China Mobile ready to subsidize iPhones?

View this article at: http://www.macnn.com/articles/08/08/29/cn.mobile.iphone.subsidy/

Friday, Aug 29, 2008 11:40am

China Mobile ready to subsidize iPhones?

China's largest cellphone carrier -- China Mobile -- may be ready to subsidize the iPhone in its home country, says JLM Pacific Epoch. The research firm cites China Communications, which in turns quotes a source close to China Mobile. The source claims that the carrier is close to finishing negotiations with Apple for the iPhone 3G, and as part of the deal, China Mobile would provide a significant subsidy for each unit.

The inclusion of a subsidy is considered critical to China, rather than just beneficial. While many Americans and Europeans have bought unsubsidized iPhones, the majority of Chinese are too poor to afford one; at $499, a 16GB, 2.5G iPhone cost twice the average monthly salary of a Chinese worker.

Apple has sought to bring the iPhone to China for some time, but has previously encountered stiff resistance, mainly due to an insistence on revenue sharing. The company dropped this policy with the iPhone 3G however, which helped reinvigorate talks with China Mobile.