China Unicom to launch iphone in China by Q4/2009

Under the three-year deal, iPhones will start to be sold in China in Q4/2009. Unicom won't share revenue with Apple, as some operators do, and it will purchase the handsets from Apple on a wholesale basis and resell them to consumers, the Chinese company said. Unicom will offer a subsidy to customers to lower the iPhone's price.

China Unicom is the second-largest mobile phone company in the country and is hoping the iPhone contract will help it gain market share from larger rival China Mobile. China has nearly 700 million mobile phones subscribers today.

According to a Wall Street analyst, Apple will sell somewhere between five and seven million iPhones in China in 2010, which account for about 15% to 20% of its worldwide iPhone sales, as a result of its deal with China Unicom.

While its rival announced the deal, China Mobile is still in talks with Apple about offering the iPhone in China, which have reached no conclusion yet. China Mobile started its talks with Apple two years ago (cf. Smart Insightsq 07-47), but China Unicom, which operates WCDMA network which is compatible with the iPhone, became seen as the favorite for an iPhone deal in recent months.

One snag in China Mobile's talks with Apple was the carrier's plan for its own mobile application store, in potential competition with the iPhone App Store. Another was China Mobile's use of a mobile standard TD-SCDMA that was domestically developed and is not compatible with current iPhone models.

Still, China Unicom are now facing challenges to realizing the iPhone's potential in China, including competition from similar devices, and the fight against the iPhones smuggled into the country and home-made counterfeited iPhones sold for only one third of the price of the original which already flooded the market.