Can Jobs Get Revenue Sharing In China?
11.30.07 - 04:53pm
China is the largest mobile phone market in the world. It has a population of over 1.3 billion, amassing more people than any other country in the world. It also has over 350 million mobile phone subscribers currently subscribed with China Mobile and an expected growth to 500 million in the next year.
It is a market that Apple severely wants to cut into with the iPhone, yet it may be an unattainable market for a company that wants unprecedented revenue sharing. While China Mobile has been in talks with Apple, China Mobile President Wang Jianzhou stated that the revenue sharing wasn’t something they were particularly open to. He said, “We still think we can maintain the operator-centric model because we have the customers.” They also have a monopoly control as they are the government run mobile phone company in China with just one real competitor, China Unicom, which has said they are open to talks with Apple but no talks have begun commencing between the two. Meanwhile it has been both reported and denied in reports that talks between Apple and China Mobile have failed and ceased.
Apple may need China and its mass millions of people to really have an impact in the mobile phone market. Principal analyst for Creative Stratagies Tim Bajarin said, “It will probably take serious compromises on the part of Apple and China Mobile or even a second-tier vendor if a deal is to be done to make it possible to have legitimate Apple iPhones offered in China,” Bajarin said. “But Apple can’t ignore China if it wants to be a global smartphone leader.
Apple makes approximately $6.50 to $18 a month for every subscriber through AT&T. Numbers that Piper Jaffray analyst Gene Munster says will generate over $4 billion a year for Apple by 2009. A huge amount of revenue. Worth the cost to Apple to then try to prevent unlocked iPhones and retain revenue contracts with as many wireless companies as possible.
Apple has been having a harder and harder time keeping up the revenue sharing contracts as countries such as France have to sell unlocked iPhones in order to comply with the law. Germany’s T-mobile was sued and forced by a judge to sell the iPhone unlocked there as well. To get around the current legislation T-Mobile offered the iPhone unlocked for almost twice as much as locked. The huge ramp up in price is not holding the competition back however as the iPhone has proven to be such a hot commodity that one carrier, Debitel, is offering to pay the difference of the phone, paying over 600 euros in rebates to anyone who wants to sign up with them using the iPhone.
Apple has not said yet where the iPhone will be released yet although they are reported to be in talks in Spain and Australia. It would appear Spain is waiting for the 3G iPhone as their only network compatible with the 2G iPhone would be extremely slow - worse than using dial-up.
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