Apple’s iPhone takes slow boat to China

May 19, 2009

In China, Apple’s iPhone commands a strange presence. Perenially “coming out”, already widely available on the black market, viewed with trepidation by local telecom players but with undisguised lust by affluent consumers.

Sanford C. Bernstein Toni Sacconaghi thinks the wildly popular device will arrive in the Middle Kingdom before the end of the year, after a long haul of negotiations with state-run telecom carriers keen to control the content to be sold over the gadget.

Some sticking points thus far: Sacconaghi says Chinese typically spend $10-$15 per month on data services — everything from stock quotes to weather forecasts — wheareas your typical iPhone user in the developed world now spends $70. That limits the Chinese carriers’ ability to subsidize the iPhone. But the analyst thinks that in one to two months Apple may unveil a cheaper version of the device that can lower the cost of the phone to lower-paying Chinese customers.

“You’re struggling with how to monetize the iPhone”, he told the Reuters Global Technology Summit. “It could be used to let carriers pay less.”

Though conceding that negotiations on that front between the consumer electronics giant and carriers in the world’s largest telecoms arena have been “opaque” at best, Sacconaghi thinks Apple is getting tougher.

“It’s a testament to the fact that they’ve been negotiating pretty tough” that the iPhone’s introduction had been delayed,” he said.

Problem is, Apple may be underestimating the Chinese government’s tendency to want to control content — especially mass consumer content — and its distribution. Apple, which also jealously guards ultimate control of the applications or programs sold through its Apps store, may have finally met its match.

4 comments

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I have mixed feelings about the iPhone in China. I’d like to see Apple give some price concessions to China, but I don’t like the idea of China carriers trying to control content. But hey, it’s their country and I guess they’re entitled to do whatever they please. I’d sure like to see the iPhone get a leg up on the BlackBerry in China, but I’ll willing to bet RIM will be happy to make sacrifices to grab market share any way it can. Apple will have to make some hard decisions.

I recently heard that FoxConn was going to help develop Chinese apps for the iPhone, so it looks like there might have been some progress made with some Chinese carrier. I hope the those developers build some apps that will knock the socks off the Chinese iPhone users.

Posted by iphonerulez | Report as abusive

Apple is confronted with the same problem in India, were sales are disappointing too. The phone and services offered are too expensive and there also are not enough 3G service providers in India. Apple is already developing a cheaper version of the iPhone for the Indian market and I guess this will be used for the Chinese market as well.

Maybe if people in these countries earned salaries comparable to western levels, not only would price not be an issue, but maybe we could reverse the trend of falling wages and standard of living for American workers having to compete against wages too low to be legal in this country.

Any thought that I should even indirectly pay more to subsidize a another slice to my own throat is revolting. Should I donate all of my vital organs, too?

Posted by Brian Foulkrod | Report as abusive

Apple will continue to have trouble breaking into the Chinese market, not only with the iPhone but with their computers as well. Although Apple’s computers are popular there with those working in the arts, or people who like the company’s design over function, many Chinese websites, especially e-commerce sites, have compatibility problems with Mac. Whether that will change on the web designer end or Apple’s software changes remains to be seen.