So the iPhone isn’t coming to China. At least not for now, and not with China Mobile.
The telecom giant and Apple were rumored to be in talks since November. Come January, details of a China iPhone began to emerge: It would be out in the second quarter of 2008, priced RMB4,000 (US$550). The Apple faithful in China must have been thrilled.
Alas, it was not to be. Not long afterwards, China Mobile said it had “terminated” talks with Apple. The sticking point was money. According to unnamed sources cited in press reports, Apple wanted 20-30% of user fees from iPhone users and China Mobile said no.
Such an impasse was predictable. Apple boss Steve Jobs isn’t known for his diplomacy.
China Mobile, of course, is the biggest player in the world’s biggest mobile market, with 370 million subscribers and a market cap of US$310 billion. It is also state-owned, which immediately puts it at odds with a maverick like Jobs. China Mobile chairman Wang Jianzhou earlier hinted at this when he said, “Our customers like this kind of product. The biggest issue is the business model.”
But let’s be clear on something: iPhones are readily available in China. But they’re “gray-market” goods: Hacked by enterprising vendors so that they can be used with any SIM card, not just the ones from telecom firms Apple have made an agreement with.
Apple may have fallen out with China Mobile, but an officially released iPhone in China remains a distinct possibility. Unfortunately, it’s tied to that mythical creature: 3G. An industry restructuring, designed to rein in China Mobile’s power and create three telecom entities, each with mobile and fixed-lined divisions, is said to be in the cards. This will coincide with the handing out of 3G licenses, and, supposedly, the Olympics.
Apple would find a more willing partner in, say, a China Telecom with a newly minted mobile license. There’s also China Unicom, which already runs a GSM network. Apple siding with one of the smaller players could be just what the party ordered for a restructuring.
Still, one wonders how useful an iPhone would be for Chinese users. Text-messaging is popular here, yet SMS forwarding came late to the iPhone. Meanwhile Apple’s focus on delivering content via the internet through its iTunes store and wireless connections, is at odds with China’s computing environment. Wi-Fi networks are not widespread, and there is no iTunes Store available to users in China.
If Apple is serious about China, it has to make concessions to the business and user environments of developing nations. The Apple lifestyle is aspirational, but money is only made when it‘s within the reach of consumers.