The release of the iPhone in June 2007 had technology enthusiasts and fashion-conscious mobile phone users camped out at stores to get their hands on the new units. Similar sights of long lines and tents on sidewalks are unlikely to greet China Unicom when it officially releases the iPhone in China later this year.
It’s not that China doesn’t have tech enthusiasts or fashion-conscious mobile phone users. The problem is they’ve been waiting too long. Negotiations with Apple began in 2007, and an agreement was only signed at the end of August. Many of China Unicom’s potential customers already have iPhones, bought on the gray market soon after units appeared in the US.
According to BDA China, upwards of 1.5 million iPhones are in use in China. Users have paid a markup for the privilege – iPhones cost as much as US$680 at electronics markets in China compared with prices as low as US$199 for an iPhone 3GS with a service plan in the US – but people got what they wanted. China Unicom hopes to attract more customers with its plan to subsidize the cost of handsets, though it has yet to release pricing details. A subsidized handset may appeal to people who found the gray market phones too expensive but want the latest status symbol.
But China Unicom won’t be able to hold on for long to the claim of being China’s only mobile carrier to officially offer iPhones. China Mobile has said that it is in talks with Apple about reaching an agreement to carry the handsets.
China Unicom may be the only carrier with a WCDMA third-generation (3G) mobile phone network compatible with 3G iPhones at present, but don’t expect a technological barrier to stop China Mobile from marketing the phone if it reaches a deal with Apple.
China Mobile is also the country’s leading mobile phone carrier. Its subscribers may be more willing to buy iPhones if they don’t have to give up their existing China Mobile accounts or get stuck in contracts with potentially unfavourable terms from China Unicom.
China Mobile isn’t China Unicom’s only problem when it comes to the iPhone. Domestic mobile phone handset companies, including Dopod, the distributor for the Taiwanese handset manufacturer HTC, and Lenovo, have released smart phones with interfaces very similar to the iPhone. Furthermore, some competing models beat the iPhone on features. HTC’s upcoming Magic may cost more than the iPhone – media reports say it will retail for RMB5,000 (US$733) – but it will have something the iPhone lacks: wireless internet (WiFi).
The lack of WiFi will be a key marketing challenge for China Unicom. One of the appeals of a smart phone is the ability to connect to wireless local area networks to surf the web, check email and easily download new applications. Removing WiFi could hurt the appeal of the iPhone and hit sales.
China Unicom will certainly raise its brand profile on the back of the iPhone’s official launch in China, but it’s unlikely to attract many new subscribers. In the end, all the negotiating to reach an iPhone deal may not have been worth it.