Saturday, July 24, 2010

Stubborn Chinese Telcos Losing Out On iPhone

Apple negotiated with Chinese wireless providers and only China Unicom came away with the prize. But because of the crippled version of the iPhone (no WiFi), CU hasn't managed to sell all that many iPhones. And they're God awful expensive compared to the iPhones being sold on the black market.

Most of the Chinese who have an iPhone opt for unofficial version because they are unlocked (if from Hong Kong) and they all have WiFi. And yet, Apple has not been allowed to sell a version of the iPhone for China that can compete with those on the black market. For Apple, they're fine regardless of who buys the iPhone. But the Chinese wireless providers with subscribers numbering in the hundreds of millions are losing out

Why is that? With so much money to be made, why are the Chinese so stubborn?

The iPad went on sale in Hong Kong yesterday and sold out within an hour. SF Gate has a post about dealers who are quite content with any delay in official Apple product releases because they can sell imports at a much higher markup.

Whether it's iPhones and iPads, these black market sellers are taking hundreds of millions from official revenues. But it's likely to change once Apple is allowed to introduce an iPhone that is not crippled and the iPad will make it to China supply constraints are no longer an issue.

Then there is China Telecom's stubbornness. There just no way Apple will cede control of the App Store to anyone else. The soon anyone realizes, like Verizon did just this week, the better for their wireless customers. This week, VW stated Apple changed how they see the market in relation to the App Store. And Verizon has publicly stated that they're interested on the iPhone. Perhaps one day, VW customers will have a choice of the iPhone.

So what's next for Chinese customers who want an official iPhone? China Unicom is the likely candidate for the iPhone 4 and are negotiating to carry the iPad. What we don't know is if it will be subsidized with 3G plans. Furthermore, the other mobile providers will have to be more open to Apple's iOS-iTunes ecosystem and Steve Jobs' mobile vision.

So long as they're willing to respect that, Apple should have no problem doing business with them.

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