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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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RE: China doesn't need the iPhone
By xphile on 1/16/2008 3:13:30 AM , Rating: 2
China either is, or will be, making most of, if not all, the iPhones. This ONE company has an active cellular market of more than the ENTIRE United States population. I reiterate these points as it seems to have passed a little over most posters heads. You don't, not even if you are God playing in this market right now, ignore these two factors as in China they are inter-related. China wins on every manufacturing contract. And that is the ethical concept in all negotiations with the West - China must win, not... China will be seen to be screwed like every other country, and doubly so since we even make the damn thing!

Hey Apple - Hey , Hello! We MAKE THESE PHONES, and last time we looked we have more money at your disposal than you can ever imagine, increasing in multiples every single year... think again or give it up to somebody else. We like technology as much as the next man, and good technology as much or more as he does too, but like any business deal, money and volume talks, and you are simply NOT going to find this kind of volume, nor this kind of potential money; not anywhere - even in your wildest dreams.

Maybe not right now, but in terms of profit, ANY other manufacturer following along behind using Apples ideals (lock in contract kick-backs) could kill Apple in profits outright by being THE one to get a deal with the major Chinese telcos at a lesser rate with some other future competing technology. I don't think even Steve Jobs would be arrogant enough to cut off his wallet to spite his ego. Though agreed that's to be seen, but this both already is, and even more importantly for those that do not realise, is rapidly becoming, not just a manufacturing precipice, but an economy than no company either wants to, nor can afford to ignore.


RE: China doesn't need the iPhone
By PandaBear on 1/16/2008 8:12:32 PM , Rating: 2
Apple can do whatever it wants with the iPhone, as long as they pay for the manufacturing costs. China can do whatever it wants with the money it get from manufacturing the iPhone, buying the iPhone or not.

I don't see why people get all emotional about Apple or China. If Chinese want a cheap phone and Apple want a cut of subscription, and they don't work out, what is the big deal? Just grab a cheap phone that has lower profit margin and get over it.

What the fvck is all the emotion about? Don't like it? Don't buy it.

Yes, I am Chinese too.


"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher

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