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Apple, China Mobile scrap over iPhone apps

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.




by MacNN Staff

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Comments

  1. Guest

    Joined: Dec 1969

    0

    Forget China

    They are not worth the bother.

  1. iphonerulez

    Joined: Dec 1969

    +2

    I wonder about that...

    Maybe Wang is just using some typical Chinese bargaining ploy. They certainly do things differently over in China. I only look at the huge subscriber base and figure if Apple can capture the market, money will be rolling in. You would think that China Mobile would realize that offering the iPhone would make the company a fair amount of money. Providing this news is correct, I'll admit I'm somewhat disappointed. I'd hate to see another year pass and not have an iPhone in the China market. I was worked up about possibly seeing the iPhone introduced during the Olympics last year. Wang wanting control of the iPhone Apps is really asking a lot. Something that is unlikely to happen. This China venture does seem to be bummer, so far. Maybe Apple should go after a smaller carrier instead.

  1. chefpastry

    Joined: Dec 1969

    +3

    Just sell unlocked

    Apple could always just sell it unlocked at full price there.

  1. TomSawyer

    Joined: Dec 1969

    +2

    More likely

    ...the bargaining is just a front while China Mobile is reverse-engineering the iPhone. Once they have their version developed (to their usual substandard quality level) they'll put it on the market saying the reason they did was that Apple wouldn't capitulate to all their demands for the privilege of selling in China.

  1. pairof9s

    Joined: Dec 1969

    +2

    China build your own

    Yes, this has become standard procedure in just about any dealings with China. They dictate negotiations based on the leverage of potential market size (aka - their population).

    But I’d be inclined to say let them have the App Store…just not Apple’s App Store. Meaning, China Mobile is free to go set up their own app store, negotiate with developers on pricing, distribute and install said software (without Apple’s iTunes) on iPhones, provide whatever customer service they deem appropriate, etc.

    Basically, let China Mobile EARN the money they so presumptively state should be theirs with an iPhone App Store.

  1. testudo

    Joined: Dec 1969

    +1

    Man

    I would think that the undercurrent here is that China (the country - which happens to also be the telecom) wants to control what apps the users can download.

    They surely wouldn't want their customers to download iTiananmen ("Move the iPhone left or right, watch the tanks follow you") let along any Falun Gong apps, or anything that might allow the user to circumvent Chinese internet access policies.

  1. Zanziboy

    Joined: Dec 1969

    +2

    Technology Transfer

    This is essentially technology transfer. China Mobile does not have a web presence to compete with the Apple App store. Forcing Apple to handover the App Store and iTunes music store will enable China to duplicate the online e-commerce engines and undercut the global market in phones they develop on their own.

  1. macnixer

    Joined: Dec 1969

    +4

    why bother

    just make the darn iPhone sell without the contract everywhere. As it is many are paying big amounts to get a jailbroken- unlocked or turbo-simmed phone. If Apple were to unchain the iPhone the industry will stop the stupid negotiations and Apple will walk happier to the bank. Obviously China would put an embargo on iPhones then.

    Currently what we need is freedom and certainly this is not happening in China and to a great extent at the way Apple does business

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