updated 11:05 am EDT, Thu August 26, 2010
Marketing costs blamed
China Unicom profits fell 54 percent in the second quarter, in spite of benefits from being the only official iPhone carrier in China, Bloomberg notes. The drop is attributed partly to discounts on phones, but mostly to marketing costs, which exceeded estimates. Unicom nevertheless attracted only 4.88 million subscribers in the quarter, as compared to China Mobile's 15.2 million. Mobile also continued to dwarf Unicom in overall subscribers, with 554 million versus 157 million.
Unicom should in theory have an advantage in China thanks to the iPhone, as well as a superior 3G network. Until recently however Chinese iPhones were stripped of Wi-Fi, making cheaper, gray-market foreign versions more appealing. Analyst estimates suggest that while Unicom may have sold about 500,000 iPhones in the first half of the year, the gray market was close behind at over 400,000.
The company has also yet to ship the iPhone 4, though it has now confirmed a launch for the second half of the year, during which time the iPad will also become available. It was recently rumored that the iPhone 4 launch is set for September 16th. To cope with the device's reception problems, Unicom may be giving out free cases.