Apple’s iPhone Going to China?

Speculation has both China Unicom and China Mobile working to get their hands on the Apple iPhone...but some industry watchers say a deal won't happen soon.

Since it’s announcement last January (and debut in the U.S. market in June), Apple’s iPhone has become the de facto benchmark to which other Internet-enabled devices and smartphones are compared. As the iPhone debuts in Europe, speculation is mounting when the iPhone will leap to the Asian market—and Chinese mobile operators are fueling speculation that they’ll be offering the iPhone soon.

In recent comments, the CEO of China Mobile—China’s largest mobile operator—said it is in talks with Apple to offer the iPhone to the mammoth Chinese market, a comment that sent China Mobile’s stock shooting up almost 10 percent, and undoubtedly contributed to a 10 percent bump in Apple’s own stock. Not to be outdone, China Mobile’s largest rival, China Unicom, weighed in, with CEO said Li Zhengmao saying that while it doesn’t have any plans to offer the iPhone, it would definitely talk to Apple about offering the handset—potentially giving Apple a second partner to reach China’s estimated 500+ million mobile phone users.

However, China Unicom has also said it doesn’t currently plan to build out a 3G mobile network in China, although the company did win a license to roll out 3G technology in Macao. China Mobile’s 3G service will be based on China’s home-grown TD-SCDMA (Time Division Synchronous Code Division Multiple Access) technologies, and should be operating in eight of China’s largest cities by the end of 2007, and in ten cities by the start of the Beijing Olympic Games in August 2008.

However, industry watchers are skeptical that Chinese carriers will be able to get a deal for the Apple iPhone anytime soon, due to compatibility issues with Chinese telecommunications technology and revenue models. With the exception of unlocked iPhones to be offered in France, Apple’s locked iPhones have been locked to a single provider’s network. In China, SIM cards are unlocked so users can move between mobile networks, which would put the iPhone at a distinct disadvantage. Also, Chinese mobile operators have never entered revenue-sharing arrangements with phone manufacturers. With its current mobile partners, Apple receives money from mobile operators for each iPhone sold; in the United States, estimates have AT&&T paying Apple as much as $18 per month for every iPhone in use.