Various issues expected to delay iPhone debut in China

China Mobile chief executive Wang Jiangzhou said Tuesday his company is in talks to carry the iPhone, but telecom executives familiar with the discussions say a number of contingencies on Apple's part are likely to prolong the process.

Specifically, there's a precedent among Chinese telecom operators that they do not, under any circumstances, agree to share their revenues with outside parties, as Apple has requested of and achieved from all of its iPhone partners thus far.

"[O]ur business model does not entail sharing revenue with terminal producers — we don't share revenue. That's a Chinese rule," one executive told Reuters on condition of anonymity. "All it is right now, on the iPhone and Apple, is that the firm welcomes their approach."

Secondly, and possibly more crucial, is the fact that iPhones might be incompatible with the Chinese market because of their "locked" SIM cards — meaning the device would not be able to piggyback on another operator's network.

"You have to realize Chinese SIM cards are not locked up, as the iPhones' are," the executive said.

Still, word of the talks sent shares of China Mobile, which has 349.6 million subscribers, as well as smaller rival China Unicom, which caters to 156 million users, soaring on Tuesday. China Mobile shot up 9.23 percent to close at HK$140.80 ($18.08), while China Unicom Ltd. rose 6.19 percent to HK$15.44 ($1.98).

And while China Unicom said it it has no immediate plans to bring the iPhone to China, it remains open to the idea.

"Right now, we don't have any plans to introduce Apple's iPhones in China," Unicom Executive Director Li Zhengmao told reporters on Wednesday. "But of course, we're always willing to discuss a good business opportunity if it presents itself."

Zhengmao said he could not predict whether the iPhone would gain widespread adoption in China, but said it would need to support text messaging in Chinese language to be accepted.

At (US)$400, the Apple handset also currently costs more than the average monthly salary in China.

Apple has said it hopes to launch iPhone in parts of Asia in 2008.

24 Comments

rawhead 21 Years · 89 comments

About 17 years ago

How can SIM lock be an issue, when everything points to the iPhone being released unlocked in France very soon?

melgross 20 Years · 33622 comments

Quote:

Originally Posted by rawhead

How can SIM lock be an issue, when everything points to the iPhone being released unlocked in France very soon?

I know. If the rules are their, Apple must follow them. But if this isn't law, then it would be subject to negotiations.

I think the revenue sharing is the bigger issue.

I've been concerned that it will trip Apple up over the long term.

g5man 18 Years · 91 comments

Originally Posted by melgross

I know. If the rules are their, Apple must follow them. But if this isn't law, then it would be subject to negotiations.

I think the revenue sharing is the bigger issue.

I've been concerned that it will trip Apple up over the long term.

I am not so sure. I imagine the iPHone can still sell well without China and Apple can grow in its Mac share without China. At least for the next 5 years.

The world market alone is much bigger then China. An agreement without revenue sharing will decrease apple's negotiating power in the rest of the world.

So the Chinese will have to just keep buying unlocked phones in the mean time.

ak1808 18 Years · 94 comments

They are releasing these statements to puff up their "negotiation power". Makes total sense.
Three months ago "European network providers" called Apple "arrogant" and their demands "ridiculous" in the press.

And now? Everybody is happy.

I don't know whether Apple will make a step towards them or they towards Apple, but it is clearly all rhethoric at this point. Of course they will share the revenue, and sell locked SIMs, if the deal is sweet enough for them!