Apple

The iPhone didn't get quite the reception in China as it did in other markets.

The exclusive carrier for the device in the country, China Unicom, said Tuesday that it signed up 5,000 iPhone subscribers in the first four days it was available. While that's certainly not a blockbuster opening weekend, the carrier says it's pleased nonetheless.

The mob scene at the iPhone's 2007 debut in San Francisco. The phone's reception in China was a bit cooler.

(Credit: Erica Ogg/CNET)

"We are satisified with iPhone sales so far, and we aim to have an additional 1 million new 3G subscribers each month in the near future," China Unicom Chairman Chang Xiaobing told Reuters.

It's a difficult comparison when you measure the first weekend sales in China against the 146,000 AT&T signed up in the U.S. during the original iPhone's first weekend in June 2007. Besides having to sell the device without WiFi, China has to contend with something U.S. carriers largely do not: a vast market for iPhone knockoffs.

Referred to as gray-market handsets, these are cell phones made in China that are not legally licensed by the government. Manufacturers don't pay taxes on them and they use fake Mobile Equipment Identity numbers. As a result, the phones are cheaper and can be used with prepaid wireless accounts, and, perhaps unsurprisingly, they're increasingly popular.

China's gray-market phone shipments are expected to reach 145 million units this year, a 44 percent increase over the 101 million shipped in 2008, according to market research firm iSuppli. For perspective, the worldwide (legally licensed) cell phone market is 1.13 billion, so the 145 million is a sizable chunk of that, almost 13 percent.

Still, Apple analysts are already calling the phone's debut in China "a disappointment." Piper Jaffray's Gene Munster said he was expecting China to contribute 1 million to 2 million iPhone sales to the worldwide total of unit sales for next year. Based on the weak opening numbers, he is revising China's contribution to 550,000 next year.

China is also in the middle of building out more of its 3G network, so it could take time before devices like the iPhone truly takes hold, the way it has in other markets.

"We believe that eventually China will emerge as a major market for iPhone sales," wrote Jaffray in a research note Tuesday, "but it could take a year or two to gain meaningful unit traction as it did in the U.S."

A saleswoman introduces Apple's iPhone to customers in Chengdu in southwest China's Sichuan province on Saturday.

(Credit: Zheng Duo/ColorChinaPhoto)

It could be the Year of the iPhone in China, as Apple officially started selling its iconic smartphone in the world's largest mobile market Friday night.

While China saw nothing near the frenzy of the first iPhone launch day here in the U.S., crowds there did honor the tradition of lining up for the phone many hours in advance at several locations. A few hundred people queued up in the rain and cold outside The Place shopping center in Beijing, for example. There, Zhi Xianzhong became the first person to get the iPhone from Apple partner China Unicom after waiting 7 hours and 40 minutes, according to China Daily.

As expected, China Unicom, the country's second largest telecom operator after China Mobile, is selling two versions of the iPhone in China under a three-year deal with Apple. But cost could prove to be a deterrent. Prices range from 4,999 yuan (about $732) for the 8GB 3G model to 6,999 yuan (about $1,025) for the 32GB 3GS phone (sans contract).

Consumers can get cheaper, cracked, gray-market iPhone models at local electronics stores or bring them in from other markets. But price isn't the only potential obstacle here. In accordance with Chinese government regulations, the handsets also lack a key feature--Wi-Fi capability, though reports say China Unicom hopes to offer Wi-Fi-enabled iPhones within a few months.

China Unicom is starting off by selling the iPhone in 285 cities. The carrier hopes to sell 5 million devices in three years, according to Chinese news reports, but the company wouldn't confirm that figure.

Apple is wasting little time in expanding the reach of the iPhone in China.

Just two weeks after signing a deal with China Unicom, Apple is once again in talks with rival China Mobile to offer the iPhone as well.

China Mobile Chairman Wang Jianzhou confirmed that his company is in talks with Apple to offer the iPhone, according to a report in The Wall Street Journal on Monday. Unlike in some countries, like the United States, where carrier agreements tend to be exclusive, the deal with China Unicom is nonexclusive.

This leaves Apple open to negotiate with as many carriers as it wants in that market. This is both good and bad for Apple.

China Mobile, China's No.1 carrier, has 141 million subscribers, the Journal reported. That's more than triple the subscribers of No. 2 carrier China Unicom. Obviously, getting the iPhone into the hands of China Mobile customers would have great economic and market-share benefits for Apple.

However, as the Journal points out, Apple would need to make some changes to the iPhone in order for it to work on China Mobile's TD-SCDMA wireless platform. The other option is to leave the iPhone as is and let it run on the carrier's slower 2G platform.

The iPhone now has an official ticket to China.

Mobile phone operator China Unicom plans to start selling two versions of the iPhone in China in the fourth quarter of 2009, under a three-year deal, an Apple representative confirmed Friday morning.

China Unicom didn't say what it will charge for the iPhones or what the service plan will include, but it does plan to keep the price modest by offering subsidies to customers, according to The Wall Street Journal, which first reported the deal earlier Friday. The agreement does not include revenue sharing, the newspaper said.

In accordance with Chinese regulations, the iPhones will be sold with their Wi-Fi function disabled, the Journal reported.

The news was, by and large, expected. Reports of an impending deal had been circulating for some time now. And at least as far back as March, China Unicom--the country's second largest mobile operator--had been posting iPhone photos and specifications on its Web site. Apple had also been in on-again, off-again talks with the country's largest carrier, China Mobile.

Apple's iPhone has been in widespread use in China for a number of years as people brought the gadget into the country from markets where it was available.

China Unicom also said Friday that its 3G network will launch commercially at the end of September, according to the Journal.

UBS analyst Maynard Um said in a research note Friday that the "formal announcement with specific timing of a launch may be viewed as a modest positive," although it's "still difficult to gauge the level of potential demand." For Apple, Um said, international expansion and partnerships with new wireless operators are central to the company maintaining its iPhone and earnings momentum.

CNET News contributor Jim Dalrymple provided reporting for this story.

Finally, it seems the Chinese people are about to be able to legally get their hands on the phone they have been building: the iPhone.

According to International Business Times, Unicom, China's second largest cell carrier, has paid 10 billion yuan (about $1.46 billion) to buy 5 million iPhones from Apple. The first batch of the phones will be made available to Chinese customers as early as next month. Since March, the company has been posting the phone's images and specs at its stores.

Like almost everything nowadays, the iPhone is also from China.

(Credit: Dong Ngo/CNET)

This will be the first time the phone is legally available in the country with the largest amount of cell phone users in the world. I find this sort of ironic, as, like most electronic devices, the iPhone is assembled in China.

The Chinese people are already acquainted with the iPhone. Prior to this, the phone has been available in China, as well as Vietnam and many other countries where Apple has no business partners, via smuggling.

What will be new to the Chinese people for sure, however, is the fact that the phone will be locked to Unicom. Yu Zaonan, general manager of the customer development department of China Unicom in Guangzhou, told International Business Times that China Unicom is hoping 5 million iPhones will translate into 5 million new customers for the company. Unicom currently is still far behind China Mobile, the largest cell carrier in the country, both in terms of subscribers and profit. Unicom hopes the iPhone will help it narrow this gap.

Locked phones are generally new to China and Asia, where people have had the freedom of getting any phone at any store and using it with any carrier. This deal between Apple and Unicom means they will get a taste of business the American way.

It's unclear which versions of the iPhone (3G or 3GS) are included in this deal and whether the phones will have Wi-Fi disabled. However, according to Yu Zaonan, the price for the 8GB iPhone will be 2,400 yuan ($350) and the 16GB version will cost twice as much. This means the company's hopeful new batch of 5 million subscribers will be those with substantially high incomes.

Anyone not so well-off might just have to resort to used and jailbroken iPhones smuggled in from other countries. These phones cost somewhere between 400 yuan ($59) and 1,000 yuan ($146), according to International Business Times.

Personally, I think it's likely many of those 5 million iPhones will be jailbroken by the locals. Now, if Apple's claim that jailbreaking the phone can turn it into a weapon of mass disruption was true, this could be unsettling news for communist China.

Foxconn, the company that manufactures Apple's iPhone and iPods, has agreed to compensate the family of a Chinese worker who apparently committed suicide over a missing prototype.

A Foxconn official, speaking on the condition of anonymity, said Tuesday the company will give Sun Danyong's parents a one-time payment of 360,000 yuan ($52,600), according to an Associated Press report. The company also agreed to pay an additional 30,000 yuan ($4,385) for each year either of the parents is alive, the AP said.

That figure is higher than that reported Monday by The New York Times, which stated that the family was receiving 300,000 Chinese renminbi, or about $44,000, and that his girlfriend was getting an Apple laptop.

Sun, who was 25, apparently jumped to his death on July 16 after allegedly losing a fourth-generation iPhone prototype that he was responsible for.

Apple expressed regret over Sun's death and said last week that it was "awaiting results of the investigations into his death."

Foxconn apparently suspended a security official after Sun's death, and the case was turned over to Chinese authorities to investigate. The security officer denied beating Sun but did acknowledge that he became "a little angry," according to The New York Times.

Foxconn General Manager James Lee said this wasn't the first time products given to Sun had gone missing, the New York Times reported. "Several times he had some products missing, then he got them back," Lee said. "We don't know who took the product, but it was at his stop."

Foxconn reportedly has not been able to locate the missing prototype.

Apple may have blinked first in the ongoing battle with the Chinese government to allow the company to sell a Wi-Fi-enabled iPhone in that country.

(Credit: Apple)

The back-and-forth battle between Apple and China's Ministry of Industry and Information may be coming to a close. According to a BusinessWeek report, Apple has applied for a Network Access License that would allow the company to begin selling the iPhone without Wi-Fi.

In typical fashion, Apple has reportedly been hard-nosed in negotiations with the Chinese government over the iPhone. However, the government has been just as hard-nosed, refusing to allow Apple to sell the Wi-Fi-enabled phone in China.

AppleInsider guesstimates that the approval process for the iPhone would take four to six months, making a potential launch date no later than January 2010.

Of course, the iPhone is being used in many countries where it is not officially sold, China being one of them. The ability to unlock the phones and use them on any compatible network has made the iPhone popular worldwide.

Bringing a Chinese company, speculated to be China Unicom, on board as an official carrier would enable Apple to open the iPhone to a huge market of potential growth. It's unclear what the lack of Wi-Fi will do for the popularity of the smartphone, but it's obviously a concession that Apple felt was worth making.

China Mobile's plans to open its own mobile app store probably have doomed any chance of Apple's iPhone getting onto that network.

(Credit: CNET)

China Mobile is staking out its own ground in the mobile-application marketplace.

According to IDG News Service, the world's largest wireless carrier plans to introduce its own mobile-application store later this year, calling it "Mobile Market." The report says the store will be open to both independent developers and companies, though it's not clear what operating system or platform technologies will be used by the phones running on China Mobile's network when the store is ready to go.

China Mobile's plans for Mobile Market illustrate the difficulties that it and Apple faced in trying to reach an agreement to sell the iPhone through China Mobile. The two companies have flirted for quite some time, but Apple's insistence on being the sole gatekeeper and distributor for iPhone applications would have been at odds with China Mobile's desire to offer its own service, which is why Apple is believed to be negotiating with China Unicom instead.

Apple's approach is rare in the nascent mobile-application world: many other makers of mobile operating systems are trying to find a way to let carriers such as China Mobile in on the action while maintaining their own central roles. With about 415 million subscribers, China Mobile's customers will be an attractive target for handset companies and software developers.

China Unicom probably didn't post this image of the iPhone 3G just because it liked the graphics.

(Credit: China Unicom)

China Unicom did nothing to dispel rumors that it plans to be Apple's iPhone partner in China by posting images and specifications of the iPhone 3G on Tuesday.

The details (in Chinese), spotted by IDG News Service, are perhaps the strongest sign that China's second-largest carrier has won the deal to supply the iPhone to the world's largest mobile phone market. At this point, some may wonder why China Unicom wouldn't just wait for the new iPhone that is almost universally expected to arrive sometime around the middle of this year, but Chinese media reports have suggested that China Unicom and Apple reached a breakthrough in their negotiations just last week, and China Unicom plans to launch a 3G network in May.

Apple and China Mobile, the country's largest carrier, have negotiated off and on for over a year about bringing the iPhone to China but have thus far failed to reach a deal. Part of the problem with the China Mobile talks was that the large carrier reportedly wanted some control over the App Store in China, as well as a version of the iPhone made to work with a homegrown 3G standard used only by China Mobile.

China Unicom has 130 million subscribers before which Apple can push the iPhone, as compared to AT&T's 77 million subscribers.