Monday, January 14,2008 @ 9:40am
Apple, China Mobile break off iPhone talks
Apple and China Mobile have broken off all talks over the latter carrying the iPhone, Reuters reports. The iPhone is thus unlikely to ship to China in the foreseeable future, and unless the companies reconcile their differences, Apple will also be denied access to the 350 million subscribers China Mobile can provide. No reason for the split has been given; it has been suspected, though, that as hinted in earlier reports, China Mobile stood up to Apple demands for revenue sharing. Apple has traditionally insisted on collecting a portion of the income from each iPhone, as well as subscription fees.
"It's not a surprise, China Mobile doesn't want to share its non-voice revenue," says Duncan Clark, chairman of the telecom research firm BDA China. "The two have very strong egos and, as in any relationship, that often doesn't work." Revenue sharing is also generally said to be a foreign to the Chinese marketplace, which may work against Apple if it attempts to negotiate with China's other wireless carrier, China Unicorn.
Apple faces still greater problems in that the American iPhone costs $399, more than the average Chinese worker makes in a month. The market is also already being saturated with imitation iPhones, which lack some of the signature features yet are cheaper and cosmetically similar. The most prominent of these may be the Meizu M8, although it has yet to go on sale. Finally, Apple's locked SIM cards may be incompatible with Chinese networks.