Wireless

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.

Telefonica, one of the world's largest telecommunications companies, has announced a $1 billion share swap with Chinese operator China Unicom.

Under the agreement, announced Monday, each company will buy $1 billion in shares in the other company. In addition, the partners will cooperate in business areas. For example, they will jointly acquire infrastructure and equipment and jointly develop wireless service platforms.

"We are looking forward to enhancing the partnership and achieving a win-win situation for both parties," Chang Xiaobing, China Unicom's chief executive, said in a joint statement from the companies. "We believe that the partnership will help improve our capacities to provide extensive telecommunication and information application services."

The partners, which handle both fixed-line and mobile business, will jointly provide services to multinational enterprises. They also plan to cooperate on providing roaming coverage, conducting research and development, and mapping out best practices for management.

The deal will give the two companies a combined 550 million customers, according to the statement.

China Unicom, which was granted the license to operate 3G WCDMA technology by the Chinese government in January, has fixed-line and mobile operations in 31 provinces of China. The company is the second-largest mobile operator in China.

Madrid-based Telefonica, which owns U.K. operator O2, conducts the majority of its business in Europe and Latin America.

Both companies have 3G mobile businesses that use WCDMA technology.

Independent telecommunications analyst Dean Bubley said the deal will benefit both companies, giving them a foothold in each other's respective markets.

"China Unicom will be (especially) interested in Telefonica's reach into Latin America," he said.

"This (deal) will increase Telefonica's footprint in the Chinese market," Ovum analyst Charice Wang said. She noted that Telefonica had expressed an interest in China Netcom before that company merged with China Unicom in 2008.

Before the deal, Telefonica owned 5.38 percent of China Unicom's shares. After the transaction is completed, Telefonica will own about 8 percent of China Unicom's shares, while China Unicom will own around 0.88 percent of Telefonica's shares.

Tom Espiner of ZDNet UK reported from London.

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.