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Apple and China Mobile See Red, End Talks

There may have been many heavy hearts in the investor community ever since Apple Inc. and China Mobile called off talks this week of bringing the iPhone to China, effectively killing the chances of the phone reaching what could have been the phones biggest market audience.

China Mobile is the leading phone company in China and has an incredible 350 million subscribers -- more than the entire U.S. population.  Hopes were high as talks survived all the way from early November.  The buzz that the massive provider would pick up the iPhone, raising its user base to a whole new level, was starting to gain support from analysts.

Early on, analysts were far more skeptical and some remained so.  Duncan Clark, chairman of BDA China, a Beijing-based telecoms research consultancy, expected the talks to fall through and explains that it was a war of wills between the firms.  He states, "It's not a surprise. China Mobile doesn't want to share its non-voice revenue.  The two have very strong egos and, as in any relationship, that often doesn't work."

Apple was able to get big cuts of the revenue from telecoms in Britain, France, and Germany.  In China, this is a less respected business practice, and China Mobile was extremely resistant to adopting such measures.  Despite achieving respectable sales success in the U.S., the iPhone would also have to struggle with other technical and censorship issues in approaching the Chinese market.

China Mobile remained cool in its response about the split, with a spokeswoman merely stating, "
Our parent has terminated talks with Apple over the iPhone."

The door remains open for more talks, with China Mobile telling the press that it is willing to participate in possible future talks.  The country's smaller provider,
China Unicom, has also expressed interest in talks with Apple.

Apple is also experiencing resistance in its talks with Japanese telecoms.

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Good for them
By Suomynona on 1/15/2008 5:01:02 PM , Rating: 5
I think the iPhone is pretty nice, but that doesn't mean Apple is entitled to a bigger share of a mobile carrier's profits. I know it's not the kind of "FU" coming from this company as it would be for a major western carrier, but it's still kind of satisfying.

For all the talk about Apple "changing the game" with the deal they struck with AT&T, it's just transferring control from one evil company to another. The only win for the consumer is a transfer of control from both wireless carriers and cell phone vendors to the consumer. Giving Apple the ability to lock down your phone isn't that much better than giving AT&T or Verizon the ability to lock down your phone.

RE: Good for them
By bhieb on 1/15/2008 5:29:42 PM , Rating: 2
I know it's not the kind of "FU" coming from this company as it would be for a major western carrier, but it's still kind of satisfying.

I don't know I'd say it is a bigger one since this company has more subscribers than every man woman and child in the US. Just because we've not heard of them does not make the FU any less important. This is a huge loss for Apple, I wonder what it was that Jobs just would not do for that kind of business. They probably wanted the OS code or something pretty horrible for Jobs to let that kind of market slip away.

RE: Good for them
By Suomynona on 1/15/2008 6:10:31 PM , Rating: 2
It's a much bigger economic hit to be locked out of such a huge market, but it's not as big of a hit to their reputation.

RE: Good for them
By cochy on 1/15/2008 10:00:55 PM , Rating: 2
I wonder what it was that Jobs just would not do for that kind of business.

From the looks of it, China Mobile didn't want to get into a revenue sharing deal with Apple. Nor should they want to. They have no incentive to unless there's the threat that Apple might partner up with a competitor of China Mobile. However if that's not a possibility, I don't understand why Apple would lose all the potential hardware sales over this impasse. Maybe they are just playing hardball.

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov
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