China Mobile running 400,000 unlocked iPhones

As many as 400,000 unlocked iPhones were running on China Mobile's cellular network at the end of last year, according to market research firm In-Stat.

Apple sold 3.7 million iPhones in 2007, and more than 10 percent of them are in China, In-Stat said, attributing that information to China Mobile. That helps explain part of the "iPhone gap" created by the difference between Apple's shipping totals for 2007 and the activations reported by its carrier partners in the U.S. and Europe.

Somewhere around 1 million iPhones are thought to have been unlocked, and 400,000 are in China.

(Credit: CNET Networks)

Despite Apple's attempts to keep iPhone unlocking under wraps with new software and changes to the iPhone's bootloader, enterprising entrepreneurs are apparently giving the people what they want. This is a bit of an opportunity lost for Apple, since the company has signed lucrative revenue-sharing deals with its carrier partners that don't apply if an iPhone is unlocked from its respective network.

But, as In-Stat noted in a report, at least it shows people want the iPhone. The firm said Chinese consumers want smartphones with multimedia features and Web browsing, and the iPhone fills that need nicely. And they're willing to pay for it: 20 percent of smartphones sold in China last year went for 4,000RMB ($533) or more.

Apple had at one point discussed the iPhone with China Mobile, but Apple CEO Steve Jobs downplayed the significance of those talks, saying the companies just had a single meeting. The iPhone is set to make its official debut in Asia at some point in 2008, probably sooner rather than later, but it's clearly a hot item in China already.

[42istheanswer]

Carrier Lock

Carrier lock-in was a stupid idea. The actions taken by the Chinese is a big surprise?

I would love to have an iPhone, but there is NO AT+T service in my rural area. Bummer.

[hackingbear]

move

Move to China and you will have (1) unlocked iPhone and (2) mobile phone access in (even remotest) the rural area. If you have a million bucks and a Master degree or above, you may even apply for a Chinese green card.

[sonoffar]

no AT&T?

I too would love to have an iPhone but in the area where I live, also a rural area, all we have is AT&T. Trust me when I tell you AT&T spelled backwards is "BUMMER".
If an iPhone means dealing with AT&T, I'd rather have a poke in the iPhone with a sharp Moto Ming.

[mgichg]

Could have told you that months ago

I could have told you this 6 months ago. I live in Hong Kong and
all my friends have iPhones. They are sold sell in every phone
shop, computer shop and even in shamshuipo street stalls in
Hong Kong, apart from the official network carrier phone stores.
I purchased mine in here in Hong Kong in September 2007 and
there was no shortage of them around. All of a sudden one day
in September the market was flooded with them here. They were
all sold unlocked, ready to go and even had a chinese sms
program preinstalled for the local market. And everytime apple
releases a software update, you just take it into the shop you
bought it from and they'll do the upgrade for you. No wonder
China mobile will never agree to Apples terms. They're already
making money off people using the iPhone, why should they
give money to Apple for it? I honestly don't see how any other
carrier worldwide would agree to Apples terms when its blatantly
obvious that anyone can hack an iPhone with just a toothpick
and a putty knife MacGuyver style.. Plus I'm sure you've all seen
the iPhone fakes floating around in China right? Ask anyone
here in Hong Kong and they'll tell you that no carrier here will
ever agree to Apples terms for the iPhone when they're already
being used here on their networks without having to pay Apple
for the "privilege". I would love to be in on one of those
meetings when Jobs is trying to convince a network to pay him
for the phone that they are already having people use on their
networks. That must be one hell of a sales pitch. But I guess you
cant win them all.
PS love my iPhone, will never be able to use any another phone
ever again. And 400,000 in China is probably a low estimate,
very low.

[akanish]

Arent you smart?

in some countries they have these really weird things called copyrights and trademarks. (yuck!) In addition to this madness companies are ACTUALLY allowed to protect their knowledge investment. (wow, whoever came up with this ridiculous crap) I know. its totally weird. Go china!

[chonnom]

Japan

The Japanese are already snubbing the i-phone and talks between apple and docomo fell apart when docomo found out they would have to dumb-down their network to get the iphone to work in Japan because it's 2-G and everything in Japan is 3-G, becoming 4-g...not to mention the phones here are 10x better. Where do you think apple gets their tech?

[idannyb]

Here?s the pitch Apple might make to China Mobile

The following is a SWAG ?

Apple negotiating team to China Mobile team:

?We?re coming out with a 3G iPhone and the chipset will support
all world standard 3G protocols including TD-SCDMA and
WiMax (Not LTE 4G as this is too far down the road). This new
iPhone will be seriously hack proof vs. the current model.

China Unicom tells us their mobile division is being acquired by
China Telecom (TBA post Olympics) and the combined company
will be granted rights to build out the (proven) W-CMDA 3G
network. They want an iPhone exclusive and they?re making a
compelling pitch to us:

1) They say W-CDMA 3G is going to eat TD-SCDMA for lunch
and they?re going to steal away your most coveted subscribers
? those on contract with a data-plan.

2) Telecom/Unicom wants to jumpstart their new TBA 3G mobile
business by ?exclusively? offering subscribers the most
compelling smart-phone for Net use, superior audio/visual and
intuitive and fun UI ? the iPhone. This exclusivity can be
enforced due to the hack-proof nature of the next-gen iPhone.

We know that you?ve (China Mobile) been growing subscribers
at a clip of 5,000 to 8,000 per month. Congratulations! We
also know that despite this growth, your revenue per subscriber
has slipped. We understand that a key strategy for China Mobile
is to grow your Monternet (data services) platform. And finally
we know how critical mobile TV and delivery of video is to your
future growth plans.

There is no phone that offers audio/visual and boosts data use
like the iPhone! ? Ask Google or any carrier who has officially
launched iPhone. But then again, we know you?ve already asked
? Net surfing increases 50 times and overall data-usage
doubles or triples!

The iPhone it?s not a prisoner to fixed buttons. It runs OSX and
software upgrades allow iPhone to evolve. It will only get
better/cooler. We at Apple are going to take responsibility
(cost/delivery) for these upgrades via iTunes. We want to offer
these upgrades to all iPhone owners for free. These upgrades
will improve user experience and continue to encourage
maximum use of data. We are offering significant value-add and
this does not come without cost to Apple. All we are asking is a
small share of your monthly data-plan revenues to compensate
for this value. A happy iPhone owner is a retained ?on contract?
customer! In addition to regular Apple iPhone software
upgrades? wait till you see the SDK unveiling. SDK will bring a
whole slew of new iPhone aps. Showtime in a few days!

End of pitch ?

Now, if competitive dynamics take too long to evolve in China
(i.e. Telecom acquisition of Unicom mobile unit does not happen
or is delayed), China Mobile might not feel compelled to
capitulate ? Not a problem for Apple. They can offer a fully
sanctioned "unlocked" iPhone without an exclusive carrier deal.
This distribution could easily be done via deals with D-Phone,
Shenzhen Aisidi, Apple.com (China) online and via new Apple
stores in China. It will be a premium-priced iPhone, but not
above the current price that black-market buyers are currently
paying.

http://idannyb.wordpress.com/

[rdupuy11]

Does not represent lost revenue

As the author of this article is perfectly well aware, the selling of additional phones represents additional revenue, not lost revenue.

His idea that it represents lost revenue is based on a fictitious belief that you can assume that the Chinese would have paid additional revenue, had they been successfully denied access to the phones.

He needs to learn a bit about China. 400K additional sales, is big bucks for apple, and they were never going to force the Chinese into the outrageous, and quite frankly, shameful gouging that Apple has done to the Americna public.

[GGGlen]

Good, up to a point

You made sense, up until the "out in left field" attack on Apple.
The Chinese are buying the hardware, right? Apple isn't giving
iPhones away, so there's NO WAY that Apple is engaging in
"shameful gouging" of any public, anywhere.

Now if you'd have dropped the wackiness and said something
about US carriers requiring long term contracts... you'd have
been correct.

[MarkLatarnik]

Unlocked iPhones in Canada (and in China)

Because all the discussions are being held in secret, we will never
know who is more greedy: cell phone service suppliers or Apple?
In Canada there are tens of thousands iPhones, either registered
in US or unlocked and having SIM cards from ROGERS or FIDO.
I can not wait to hear a statement from APPLE why iPhones are
not legally sold here. Open up and blame the guilty (most greedy)
party. Waiting is stupid and hurts Apple most of all!

[Pepe7]

Incorrect- it *does* represent some lost revenue

But this is (obviously!) not on the phones, but on the lucrative deal on the piece of the monthly service/activation Apple forged with ATT. If they aren't using ATT service, Apple loses out on a significant amount of revenue.

-Pedro

[krb5kdc]

accounting for refurbished/ replacement iPhones

How are refurbished/ replacement iPhones accounted for?

During the early days of the iPhone rollout, in 1 hour of
observing the Genius bar at a Manhattan Apple Store you could
easily see 10+ people having their broken iPhones replaced on
the spot!

The Genius would just pull out a plain box (coffin) with a
replacement iPhone from a seemingly endless supply.

How are these "extra" iPhones that must be at every Apple Store,
Apple repair depot and possibly AT&T stores accounted for!?

[perfectblue97]

Very "American" of them

It seems like Apple is behaving like a communist state by restricting people and China is behaving like a capitalist enterprise by giving them what they want.

[pdenlinger]

When marketing and distribution conflict

I wrote about China demand for iPhones in this "Apple's iPhone Marketing in China Leverages Global Buzz" http://www.chinavortex.com/2007/09/apples-iphone-marketing-in-china-leverages-global-buzz/
which I published last September.

This is why China Mobile does not need a data-sharing agreement with Apple. iPhone users spend much more on data than other mobile phone users; why should China Mobile share this revenue with Apple?

As far as China Mobile is concerned, the more people who use cracked iPhones in China, the better...

Now if the iPhone had WiFi capability, they might feel differently...

[machelpdesk]

iPhone DO have WiFi

According to the iPhone Specifications located here -
http://www.apple.com/iphone:

GSM
Quad-band (850, 900, 1800, 1900 MHz)

Wireless data
Wi-Fi (802.11b/g)
EDGE
Bluetooth 2.0+EDR

[winstein]

Simple... Foreigners in China

There are many, many businessman and women working in and travel to China. Many, many of them are from the US and other countries that have access to iPhones.

[justinnewton]

Lost revenue?

This article speaks of the iPhones being used on other networks as a "lost revenue opportunity". It isn't. Those phones were purchased SPECIFICALLY to be hacked and run on China's network. Had people not been able to unlock those phones they wouldn't have been sold AT ALL. This is very different from what happens when someone buys an iPhone, unlocks it and then runs it on the TMobile network here in the US. In that case it is a lost revenue opportunity, as if the phones couldn't be unlocked those users (may) have still bought the phone and run it on ATT's network. In the case of users in China, there is no carrier there who shares revenue with Apple, so if you could not unlock the iPhone they would not have sold those units at all.

Duh.

Justin

[vminvic]

Role reversal ?

Funny how the "capitalists" (Sony/Intel/Microsoft/Apple) are dead set on forcing customer to take only what they dictate. "Commies" do work around to give customer what he really wants. Expect a cheap generic brand ALL CHINESE & UNLOCKED smart phone to capture the world market soon.! Same idea as region free DVD player. "Free" (Chinese) market will deliver what customer asks for - despite what big corporations try to prevent it.

[chonnom]

they already do

Yes, you too can buy an iphone knock-off for less than $202....triband and dual sim-card ready. No 8 gig model though. ;-)

http://www.dhgate.com/productdetail_ff8080811811889801182d45f8d072f4_k_c1303_pdefault.html

[brettpweb]

apple TV and the 24 hour movie limit joke.

Hey...can you get a message to Steve J....

I have an apple tv and if he wants me to rent more videos from him he needs to open up the 24 hours to watch a movie to at least 48 hours or 72 hours...

I am disappointed that I could not watch Underdog one more time the 2nd night and it already dissappeared from my apple tv menu...this just sucks!...I will continue to pay for my netflix monthly rental until he changes this policy... and I will not rent from apple until he makes this change...

good luck...

[Zekeuyasha]

Woe is the Jobs

Jobs won't change the policy I'm afraid...he wan't his money from all the apple nerds and fans that absolutely MUST have every apple product out there, no matter the cost. even if that means people like you won't do it. he already has a fanbase. You could hack it to get the movie for as long as you want but they papers intellectual laws of doom might do....er....yeah...nothing! so there's really no repercussion if you hack it, just don't sell it and you'll be fine!

[totgafk]

Are the unlocked iphones in China using a English UI or a Chinese UI?

I'm an English-speaking, future China resident who hopes to use an iphone in China. However, for me to use an iphone in China, I will need an English UI. :P