Daniel Eran Dilger
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China signs 3 year iPhone deal

Daniel Eran Dilger

China Unicom has signed a three year agreement with Apple to become the exclusive provider of the iPhone in China, according to a report citing the company’s chief executive and a representative from Apple.
At a news briefing covered by the Wall Street Journal, China Unicom’s Chairman and CEO, Chang Xiaobing, stated that the company would begin selling two iPhone models by year’s end. Pricing hasn’t yet been revealed, but the deal reportedly does not involve revenue sharing with Apple but does involve a subsidy to make the phone more affordable to users.

China’s official version of the phone will lack WiFi due to Chinese regulations, but will use the same WCDMA 3G mobile network technology as Apple’s existing iPhone models. China Unicom’s network currently covers 285 cities with its new 3G network and has plans to reach 335 by the end of this year. The company hopes to grab a third of China’s 3G market share by next year, using the iPhone as a 3G voice and data growth engine.

China Unicom is the country’s second largest provider with 141 million subscribers, but caters to a more urban and affluent customer base than first-place China Mobile, which serves a massive 498 million people but uses a homegrown Chinese mobile network and primarily sells cheap and simple phones.

China Telecom, the third largest provider with 42 million subscribers, is in talks to bring RIM BlackBerry and Palm Pre phones to the country.

Beware of a Japanese flop?

The online version of the story posted by the Journal for mobile users originally warned that “the iPhone hasn’t sold as well in some markets as in the US. In Japan, for example, the Apple brand isn’t as strong, and regular mobile phones offer many of the same features.”

Related reports on the Chinese iPhone deal published by the Journal also included the unsubstantiated claim that the iPhone was not selling well in Japan, but those lines were missing from the standard web edition of the story. The 32GB iPhone 3GS debuted as Japan’s best selling phone this summer, with the 16GB version also placing within the top ten phones sold there.

In 2007, the Journal reported that the iPhone had flopped in Japan based on estimated sales figures published by a marketing firm.

That report also suggested that the Japanese market held the Apple brand, and the iPhone in particular, in little regard. In contrast, actual surveys of influential buyers have indicated that Apple and the iPhone are wildly popular brands in Japan. The idea that Japan “hated the iPhone” was also repeated in a Wired article last year.

  • twilightmoon

    I suspect it’s more laziness and ignorance on the part of the Wall Street Journal than any malice towards Apple that they continue the “iPhone does not sell well in Japan” meme.

  • dominicnz

    Laziness by the WSJ. It seems true that the iPhone wasn’t selling well in Japan after the initial launch. But since March 09 it has been the *no.1* selling single model in Japan (+ other nuggets of info):
    http://tinyurl.com/m747te

  • gplawhorn

    Great – I’m glad for the People’s Republic.

    How about northeast Nebraska, guys?

  • tundraboy

    I wonder if the WiFi strip is a firmware implementation, an actual (but reversible) physical disabling, or complete removal of the WiFi hardware.

  • westech

    How about India?

  • http://www.veo-design.com VeoSotano

    Why are there regulations in China that prohibites WiFi? I mean… if you gonna censor the internet it doesn’t matter if you get it through the cellphone network or any other means… you just make the ISP comply.

    Is it a frequencies thing? Something technical or just political?

  • ChuckO

    I’m pretty sure iPhone is in India and doesn’t sell much there. The Indian mobile phone market is not very iPhone friendly. In India you can walk into almost any store and pick up minutes for your phone. They don’t sign contracts and have a relationship with a mobile phone company. It’s Nokia heaven.

  • JohnWatkins

    “Why are there regulations in China that prohibites WiFi?”
    Westerners seem to forget that China is a totalitarian communist state. I guess we see the millionaires, business men, and shiny, happy people etc. ( even Chinese under 45 or so are similarly blinded by recent “changes” in China.) The fact is, Chinese people do not even have the right to their own thoughts or control of their own bodies. These are still actually the property of the state. “Enemies of the State” (criminals, political prisoners [anyone who becomes a problem,] or whoever,) are imprisoned arbitrarily. Whether they are executed often depends on if their organs are a match for someone with money or power. When executed, their families are billed for the cost of the bullet. Given this state of affairs, it’s odd to even entertain the notion that there might need to be some “reason” why wifi is restricted. The state does whatever it wants.

    All that said, there has been a move to look at “easing” the wifi restrictions lately. Perhaps someone in power has been offered a bribe for a change in the law (the only way to effect superficial “change” in China.)

    Although things are in many ways “different” in China in recent years, its not really that different at the foundation. And I say this as someone who enjoys China and the Chinese (as well as the Tibetans and Uyghurs etc.)

  • http://www.cyclelogicpress.com Neil Anderson

    Wow, that’s a large market!

  • http://blog.cytv.com cy_starkman

    @John …ah yeah, right… Nice xenophobic rant there bruz. And what are your inglorious rights of freedom? A choice in chocolate bars, while watching your choice of state sactioned news, where u can be locked up without trial for texting the word “bomb” too often and choose between muppet A or muppet B to take all your money for the state and it’s debt; while your free and egalitarian hospitals who pay for the Chinese to harvest organs let the rich people buy them while the poor die on waiting lists only to be harvested themselves as their families pay the price with their hearts.

    Yeah….

    Now back on topic. India does have the iPhone but from telco reports I have read, the 3G Network rollout has been stalled For a few years by various factors and the providers heavily gouge, the iPhone being very expensive and outside the biggest cities the gouging spirals out of control.

  • JohnWatkins

    @cy
    I’ll admit I have strong opinions on western views of China and I discourage the sweet cozy ones. I’ve traveled throughout China. I lived in China for a few years in the 80’s and learned to speak Chinese (I’m a real xenophobe.) I know Chinese folks who have spent time in Chinese prisons (I guess they’re xenophobes too.) But my point is that because we in the west “do business” with China and because young clueless hipsters (like yourself?) think China is “cool” and “just like us,” we tend to forget that government restriction on Wifi is the least of their problems. But by all means keep telling yourself I don’t have a clue.
    Here’s the article from June on possible easing of WiFi restrictions:
    http://www.hktdc.com/info/vp/a/ict/en/1/2/1/1X05ZEYW/China-To-Ease-Restrictions-On-Wi-Fi-Enabled-Handsets.htm

  • http://stucktrader.blogspot.com STUCKTRADER

    so 141 million people have the option to get an iPhone. *sigh* my carrier can’t offer that choice. i am tired of the exclusive partnerships both as a customer and investor.

    in any case… iPhone needs to be in China to show how different it really is (it is after all a Mac-inside) from the knock offs in China.

  • Raymond

    I wonder will the Chinese iPhone physically lack wifi capability or will this be a case of disabling it in the firmware of existing iPhone models. Especially with talks of the chinese government easing the restrictions.

  • JohnWatkins

    Raymond,
    I have no idea. If restrictions are eased, the phones will have to serve up the Chinese WAPI standard. I’ve not read anything about what issues arise in implementing this standard.

  • http://blog.cytv.com cy_starkman

    Thanks for the reply John. I ain’t no young hipster and my on the ground experience in china is zero.

    I do have though a key eye for rose coloured glasses. The notion that china is or is not something when our own “free” nations are rather questionable themselves ( Australia for me ) is worthy of highlight. One thing I’ve always respected in the governance of places like china is at least they are honest, “we giveth and taketh away your rights, and we, not you, own you”; whereas nations like the USA and AU wave a flag of freedom, are clever with words, yet see the citizen with no less ownership, and offer flexible rights which evaporate at a moments notice.

    Even the free market fairy tale, or the highlighting of corruption in these “bad” nations. You go try n start a street side business selling meat on a stick. Perhaps in china you bribe the offical walking past, but if it’s all u can do to change ur life, no probs; here the bribe is just as real, only dramatically more and institutionalised and with it comes lobbied fees to buy “required” items to be permitted to do business. Closed market, with high barriers to entry and a heavy dose of ongoing “fees” to keep others in jobs while they file your signature is more like it.

    Further, though from a novel (diamond age by Neal Stevenson), comes an angle. So exactly how do you keep 1.x billion people cohesive; what are our piddly nations with less than a 1/4 or a 50th the population to be managed even thinking saying they know how to govern china in some alleged “right way”; and which of these “right” nations has had a continum of governance over a land and people for over 2,500 years, the UK, the USA?

    Pfft, our nations have experimented on us, murdered millions, crushed ethnic minorities, make sure old mate and friends are well fed at the expense of others and have no qualms dressing up socialism, or totalitisim in the words of democracy, while our elected representatives do as the please, not as we ask. To quote Bush Jr on the eve of invading for freedom in response to a question about the largest public protests since veitnam “that’s what I love about democracy, everyone is entitled to their own opinions… and that’s not mine”

    let’s not tag with the brush of distant convienence others as that which we are so closely ourselves.

    And let’s not confuse a selection of brands with freedom of choice.

    or as I like to say “confused by the choice between mars bar and snickers, the western world forgot to revolt”

    thanks for the good chat

  • JohnWatkins

    Cy,
    Everyone knows the West/US is not perfect. Problems, opportunities, and abuses abound everywhere. Certain basic high principals like freedom of thought and person are, however, very basic and of utmost importance.
    Recent abuses in the US cannot be excused simply because they directly effected only a few people. They diminish not just Americans, but every person on earth. But I believe those abuses are events at the edge of the pendulum swing, and fortunately our system allows the truth to see the light of day and allows for punishment and correction of abuse.
    As far as Snickers bars etc., only the most shallow of morons would think that an array of goods equates freedom (admittedly, we have plenty of morons though.) I worry even more about corporations and multinationals abusing people’s rights than I do about governments, but its the governments that set the rules in the first place.
    Cheers to you, in central Australia.

  • FreeRange

    @ John Watkins – regarding why no wifi in china phones, please stop your pontificating. I have been coming to China for 10 years and currently live here with my Chinese wife. Your postions are way overblown! The Chinese are actually much more open and free thinking than you are leading people to believe. We could get into all kinds of discussions about how 100’s of thousands of blacks are imprisoned in the US on minor drug charges, or how 8 years of hell under Bush endangered our basic freedoms, etc. etc. etc. but lets address the real question – “Why does the Chinese government ban wifi in cell phones?” The truth is they DON’T. You can in fact have the international wifi standard on your phone in China, but the phone MUST also be equipped with the homegrown Chinese standard and therefore must have two different “wifi” radios installed. China has developed their own internal standard in place of the international wifi standard as they want to develop their own technologies and not always be relying on huge foreign companies, and paying royalties to same. THIS HAS NOTHING TO DO WITH CENSORSHIP! So get off your soapbox and actually educate yourself!

  • JohnWatkins

    FreeRange, first let me say that I regret having raised the issue because this is not really a politically related thread. Sorry folks. I’ll not post on this thread again.

    That aside, sure, “lets get to the real question,” but look at what I wrote, not what you imagine I wrote. I never said that Wifi was “banned” on cell phones or that it was a “censorship” issue. I pointed out that the restrictions on mobile devices are political and, no surprise, the PRC does whatever it wants WRT “regulations.” Why? because they’re used to doing whatever they want about literally everything, including people’s personal affairs. (Do you really doubt the absolute supremacy of the Party in Chinese life? Tell the truth, will you be applying for Chinese citizenship? Does your wife seek US citizenship?)

    What is the restriction on Wifi? Effectively, (not legally — the restrictions are considered “government preference” not law,) you cannot sell a “mobile device” with WIFI unless it also supports WAPI — a non recognized “standard” created to benefit Chinese companies by requiring the transfer of proprietary technology to a few Chinese companies designated as “preferred partners” to western telecoms. The ISO rejected WAPI as “not an open standard” and the WTO considers the requirments a “barrier to trade.” BTW I never mentioned censorship with regard to WiFi in China, but the original WAPI “standard” not fully revealed except to those few Chinese companies, so who knows? Perhaps it was designed with censorship in mind.

    Also a chief goal of the IEEE 802 standards is to keep WIFI universal and royalty free.