over an 18-month period, according to the source.

In the first round of negotiations, Apple asked for between 20 percent and 30 percent of China Mobile's revenues from iPhone users, which was rejected by China Mobile, the source said.

In the second round, Apple offered to sell iPhones to China Mobile at $600 per unit and required that China Mobile subsidize iPhone service bundles offered to users. Again, the two parties failed to reach an agreement.

The third and final round of negotiations also broke down over Apple's insistence that it, rather than China Mobile, sell iPhone applications directly to customers via its online store. Wang saw the offer as a threat to China Mobile's dominance of China's mobile Internet industry, as Apple rather than China Mobile would collect money directly from customers under the deal.

"Wang said China Mobile should operate the application store itself in order to maintain its advantage," the source said.

Wang also pointed out that iPhone users in other parts of the world pay for applications by credit card, a model which would not be successful in China, where users prefer to pay through deposits in their mobile phone accounts. Under the latter arrangement, China Mobile would have to play a part in administering the purchase of iPhone applications in China, the source said.

Wang said during the negotiations that China Mobile is mapping out its own strategy to offer applications for smartphones, according to the source.

I have always indicated that it is highly unlikely for Apple to focus precious development $ on a non-UMTS based device. China Unicom although is only 1/2 the size of China Mobile but it is almost twice the size of Verizon Wireless (from subscriber base perspective). China Unicom uses UMTS access technology and is consistent with current iPhone support (except for some simple tweaking of spectrum bands). This is now becoming much more likely to happen. According to ChinaTechNews, agreement has been reached although no public announcement has taken place.

More info

David, those China Unicom specs are probably the strongest evidence we have so far for a real deal.

Two other tidbits that I want to offer to the discussion:

Shanzai iPhones: http://www.nytimes.com/2009/04/28/technology/28cell.html

Imported iPhones: A Chinese student I talked with last week said she is going back home soon, and bringing 10 iPod Touches for friends to sell at a markup. They're expensive, but she says they are a hit. I've actually tried the Chinese character input, and it's not bad.

Clearly there's a demand, which puts pressure on Chinese carriers and Apple. Moreover, Apple obviously wants to get a foothold in the world's biggest mobile market, so I can't see the negotiations being abandoned. It's a question of who caves first on the details. Who has more to gain/lose?

Ian Lamont
Managing Editor
The Industry Standard
twitter.com/ilamont

The timing would be right for an interesting WWDC announcement.

Ian Lamont
Managing Editor
The Industry Standard
twitter.com/ilamont

Merrill Lynch expects the iPhone to go on sale in China on October 1-
http://tech.yahoo.com/news/nm/20090619/tc_nm/us_apple_unicom

Deals in China is never certain. Lots of political wrangling, bribery, back-alley deals and Intellectual Property issues. It is well known to reverse engineer and sell clones without much retributions.Merrill Lynch merely assumes an expectation of a deal to coincide with launch of 3G service in China. Not really that strong of an argument in my opinion.

Conflicting rumors and denials on a Fortune blog:

http://brainstormtech.blogs.fortune.cnn.com/2009/07/28/chinas-iphone-dea...

Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard

Unicom denies 5M iPhone purchase rumor

http://www.reuters.com/article/technologyNews/idUSTRE57Q0NY20090827

The iPhone will be released in China this year, therefore rendering a negative judgment. Details here:

http://www.thestandard.com/news/2009/08/28/china-unicom-sell-iphone-next...

Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard

That was quick!

Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont