China Mobile iPhone talks in question
UPDATE: China Mobile is now said to have denied Southern Daily’s report that talks with Apple have stalled. See here.
Instant analysis from The Mac Observer’s Apple Finance Board:
Pretty much as expected, everyone is playing hardball, but China Mobile just blinked by having to issue a denial that it had terminated discussions, thereby looking like the weaker hand. They’ll be furious at having to disclose their interest in this manner - it undermines their bargaining position and strengthens Apple’s with the other carriers like Unicom. –Tommo_UK
- - -
Less than three weeks after the first reports that Apple (AAPL) was in talks with China Mobile — the world’s largest cell phone operator with 350 million subscribers — to carry the iPhone in China, negotiations have broken down, according to a report today in China’s Southern Daily newspaper.
This follows earlier reports that talks with China Unicom, the country’s second-largest carrier, had also failed. The sticking point in both cases: the revenue-sharing model that Apple insisted on — and got — in the U.S. and European market.
It’s impossible to say from the brief report today whether this door is firmly closed or could be re-opened. Henry Blodget has argued persuasively in Silicon Alley Insider that a China iPhone deal is inevitable. The Chinese market is so big that even if Apple got only a 1% slice of the pie, no revenue sharing and fire sale prices, it could see revenues of $600 million a year. A 5% market share at today’s iPhone prices could bring in $6 billion a year, even without revenue sharing. (link)
That there is demand for the iPhone among Chinese mobile aficionados is clear. Wired early this month reported on the lively trade in black market iPhones, known in China as the “Ai Feng” (”Crazy Love”). The devices are carried back into the country where they were originally manufactured by mules from Hong Kong and sell for as little as $474.
But Apple may need China more than China Mobile needs it. Earlier this week, Chinese wire services reported that rather than relying on the big Chinese distributors to sell the iPhone, Apple plans to open its own stores in China in 2008.
We may also recommend that APPLE CEO to negotiate with China Telecommunication companies to let Apple iPhone sales in Hong Kong at the very beginning to see how the system work properly.
Since most of the China big companies also launch their stocks through Hong Kong stock exchange to Worldwide markets.
Hong Kong could be the suitable place for Apple to first launch their iPhone before moving into Mainland China.
We suggest APPLE to open shops in major cities like Beijing, Guangzhou, Shanghai, Cheungdu, Sheungzhen etc. to sell not only iPhone but all others computer products, similar to what APPLE is now doing in USA, Europe and coming to the huge market in Asia.
People can either buy unlock iPhone from APPLE shops and join any of the three telecommunication companies such as CHINA MOBILE, CHINA UNICOM, CHINA TELECOM which ever favorable to their area network, or buy the iPhone through the above mentioned telecommunication companies with 2 or 3 years service plan.
China would unlikely to see telecommunication companies to compete each other, they prefer evenly grow.
It’s China UNICOM, symbol CHU, and NOT China UNICORN.
We sincerely hope that APPLE CEO will continuously open discussion with Chinese Telecommunication Authorities to finally achieve an agreement to officially bring in the advance iPhone to Mainland China, Hong Kong, Macau as well as Taiwan.
We definitely looking forward to purchase the officially launch iPhone as early as in 2008 in either 2.5G or 3G or even 3.5G model.
iPhone is the greatest cell phone in the world or even the greatest electronic product ever in the history. We love iPhone. iPhone will be available in China soon.
Philip, maybe that was a bit harsh of me. I should have directed my unhappiness towards Fortune’s editor given the recent FUD your masters have been publishing about Apple. Sorry.
However, if not “behind the curve,” then I have to say there’s definitely a tendency for your column to focus on the more FUDtastic Apple news out there, and rarely on anything positive. Its a shame there seems to be a “good news is no news” policy at Fortune WRT Apple.
I know you’re trying to make a point of delivering news from “outside the reality distortion field,” but you’re also in danger of creating a distorted impression of the newsflow by trying too hard to avoid being seen as an Apple-loving blog.
Hard balance to strike, I appreciate, but one worth striving for in such a widely-read publication.
Apple’s iPhone is too expensive for the Chinese market, and it is also too secluded from the mainstream media world. I think Google’s alternative will be more appeal to the Chinese penchant for thriftiness. The Gphone will make all media more ubiquitous, and how that ubiquity will impact company profits. That can benefit both consumers and investors. The NewsVisual article on Google’s Open Handset Alliance http://www.newsvisual.com/newsvisual/2007/11/google-and-moto.html implies that it’s really personal connections among business leaders that determine future success in the competitive marketplace. But consumers can also benefit from the new products those alliances spawn.
I suppose you didn’t see the article in Bloomberg that contradicts your article. Or, maybe since it came out before yours, you just decided to ignore it. See below:
Apple Inc. (AAPL US) added $3.25, or 1.8 percent, to $187.54 in trading before the official open of U.S. exchanges. China Mobile Ltd. (CHL US), the world’s largest wireless-phone operator by subscribers, said it is still in discussions to offer Apple’s iPhone handset, denying a newspaper report that talks between the two companies have ended.
Phillip, what has happened to you? From what I can tell, you were once an accomplished journalist, but now you have resorted to your daily rants and misrepresentations about Apple. Sad, very sad.
ex ped: Appreciate your concern for my career. As it happens, the Bloomberg report came out after mine was written, but before it was posted, due to circumstances beyond my control. Item updated with the latest news. –Philip Elmer-DeWitt.
As so often, this column is behind the curve:
From Bloomberg:
Apple Inc., the maker of the iPod music plaver, increased $3.54 to $187.83. China Mobile Ltd., the world’s largest wireless-phone operator by subscribers, said it is still in discussions to offer Apple’s iPhone handset, denying a newspaper report that talks between the two companies have ended.
ex ped: “As so often”? That’s a pretty wild swing for you, Tommo. As it happens my piece was filed well before the Bloomberg report. It’s been updated now. –Philip Elmer-DeWitt
As a shareholder I hope Jobs drops the revenue sharing idea and just sells the phone (unlocked) in China without a rev share. There will be far more money made if they just open this phone up in China and sell it at the 40-50% margins Apple historically makes.
I see that Fortune has been a lot of attention to the drawbacks or any negative rumors and news surrounding the iPhone.
Can’t they get over the fact that it is a successful product.
Get your facts right Elmer. Talks continue….
http://www.bloomberg.com/apps/news?pid=20601103&sid=a8Q.krcjzuJw&refer=news
News from a reliable source.
ex ped: Overtaken by events. Thanks for the tip. –Philip Elmer-DeWitt
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
Its apparently stalled. I’m surprised Apple could let this happen, the market is enormous and they want it.
I have to agree with Charanis Chiu - Hong Kong first. I also have to agree with him because, well, he has a cool name.
More comments here:
http://www.i-rant.org
Charanis - if you read this please get in touch with me there.