Apple Talks With China Mobile Breakdown—Officially
The on again-off again talks between China Mobile and Apple (NSDQ: AAPL) to bring the iPhone to the world’s most populous mobile phone market are off again. After months of rumours that the two companies were in discussions, and news that talks had stalled in November, China Mobile announced today that they had “terminated” negotiations with the Cupertino-based company.
No official reason was given, but Bloomberg cited news site Sina.com which quoted China Mobile’s director of data services Gao Nianshu as saying that the carrier wasn’t prepared to hand over the 20 to 30 percent revenue share fees that Apple wanted for bringing in iPhone customers. Johnny Yeah, an analyst at Hong Kong research called the breakdown bad news for Apple because of China Mobile’s massive user base. The operator is the largest in China and has nearly 350 million subscribers. Yeah noted, “Apple entering China without China Mobile won’t be as substantial.’”
Sina.com said the companies would meet for another round of talks, but China Mobile’s spokesperson said she was unaware of any future meetings.
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Comments (3)
Jan 14, 2008 10:46 AM
This was inevitable. CM has close on 90% of market share with Unicom a distant second. The future of 3G and the possibility of any competitive threat to CM will always be “managed” by the Ministry of Communications so a true competitive environment that would enable the iPhone and Apple to get the same terms as the USA is fantasyland. The average handset turnover time in China is less than 6 months and CM has no incentive to do anything with Apple to drive subscriber growth based on Apples terms. The fact is that in nearly all major Chinese regions there is no choice but CM so Apples sales pitch (decreased network switching, churn management, and brand differentiation) doesnt exist. Apples problem is that they must have China (a ~300-400m handset market per annum (combined new and replacement)) but they cant afford to set a precedent for other global markets in terms of the economics. Meanwhile, the clock ticks with Android and other advancements in UI’s so the window to get to market in China closes a bit more every day.
Feb 5, 2008 2:23 PM
China Mobile never adopted revenue sharing model with handset provider as they never provide handset subsidary in service contract. China Unicom could be a possible partner with iPHONE, as they normally bundle the cellphone with contract. China Unicom acturally grow pretty fast in CDMA market with it lower price to compete with China Mobile. I guess Apple could not generate revenue from music or media download in China, as there are tons of illegal music and movie download websites for iPOD and iPHONE. The price of iPhone is not a big issue in China, as most percent of middle class people have had some phones with market price over $500. Apple should think about distrubte its iPhone independently in China and the sales will break 10 million shortly. However, obviously Jobs dont want to do that. what a pitty!!
Feb 21, 2008 5:29 AM
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