updated 10:40 pm EDT, Wed August 26, 2009
Chinese iPhone release
Apple is nearly prepared to start selling iPhones in China, the company's largest untapped mobile phone market, says the Wall Street Journal. A testing center under the Ministry of Industry and Information Technology confirmed an iPhone prototype -- modified for the Chinese market -- recently received one of the technical licenses the government requires for mobile phones. Apple must still obtain an unknown number of licenses before it will be able to launch the iPhone in China. Analysts have also suggested Apple has nearly completed negotiations with state-owned wireless operator China Unicom.
A senior analyst for Merrill Lynch in Hong Kong has released a report suggesting the iPhone could launch as quickly as the fourth quarter of this year, in coordination with Unicom's planned launch of 3G in October.
Apple has faced various problems in launching the iPhone in China, including having to comply with multiple government impositions limiting the phone's wireless Internet functions. Analysts have additionally predicted a Wi-Fi enabled iPhone that complies with revised regulations will be announced soon after the initial phone release.
China is the world's largest mobile market by subscribers, with approximately 687 million subscribers. When compared to the 270 million subscribers in the US, an entry into the Chinese market could signal potentially large profit margins. Analysts estimate 100 million mobile phone users in China change their phones every year and approximately 20 million of those users purchase high-end mobile phones.
The iPhone could fair well in larger cities, where mobile phones are often seen as status symbols. There is currently a strong underground iPhone market with an estimated 1.5 million iPhones already in use in China.
However, the iPhone has struggled in markets outside of the US, such as in Japan, where regular mobile phones offer many similar features. Apple will also face competition from other smart phones set for release in China in the coming months. Another potential challenge Apple will face is that most Chinese users prefer to prepay for services rather than to subscribe to a monthly service.