China Unicom unlikely to become exclusive iPhone distributor in China
The reported suspension of talks between China Mobile and Apple is unlikely to mean China Unicom will become the exclusive distributor for Apple’s iPhone handsets in China, according to an analyst.
“It is unlikely that China Unicom will become the exclusive iPhone distributor in China. The iPhone is based on EDGE (Enhanced Data rates for GSM Evolution) technology while China Unicom is strong in CDMA technology. Most of China Unicom’s mobile Internet and data services are offered over its CDMA network. Even if the two strike a deal, Apple would be unlikely to receive much in fees from China Unicom,” Shen Zixin, a senior analyst from Beijing Pday Research Center, told Interfax.
China Mobile achieved nation-wide GPRS (General Packet Radio Service) coverage in 2002 and upgraded its GPRS networks in major cities to EDGE last year, whereas China Unicom achieved GPRS coverage in approximately 200 Chinese cities only at the end of last year.
“An exclusive deal between Apple and China Unicom is unlikely unless Apple develops a CDMA version of the iPhone. However, Apple is unlikely to do that just for the small CDMA market in China,” Shen said.
Chinese Web site Sina yesterday quoted Gao Nianshu, general manager of China Mobile’s data department, as saying that Apple had given the impression it wanted to control the value chain and had pushed for up to 30 percent of the revenue generated by the sale of iPhones in China.
China Mobile would not agree to iPhone’s revenue sharing terms, Gao said. Despite two rounds of unsuccessful talks, China Mobile is still in contact with Apple, he said.
Market watchers and analysts have said a breakdown in talks between Apple and China Mobile could open the way for rival China Unicom to offer the iPhone exclusively in mainland China.
Eric Wen, an analyst at BNP Paribas, was quoted by The Australian as saying that the failed negotiations between Apple and China Mobile could be a significant chance for China Unicom, which could start talks on an exclusive deal to supply the iPhone.
Shi Lin, a spokesperson from Huasheng, China Unicom’s handset procurement subsidiary, declined to comment.
“China Mobile, a strong player in the market, is unwilling to pay Apple fees for exclusive iPhone distribution rights. China Unicom, a smaller operator, may be interested in exclusive iPhone distribution rights. However, China Unicom is weaker in GSM technology. It is possible that iPhone will enter China without an exclusive deal with any mobile operator. Apple can just sell them at retail stores,” Shen said.
China Unicom provides both GSM and CDMA mobile services while China Mobile provides only GSM services.
As of the end of November 2007, China Mobile had approximately 362.78 million GSM subscribers while China Unicom had approximately 118.15 million GSM subscribers and 40.8 million CDMA subscribers.
The iPhone went on sale in the U.S. in June last year, and is currently also being sold in Britain, Germany and France. An 8-gigabyte version is currently selling for $399 in the U.S. AT&T Inc., the American mobile operator who signed with Apple to sell iPhones exclusively in the American market, reportedly pays Apple $10 to $20 per month for each iPhone subscriber. AT&T’s monthly iPhone service packages cost between $60 and $220 per month.
Apple has said it plans to launch the iPhone in Asia this year. However, the company has not disclosed any details regarding which operators in the region it might partner with.
Some iPhone handsets from overseas are already available in electronic stores and via e-commerce Web sites such as Taobao.com in China.
Tags: CDMA, China-Mobile, China-Unicom, GSM