Analyst: China Mobile still an iPhone contender
China Unicom is the front runner in the "battle" between China's two largest cellphone carriers to win exclusive rights to sell Apple's (AAPL) iPhone in China, but giant China Mobile is "not out yet."
So says Kaufman Bros.' Shaw Wu in a note to clients issued Monday. "We checked in with our industry and supply chain sources," he writes, "and as expected, details are hard to come by as Apple keeps a tight lid on its future plans, but we were able to gather some data points that Apple followers may find useful."
- China Unicom is hungrier: "It appears that China Unicom is more willing to provide larger subsidies and cede more control to Apple to grow its subscriber base of 133 million users vs. 488 million at China Mobile."
- Wireless protocols are key: China Unicom has made it easier for Apple by launching plans to deploy 3G coverage to 284 cities using basically the same UMTS/WCDM technology AT&T uses. China Mobile has gone its own way, with plans to launch 3G service in 238 cities using lower-cost but incompatible TD-SCDMA protocols.
- Apple has several options: It could sell its current iPhones to China Unicom; it could re-introduce the original 2G phones compatible with both carriers' GSM networks; it could make new multi-baseband phones that work with both carriers' 3G networks.
- China already has iPhones: 1 to 1.5 million of them, Wu estimates, even without an official carrier. The "official" way to buy one, he hears, is through Hong Kong's Hutchinson Telecom, which struck a deal with Apple last year.
- China's business model is different: "From our understanding, customers in China are more willing to pay more for the hardware so the subsidy is likely smaller as well as monthly fees from the service plan. Service plan pricing is much lower than the U.S. In Hong Kong, it is approximately $25 compared to $70 here in the U.S. In China, it is as low as $10 though Internet data plans are fairly new in China."
China’s 687 million mobile subscribers represent the biggest prize on the planet for cell phone makers — the last missing piece in Steve Jobs’ master plan to blanket the earth with iPhones. According to Wu, cell phone penetration there is 51% — compared with 85% to 95% in developed countries — so there is plenty of room for growth.
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what an awful job. thinking all day about how you can justify your existence when you know that your "industry and supply chain sources" only exist in your imagination and as alway and "as expected, details are hard to come by", trying to pull "data points" out of your hat like "china unicom is hungrier". i pity you, mr. wu.
Wow, sometimes I just cringe when Shaw Wu speaks. On his points:
<> Uhm, yeah! Duh! BTW, it's useless to compare pay-as-you go numbers when Shaw should be comparing actual postpaid subscriber figures.
<> Shaw makes it sound as if the carriers CHOSE their protocols. They did not. The Chinese Ministry that controls this part of industry assigned the TDSCDMA to China Mobile and WCDMA to Unicom.
<> What? He heard this? This is public information not some insider stuff. Yes, HK's Hutchinson Telecom sells unsubsidized iPhones in HK.
<> This is just embarassing. With a name like Shaw Wu, you'd think the guy has never been to China. Yes, the Chinese are more used to paying more since they buy unsubsidized handsets. I believe I read that up to 25% of Chinese handsets are sold at around $500.
Honestly, I was shocked at the prices when I went into a China Mobile store when I've been to China. I expected cheap prices, but found unsubsidized ones.
Cellphones in China are their do-it-all device. They don't buy laptops to use with LANs or wifi, they buy cellphones. A smartphone that can email, text msg, play music, surf the internet is a real winner.
Control of wireless value added services (WVAS) is the biggest obstacle to an iPhone deal with China Mobile (Both Apple and China Mobile want to control WVAS). However, 478 million subscribers is a tempting carrot to waive in front of Apple. If Apple were to build a low cost (low priced) 2G only model for China Mobile, this would not directly threaten the value proposition of the iPhone 3GS (for higher end users), which appears to be on track as a “3G exclusive” for China Unicom.
If there is still hope for a near-term (2009/10) iPhone deal with China Mobile, then it would most likely be for an EDGE 2G only version of iPhone (NOT TD-SCDMA).
No matter the future of TD-SCDMA, China Mobile will maintain their EDGE 2G network, which has broad coverage and a clear signal throughout major urban zones in China. In my view EDGE 2G could be the bridge between Apple and China Mobile. There are hundreds of millions of low-salaried wireless consumers in China who aspire to iPhone. Many have in fact already purchased cheap Shanzhai (iClone) knock-offs. But Shanzhai iPhones are not reliable and quickly become landfill. A low-priced “real” Apple iPhone running EDGE 2G only, might sell by the tens of millions.
More background > http://iphonasia.com/?p=5762