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China Mobile says iPhone not 'the only choice'

By Nie Peng (chinadaily.com.cn)
Updated: 2008-10-06 16:18

Contrary to rumors that China Mobile may start selling a modified version of Apple Inc's iPhone in China as early as November, the Chinese company now hints the deal may fall through.

Wang Jianzhou, chairman and chief executive officer of China Mobile, the county's largest wireless carrier, said the company is still in talks with Apple to offer the iPhone in the world's largest handset market, though no agreement or timetable has been reached.

"As a fashionable product, iPhone isn't the only choice for China Mobile," Wang said, in a Monday report by China Business News. However, he did not elaborate further.

Only days before the weeklong National Day holiday, media reports speculated China Mobile might agree to sell the iPhone in China on the condition that Apple make a customized iPhone product without the 3G or Wi-Fi function. But Wang did not comment on the possibility.

Some analysts have attributed the abrupt change to the impossibility of the two telecom giants reaching an accord on sharing profits.

In June, Wang told the media that the biggest barrier against the iPhone had been removed, which was regarded by the market as a signal that the two companies had reached consensus on sharing incomes, sending Apple shares up significantly.

The change of Wang's attitude means it is difficult for the two companies to form a collaborative partnership that satisfies both sides' appetite for profits, observers said.

Other analysts said China Mobile has lost interest in iPhone because its TD-SCDMA (Time Division Synchronous Code Division Multiple Access) network that backs the popular iPhone 3G's major functions is still under construction, and is far from covering the whole country. Before the massive commercial use of the network, the 3G iPhone would be just like other smart phones, making it less attractive to Chinese customers.

The TD-SCDMA network is China's homegrown 3G network, managed by China Mobile. The TD-SCDMA technology is incompatible with the WCDMA standard, on which iPhone's 3G function is based.

If the iPhone with the 3G function is unlocked by Chinese users, it will be used on the country's largest fixed-line network, China Telecom's WCDMA.

By the beginning of 2008, there were over 400,000 unlocked iPhones in the Chinese market, according to media reports.

Analysts said China Mobile, which has over 400 million subscribers, is more interested in Google's T-Mobile G1, which has more functions and faster Internet access than the iPhone.

Moreover, the G1's launch in China will be slower than the iPhone, which allows time for the construction of the TD-SCDMA network. China Mobile aims to finish building the TD-SCDMA network in 100 selected cities as soon as possible.

The China Business News report said a difference in patterns of cooperation also plays a role. While Apple sticks to cooperation with wireless carriers, China Mobile endeavors to expand cooperation with handset manufacturers.

On the eve of the Summer Davos economic forum, which opened in Tianjin on September 27, China Mobile announced the launch of SGH-i908E, the latest touch-screen smart phone which Samsung Electronics released globally in June.

The i908E is a customized model which incorporates many of China Mobile's popular services thanks to the company's cooperation with mobile phone manufacturers.

Xu Da, general manager of China Mobile's market division, told China Business News that China Mobile will continue its cooperation with Samsung, and with other manufacturers to produce customized cellphones in the future.