Just one week before the iPhone 3G is set to make its debut onto store shelves worldwide, it appears that Apple has finally agreed on a deal with China Mobile. According to a recent article that appeared in Reuters UK , Apple has relinquished its demand for a share of the content fees, while China Mobile has agreed to offer users subsidized rates to purchase the iPhone.
By backing down on its demands for mobile content revenue sharing, it looks like Apple has learned first hand of the strength that China Mobile holds in the telco markets here in China, and that they cannot bully them with revenue sharing and mobile content particulars like they do with operators in the US and in other markets. This is a pretty big concession on the part of Apple to enter the China market, though I wonder if it was necessary.
Recently, China Mobile announced that they are going to do the real-name registration for all newly issued SIM cards. This new policy includes prepaid accounts Shenzhouxing and Donggandidai (or M-zone), and is effective from January 2008. This new policy is enforceable at China Mobile service centers, but the problem is that many prepaid SIM cards are sold by independent dealers such as newspaper kiosks, supermarkets, and mobile phone shops, most of whom cannot be bothered to enforce this new policy.
It remains to be seen how China Mobile can ensure all of its newly issued SIM cards are registered under the user's name unless they cut off their dealer distribution network around China. If they do this, however, China Mobile will have to invest in drastically increasing its direct sales network, something that I'm not sure they are willing to do.
According to a new article from BusinessWeek.com titled "Millions of iPhones Go AWOL ", there may be more hacked iPhones out there than analysts first expected - up to 1 million out of the 3.7 total iPhones sold as of end-2007!
As I previously mentioned in a blog post back in November 2007, iPhone demand is strong in China and a quick scour of the grey markets shows that unlocked iPhones remain readily available for sale. Even with the widely-documented non-deal with China Mobile, opportunities remain for Apple to expand their business by selling unlocked iPhones directly to the China market.
According to our friends over at BlogNation China, Apple plans on opening its first Apple Store in Beijing by the summer of 2008. It will be interesting to see then, how consumers will react and how the prices will compare to the current going iPhone street price of $550.
Even though Apple has yet to be officially released its iPhone for sale in China, iPhone-related news continues to domnate handset discussions here in Beijing. We have reported in the past that iPhones were widely available in China by way of parallel imports (or grey market); more recently, iPhones have made the headlines when it was announced that that Apple will NOT cooperate with local mobile giant, China Mobile. Our very own, Dave Carini, was quoted by BusinessWeek in the article "Apple Loses a Big One in China ".
This non-deal (that has since become a headline) should not be surprising to those who are familiar with both China Mobile and Apple.
Maverick China was quoted in an article by Bruce Einhorn and Chi-Chu Tschang entitled "Psst! Wanna Buy an iPhone? ":
China Mobile is the world's largest cellular carrier, with 369 million subscribers, equal to a 70% market share of the mainland. "There is no need for it to make the kind of deal that American and European operators have been making," says Dave Carini, an analyst with the Beijing-based research firm Maverick China.
