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Let them use Windows Mobile!

Consider it payback.

I China mobile the only Telco in China? If so Apple might consider a gray market strategy using Taiwan, Korea, Hong Kong, etc. to funnel unsubsidized iPhones into China.

Feb 09, 09 - 10:31 am Comment from: Tommy Boy

How would a gray market strategy benefit Apple at all?

Feb 09, 09 - 10:44 am Comment from: ElderNorm

MDN says " China Mobile obviously doesn't get it at all."

Apple does not get it. China is still a communist country and individual rights DO NOT EXIST. Period. Apple wants control in a country where only the govt. has control (and deadly control at that).

Just a thought.
en

Apple didn't go with the #1 company in the states either, why not go for #2 and let the people come to them!

Feb 09, 09 - 10:57 am Comment from: MrScrith

China doesn't want something it can't control, it would be very easy to build an iPhone app that tunnels communication in a way that bypasses all of China's firewalls and censors, they don't want free access to information so they don't want that.

Feb 09, 09 - 10:59 am Comment from: Predrag

Loki:

I'm not sure what you're referring to, but AT&T is was largest single carrier when Apple made the deal. It is my understanding that it continued to be so until very recently, when Verizon became a bit larger after the acquisition of Alltel.

Although, in all fairness, Apple did first go to the No. 2 (Verizon), and was turned down.

I don't see how that is a problem. The chinese that can afford to buy an iPhone have kids that are studing in the western world like the US, UK, Canada, Australia...etc

They'll end up buying iphones from there then bringing it back to China.

China mobile doesn't understand that the mobile industry else where sucks. For them to reject the offer means they'll be a black market for smuggling iPhones in.

Feb 09, 09 - 11:00 am Comment from: MacFhearghaile

Who cares? screw china.

Apple wants to play in China's sandbox, and Apple will have to make some hard decisions. Either Apple will likely have to give up some of its traditional arrangements (which may anger its current partners), or it may have to not be in a 6 billion person market.

I'm sure Apple is VERY aware of China's political structure, much more so than all of us on this blog. Anyone saying Apple or China Mobile doesn't get it doesn't get it themselves. This isn't about who doesn't understand whom – it's about who's going to blink first and who wants to win more than the other.

It will be very interesting to watch, because neither party truly needs the other.

Feb 09, 09 - 11:09 am Comment from: Jersey_Trader

Apple should just say, thanks but no thanks and later when China is one of the last countries to be signed up, it will be on Apple's terms.

If Apple puts an iSight and iChat on the next iPhone this June, Apple will have created a real video conferencing smart phone, China will have to deal on Apple's terms.

I assume that China can get the iPod touch. The people will see what they are missing. America rebelled over tea taxes. Maybe the Chinese will rebel over the iPhone!

Feb 09, 09 - 11:11 am Comment from: Bluefin

@ BizLaw

World Population (estimated) at 6,759,421,130
as of 16:10 GMT (EST+5) Feb 09, 2009

China is about 1.3 BIllion
Hardly worth the effort...!

Blufin,

Actually the middle class in the PRC is around 150 million people, so it should be worth the effort.

Sadly - because of the state of the global economy - that middle class is going to have a bumpy four or five years.

So, in the medium-term, screw 'em.

It's all about business, not politics. MW: volume.

Unfortunately, ElderNorm is probably right about the reasons for this latest delay. I think the Chinese government is afraid of losing control. Since the apps connect to the internet, they worry about the population communicating/coordinating without their oversight. There may be business reasons as well. But the Chinese government controls such aspects of all businesses in China.

Gray market strategy would work just like it does in Europe where Apple is forced to sell unsubsidized iPhones for full price in certain markets which the buyer can then use with any compatible carrier.

Apple could simply do the same thing in all of China's neighboring countries. Sell full-priced, unsubsidized iPhones. This is already happening anyways. In Feb. 2008, it was reported that China Mobile already had 400,000 iPhone on their network. Those phones can already download software over wifi with or without China Mobile's blessing, can't they?

China, Brazil, Russia are next big 3 industrialized nations. If any US company is going to do well, it will have to succeed in these 3 countries. The folks at Apple are smart... the will wait it out until they find a deal that fits them. But hopefully they won't wait for too long, the iPhone is manufactured in China, worst case senario, China could simply steal Apple's Intellectual Property and make an iPhone of its on (far-fetched I know, but possible).

Could Apple's current infrastructure support a successful deployment in China? The app store chokes every time there is an update to the iPhone.. how would it handle that load?

Actually Apple started selling unlocked iPhones in Hong Kong and Taiwan a few months after launch. There are many people coming from China to buy the phones to take it back into China. Quite a few people in China with iPhones even without the agreement with China Mobile. Too bad - at the end China Mobile lost and Apple still wins.

Apple doesn't really care about China mobile. I'm actually always in China. I saw A LOT OF iPhones in China already. They were bought in HK and then smuggled into China. So, Apple just need to increase the sale of unlocked iphone that way, and will be fine.

For software store, Apple doesn't need to care either. first of all, Chinese people will NOT buy iphone applications. They will use only free ones (or hacked ones). Trust me.

Music? The web site mp3.baidu.com, which is run by a company listed in the US, is the main source of pirated music for the entire China. So, i'm sure Apple won't get any music sale from China.

Feb 09, 09 - 12:16 pm Comment from: Brau

"MacDailyNews Note: China Mobile obviously doesn't get it at all."

Obviously, China Mobile does "get it" and wants to protect their existing control of the Chinese market, in the same way Apple "gets it" and wants to grab a significant share. The problem for China Mobile is; if Apple goes with another provider will they still be able to succeed, leaving CM out of large potential profits? My guess is that without copyright laws being enforced, Apple needs China Mobile more than the other way around before the market becomes saturated with iClones.

Feb 09, 09 - 12:38 pm Comment from: twilightmoon

"first of all, Chinese people will NOT buy iphone applications. They will use only free ones (or hacked ones). Trust me."

So, you mean to say Chinese people can afford a 600 dollar unsubsidized iPhone but can't spring for the 1 dollar apps?

One, don't assume that the story is correct.

Two, don't assume that Apple isn't negotiating with all three Chinese mobile carriers.

Three, there is a gray market strategy. iPhones are sold unlocked in Hong Kong, as required by law. Hong Kong has been part of China for a while now.

Feb 09, 09 - 01:28 pm Comment from: emanon

@ Synthmeister

Firstly, Apple already sells unsubsidised, unlocked iPhones in China's neighbours (hong Kong & Taiwan).

Its nothing to do with the grey market that Apple sells unsubsidised, unlocked iPhones in certain countries in Europe and as well in Hong Kong and Taiwan.

In those countries its due to competition laws that Apple has to offer an unlocked iPhone. So, to make it more attractive for you to buy an iPhone through a carrier, the carrier subsidises the iPhone and sells it for a lesser price.

The side effect of this is that there are a lot of grey market iPhones being used and sold (not authorised by Apple) in countries that do no offer the iPhone. Hence, as you mentioned, the 400,000+ iPhones on China Mobile's network.

Feb 09, 09 - 02:03 pm Comment from: YoYo

Looks quite easy, just sell the apps in the Chinese iTunes App Store for 9.9 cents and let Chinese create the apps, keep the money, and sell the iPhone for €199.

The other option would be to let the Chinese create their own copy iPhone and app store. Those lousy copies sell today for €90 and there are some apps available, but that‘s good enough for the local fine dressed peasant population.

China is developing country and people's needs reflect that: where to find pirated CD's and DVD's, where to find free this free that, where is the closest counterfeit goods market, etc.

Damn, I'm feeling hungry, where could I find some Lanzhou style hot noodles at 3AM.

Feb 09, 09 - 04:13 pm Comment from: Jubei

NO IPHONE FOR YOU! There all done.

"In those countries its due to competition laws that Apple has to offer an unlocked iPhone. So, to make it more attractive for you to buy an iPhone through a carrier, the carrier subsidises the iPhone and sells it for a lesser price."

I understand that, but as soon you as you buy one of those unlocked iPhones to use in another market where you can't buy an unlocked iPhone, it becomes a grey market iPhone, which is already happening in Hong Kong.

That's my point, Apple could lower the unsubsidized price of iPhones in Hong Kong, etc. if they wanted to continue to encourage rapid uptake of the iPhone in China without China Mobile's blessing. Apple would still get the iPhone income and App store income. China Mobile would simply have regular subscription income, but wouldn't be able to use the iPhone to attract new customers. And they'd still lose control of the App store downloads.

Actually China Mobile is doing nothing more than what Verizon has done in the USA. They believe that they control the cell phone market place and the handset manufacturers should be satisfied with being their suppliers. Apple is approaching the problem of mobile access to information from the standpoint of the user device and considering the network to be a commodity. Clearly these two views clash. In the USA there were alternatives. It is not clear that in China there are any alternatives.

Given the push to place data volume caps on both cellular and land line network connections, it will be interesting to see what comes out. I just hope that the government realizes that radio frequency spectrum is a limited and shared resource. Allowing the cellular providers to maintain absolute control over the connections and the use of this resource is likely to be contrary to the common good. Allowing the handset manufacturers more say in what is provided and how capabilities are implemented is much more consistent with the use of Internet and its extension to wireless (e.g., cellular) as a necessary resource (i.e., like mail).

China Mobile is a state owned company, meaning this is one of the Communists' main tools of controlling communication within China.

Apple is, as the communists is very well aware off, known to come with disruptive innovations that turn whole industries up-side-down. They are very afraid of any such quick big changes.

The Communists wants censorship and believe in the greater good of the soceity, Apple values liberty and believe in the individual!

What we are seeing is a massive cultural clash.

This is 1984 George Orwell negotiating with Steve Jobs...

I China mobile the only Telco in China? If so Apple might consider a gray market strategy using Taiwan, Korea, Hong Kong, etc. to funnel unsubsidized iPhones into China.


of course not. 1.6 billion people

"Three, there is a gray market strategy. iPhones are sold unlocked in Hong Kong, as required by law. Hong Kong has been part of China for a while now."

HK won't be part of China for another 30 years. It is now considered a SAR, special administrative region, whereby I need no Visa to visit HK (from Canada), but need a Chinese Visa to enter the mainland. Small point.

I'm in Shanghai right now, and I can concur tell you there are iPhones EVERYWHERE. When Apple gets on board, I don't know if it'll even make a difference. Everyone who wants an iPhone can get one, they don't even have to do it in HK, just buy one here, and get some technokid to unlock it for 100RMB, and drop a China Mobile chip in there.

Feb 09, 09 - 08:58 pm Comment from: MacSheikh

Forget about China, i say.

Let those who really want the iPhone buy it from HK or somewhere else. They've been doing that all this while anyway.

Those who just want an "AiPhone" can get one of the numerous copies available. These are the ones who won't be buying an iPhone even if they're available locally.

Time to move on to other countries.

Feb 10, 09 - 01:42 am Comment from: almux

This will save Blackberry for a few more months!

Feb 10, 09 - 01:44 am Comment from: almux

@MacSheikh
China has 20 times more market power than US and its futur is still ahead.

Feb 10, 09 - 09:27 am Comment from: MacSheikh

@almux

China obviously has enormous potential to offer any brand and they know it. But having this "power" sometimes goes to your head, especially when you know you hold all the cards. It's not a Chinese thing, it's a human thing.

Now, even fakes are becoming fashionable in China and people flaunt their GiPhone, Samsvng, Kapba, whatever. So most of the people who want the real thing and can afford it will do what they need to get it. Those who don't give a damn, well, the fakes are aplenty.

So while it's most ideal to have an official presence in China, I feel Apple can still afford not to give in too much, too soon. Feel free to walk away from the table.

Feb 10, 09 - 09:31 am Comment from: MacSheikh

Oh, and what "mike" said above. I agree completely.