updated 10:10 am EST, Mon February 9, 2009
Chinese iPhone talks stop
Distribution of apps has led to another breakdown in talks between Apple and China Mobile, according to Interfax China. A source for the news agency claims that China Mobile president Wang Jianzhou recently visited the company's Research Institute, and explained in detail how talks with Apple have stalled not only recently but three times over the course of 18 months. China Mobile wants considerably more control than Apple is willing to give, the source suggests.
The first breakdown occurred when discussing the original 2G iPhone, for which Apple is said to have demanded 20 to 30 percent in revenue sharing per each subscriber. This was rejected for unspecified reasons, though as a general rule, revenue sharing is not practiced in the Chinese wireless industry. Talks failed again when Apple's deal switched to selling phones to China Mobile at $600 per unit, with the expectation that it would subsidize the cost for customers.
In spite of signs of progress, the most recent collapse in talks is being attributed to the iTunes App Store, which Wang is said to see as a threat to his company's control of the mobile Internet. The executive feels China Mobile should be able to operate a local App Store and collect money from customers, according to the Interfax source.
A related concern Wang is said to have is that while apps are bought via credit card everywhere else, the method might not work at all in China. Chinese typically prefer to pay for data through their subscription accounts, Wang is said to argue. China Mobile is in fact believed to be devising its own means of delivering apps to smartphones, though details are unknown.