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China Mobile Execs: iPhone Won’t Come to China Any Time Soon
Tuesday, November 13th, 2007 at 3:00 PM - by Bryan Chaffin
Apple Inc.’s iPhone won’t be coming to China any time soon, according to additional comments from China Mobile execs and analysts that cover the Chinese telecom market. Reuters reported Wednesday that issues with the iPhone itself, resistance to change from China Mobile, pricing, and the lack of an iTunes Store in China are all combining to slow down any possible deal in China.
Today’s story on a Chinese iPhone comes but one day after shares in Apple jumped more than 10%, in part because of comments from China Mobile CEO Wang Jianzhou, who had told reporters he was in talks with Apple about an iPhone deal.
Today’s story is that these comments were blown out of proportion, and that many issues stand between Apple entering the massive and growing Chinese cell phone market.
One of the principal barriers appears to be resistance to change. As we reported on Tuesday, China Mobile execs think that music should be downloaded to phones from the network, and not from a computer. Apple’s iPhone places management of the iPhone music and videos in the hands of iTunes, on a Mac or PC. If China Mobile execs don’t buy into Apple’s vision, they won’t be closing a deal with the company.
Another issue is that Chinese customers expect to be able to change out their SIM cards as needed in different geographical areas, or just because they are changing carriers. The iPhone, of course, has a locked SIM that limits use to a carrier paying Apple a cut of its monthly revenues.
Then again, the notion of Apple getting a cut from the carrier is also an issue: "Our business model does not entail sharing revenue with terminal producers -- we don’t share revenue. That’s a Chinese rule," an unnamed executive told Reuters.
In addition, the expense of the iPhone itself, which costs more than the average monthly salary in China, is likely to limit its reach. According to Gartner analyst Sandy Shen, that price will limit the iPhone to niche status in China. [Editor’s Note: Retuer’s erroneously reported that the iPhone costs "about US$500. The correct price is $399. - Editor].
Of course, any niche in China will likely make the market large enough to be of interest to Apple, and China’s middle class is growing in leaps and bounds. For instance, China Mobile currently boasts some 60 million customers. While that’s a tiny figure in a country of 1.3 billion, but it would be the equivalent of AT&T counting 20% of the entire population of the U.S. as its customer list.
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