Unicom to sell iPhone in China

Fiona Chau

Apple has signed a deal with China Unicom to sell the iPhone in the world’s largest mobile market.

Unicom chairman and CEO Chang Xiaobing told a press conference in Hong Kong on Friday that the company had signed a three-year deal with Apple for supply of the smartphone.

Two models will be sold in China from the fourth quarter – the 8GB iPhone 3G and the 16GB/32GB iPhone 3G S, Chang said.

He confirmed that the phone would not support Wi-Fi, in order to “satisfy the requirements of government regulatory departments.”

Unicom will not pay a commission on each iPhone sold, as carriers have, but has struck a wholesale deal with Apple.

Chang said Unicom would subsidize the sale of the iPhone, which would be available at “competitive” prices.
At least 1 million gray market iPhones are estimated to be already in China now. These are Wi-Fi enabled, but do not support the simplified Chinese characters used on the mainland.
Unicom will launch commercial W-CDMA/HSPA services in 285 cities on September 28, becoming the third Chinese carrier to do so. Unicom is the only mainland China operator to use the W-CDMA standard. It has 141 million GSM customers.
The iPhone will compete against China Mobile’s soon-to-launch smartphone, the Android-based OPhone, made by Lenovo. Reportedly, China Telecom is in talks with RIM and Palm over the sale of their devices in China.
Sandy Shen, a research director in Gartner’s mobile group, said Unicom may need to provide heavy handset subsidies to the iPhone.
“iPhone could help lift ARPU, as proven by many other markets. But those only account for a small base of the operator so the overall impact on ARPU will be limited,” Shen said. “Unless Unicom can lower the price of iPhone and make it accessible to average users, it won't change Unicom's position in the market.
Competitive pricing was also important to help avoid people buying the iPhone from the gray market.
“If Unicom’s pricing is not attractive enough, most people will still get it from the gray market, and with full specs,” Shen added.
She said many early adopters had already bought an iPhone, so the novelty effect had faded after two years.
Another potential pitfall was that the iPhone was not ideal for typing, and Chinese users could find it uncomfortable to type SMS on the phone device, Shen said.


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