China Mobile calls off iPhone deal

15 Jan 2008

Apple’s global sales target of selling ten million iPhone handsets by the end of 2008 was shattered as talks with the number one carrier, in the world's largest wireless market, has come to a halt.
Of China’s 522 million mobile phone subscribers, state-controlled China Mobile has 363 million subscribers and therefore a stronger upper hand in negotiating deals than other operators. "We can only say that negotiations have ended for now. We have no other news to report," said Li Honghui, a spokeswoman for China Mobile Communications Corporation."We have held talks with Apple to launch the iPhone device in China. However, those talks have ended," said Rainie Lei, a spokeswoman for China Mobile. Speculations point to disagreements over revenue-sharing terms in the preliminary discussions between the two companies.China Mobile, the world’s largest mobile phone operator based on the number of subscribers, was reportedly unwilling to accept Apple's request for a 20 per cent to 30 per cent share of China Mobile's user fees from future iPhone users.The Cupertino, California-based company, which released the hyped handset in the US, Germany, the UK, and France in 2007, has said it plans to launch the iPhone in Asia in June of this year. Apple, which so far has only released the device on the country's largest networks, has already begun talks with China Unicom to offer the iPhone exclusively in mainland China. Analysts believe smaller rival China Unicom is more willing to give Apple a larger piece of the revenue pie than China Mobile.

Elsewhere, Canadian company Research in Motion (RIM) is having an equally difficult time with China Mobile. RIM is known to have sent its first shipment of BlackBerry units to the mainland operator in October, with China Mobile vowing to kick off sales this year, but it has not yet began selling the devices.“You should ask China Mobile about the timeline,” RIM China general manager Charles Lui told Reuters. “From my perspective everything is according to plan.” The vendor also unveiled a Chinese distribution agreement with Alcatel-Lucent around the same time that has also failed to see the popular smartphone hit shops. Its regional launch is likely to come up against stiff competition from local players, including the similarly named RedBerry. Lui downplayed concerns and said RIM was “satisfied” with the staging of its Chinese launch and would initially focus on business customers. “China Mobile is basically targeting enterprises. Later on more services will be launched, but we need to start from somewhere,” he said. “It’s always fun to work in a competitive environment and BlackBerry has always welcomed competition.”