Details of iPhone Negotiations Between Apple and China Mobile Emerge

MacRumors · Feb 9, 2009

Interfax reports on details of the lengthy negotiations between Apple and China Mobile over bringing the iPhone to China. According to their source, China Mobile president Wang Jianzhou revealed in a recent visit to the China Mobile Research Institute that talks between the two companies have broken down three times over the past year and a half.

The negotiations, which have reportedly involved both Steve Jobs and Tim Cook, initially stalled over Apple's request that China Mobile share 20-30% of their monthly iPhone revenues with Apple. While this business model was initially utilized in the United States with AT&T and the original iPhone, Apple has shifted away from revenue-sharing deals with carriers to more traditional arrangements involving handset subsidies. Apple and China Mobile, however, were also unable to come to an agreement on subsidies, with China Mobile objecting to Apple's demand that the carrier pay $600 per iPhone.

The most recent round of talks has broken down over Apple's App Store and China Mobile's reluctance to relinquish their tight control over China's mobile Internet offerings.

The third and final round of negotiations also broke down over Apple's insistence that it, rather than China Mobile, sell iPhone applications directly to customers via its online store. Wang saw the offer as a threat to China Mobile's dominance of China's mobile Internet industry, as Apple rather than China Mobile would collect money directly from customers under the deal.

"Wang said China Mobile should operate the application store itself in order to maintain its advantage," the source said.

Wang also pointed out that iPhone users in other parts of the world pay for applications by credit card, a model which would not be successful in China, where users prefer to pay through deposits in their mobile phone accounts. Under the latter arrangement, China Mobile would have to play a part in administering the purchase of iPhone applications in China, the source said.

Article Link: Details of iPhone Negotiations Between Apple and China Mobile Emerge

MacBoobsPro · Feb 9, 2009

Two stubborn asses. Ain't nothing happening here.

CocoaPuffs · Feb 9, 2009

Apple should know this already. Doing business in China is not the same as doing business anywhere else.

kas23 · Feb 9, 2009

Apple has certainly met its match here. It will be a cold day in hell when China Mobile goes along with Apple's plan (which is akin to highway robbery). It's just not going to happen. China Mobile knows they are holding all the cards in this game and know they are sitting on an absolute gold mine. I don't expect them to blink first. China Mobile is perfectly fine without them and Apple should realize this.

In fact, Apple should be paying China Mobile for every iPhone sold.

Small White Car · Feb 9, 2009

I have a vision of Steve's health problems being false; a cover to explain his absence over the next few months as he hang-glides into China Mobile's headquarters 'Dark Knight' style, cracking heads left and right.

Hey, if they reach a deal in the next few months you'll KNOW this is what happened. I can't see either side giving in any other way.

Cleve · Feb 9, 2009

The carriers would be better to focus on innovating the back end

China mobile wants Apple's App store revenues? The nerve! Apple built that all up. China mobile is just providing packets (which they are getting reimbursed for.

Why can't they offer value added services to the backend which would be good for customers.
For instance:

* Instead of Voicemail: The carrier uses their speech recognition to send a text to your phone with text of the voice message and who/number it was from.
* Instead of listening to your phone ring or busy signal, people who call you get your public calendar (next freetime available?), latest GPS data, weather report, last time online, etc.
* When you call someone, it can send you an SMS with the Google Maps coordinates of you and the person you are calling.

http://blogs.computerworld.com/china_mobile_and_apple_cant_agree

Small White Car · Feb 9, 2009

kas23 said:
It will be a cold day in hell when China Mobile goes along with Apple's plan (which is akin to highway robbery).

I'm sorry, I'm a bit confused. How is running the App store "highway robbery?"

kas23 · Feb 9, 2009

Cleve said:
Why can't they offer value added services to the backend which would be good for customers.
For instance:

* Instead of Voicemail: The carrier uses their speech recognition to send a text to your phone with text of the voice message and who/number it was from.
* Instead of listening to your phone ring or busy signal, people who call you get your public calendar (next freetime available?), latest GPS data, weather report, last time online, etc.
* When you call someone, it can send you an SMS with the Google Maps coordinates of you and the person you are calling.

This would involve Apple "approving" all of these services since they are likely going to require minor adjustments to the firmware. This isn't going to likely happen.

And you say the "nerve" of China Mobile? What about the "nerve" of Apple? They were collecting a portion of AT&Ts monthly bills! Where is the precedence for that business model? AT&T may win out in the end (which will take years to realize), but they have been bleeding money the last 2 quarter due to the iPhone. Finally Apple has met an entity just as stubborn as them. I hope they enjoy it!

LEStudios · Feb 9, 2009

kas23 said:
Apple has certainly met its match here. It will be a cold day in hell when China Mobile goes along with Apple's plan (which is akin to highway robbery). It's just not going to happen. China Mobile knows they are holding all the cards in this game and know they are sitting on an absolute gold mine. I don't expect them to blink first. China Mobile is perfectly fine without them and Apple should realize this.

In fact, Apple should be paying China Mobile for every iPhone sold.

No I don't see it happening unless Apple create a Special Gift cards that can pay China Mobile balance and App Store, Revenue Sharing Could Work if Apple raise price of the phone for technical reasons and specific features to offset the cost of 20-30% meaning raise the price for the phone 20-30% make that 32GB and 64GB Module to increase the memory capacity because if they launch the 32Gb and 64GB there first that demand will be high enough to enable Apple to buy 2nd round 32GB and 64GB modules at a cheaper rate meaning the rest of the world will get cheaper pricing because this will make the 32GB & 64GB Memory module. Strategy in my book is to give them exactly what they want just a lot to where they choke on it. Then they gone be dependable on Apple to come through that's when you cut them off then negotiate them on new terms to where there future depends on Apple.

kas23 · Feb 9, 2009

Small White Car said:
I'm sorry, I'm a bit confused. How is running the App store "highway robbery?"

I'm sorry, I'm a bit confused. Who said the "App store" is highway robbery? I'm talking about Apple's policy of collecting a portion of the subscriber's monthly bill.

zombitronic · Feb 9, 2009

I would bet that China Mobile would also limit which Apps are allowed for sale if they ran the App Store. They wouldn't want their users to somehow get unfiltered information from outside of China, of course.

LEStudios · Feb 9, 2009

Small White Car said:
I'm sorry, I'm a bit confused. How is running the App store "highway robbery?"

Apple gets 30% off every sale! China Mobile wants some of this well as revenue sharing too. China Mobile needs to change its name to Apple of China! They sound a like in aggressive strategies!

Small White Car · Feb 9, 2009

kas23 said:
I'm sorry, I'm a bit confused. Who said the "App store" is highway robbery? I'm talking about Apple's policy of collecting a portion of the subscriber's monthly bill.

Why are you talking about that?

The article said they aren't doing that anymore, and the talks are currently stalled because China Mobile wants to run the app store in China and not let Apple run it.

I kind of assumed you were talking about THIS article and not the past. Apparently you weren't, though.

kas23 · Feb 9, 2009

Small White Car said:
Why are you talking about that?

The article said they aren't doing that anymore, and the talks are currently stalled because China Mobile wants to run the app store in China and not let Apple run it.

I kind of assumed you were talking about THIS article and not the past. Apparently you weren't, though.

Ummmmm. The past is mentioned in the above article. I'm only referencing the largest paragraph in the article.

The negotiations, which have reportedly involved both Steve Jobs and Tim Cook, initially stalled over Apple's request that China Mobile share 20-30% of their monthly iPhone revenues with Apple. While this business model was initially utilized in the United States with AT&T and the original iPhone, Apple has shifted away from revenue-sharing deals with carriers to more traditional arrangements involving handset subsidies. Apple and China Mobile, however, were also unable to come to an agreement on subsidies, with China Mobile objecting to Apple's demand that the carrier pay $600 per iPhone.

I didn't know there were specific rules about only discussing certain sections of articles. Silly me.

Small White Car · Feb 9, 2009

kas23 said:
I didn't know there were specific rules about only discussing certain sections of articles. Silly me.

There are 2 parts to the article. The part they've agreed to drop (revenue sharing) and the part that's still being talked about (the app store).

You said:

kas23 said:
It will be a cold day in hell when China Mobile goes along with Apple's plan (which is akin to highway robbery). It's just not going to happen.

You're telling me that you weren't talking about the undecided part, but rather the part they've already worked out?

So you meant: It will be a cold day in hell when [the thing that's already happened occurs?]

You can see why I decided to assume you were talking about the App store, can't you?

yuhaii · Feb 9, 2009

just a little bit out of the topic. who knows someplace without any information filter in the world?

avionicsman · Feb 9, 2009

The China Syndrome ver 3.0

Well goes to show how a unstoppable force meets an immovable object. Wait a minute, that was a chinese paradox too! Mr. Jobs and Mr. Cook better quit while you are ahead.

kas23 · Feb 9, 2009

LEStudios said:
Apple gets 30% off every sale! China Mobile wants some of this well as revenue sharing too. China Mobile needs to change its name to Apple of China! They sound a like in aggressive strategies!

And this too. I also think 30% is a bit steep for Apple's cut (but not necessarily highway robbery). Apple really doesn't do anything. Apple doesn't help market the apps in any way, nor do they organize them in a user-friendly way. Why should they get a whole third of the money developers make? And don't say; "without the app store there wouldn't be any apps." Before the App Store, apps were thriving. They were doing so well Apple decided they wanted a piece of the pie.

This may be sacrilegious around these parts, while it may help the average person, the App Store offers me no advantage. I would rather just have the apps posted on a website, like appshopper.com. Now, I never go onto the App Store to look for Apps. It's impossible. I just go there to purchase them.

kas23 · Feb 9, 2009

Small White Car said:
There are 2 parts to the article. The part they've agreed to drop (revenue sharing) and the part that's still being talked about (the app store).

You said:

You're telling me that you weren't talking about the undecided part, but rather the part they've already worked out?

So you meant: It will be a cold day in hell when [the thing that's already happened occurs?]

You can see why I decided to assume you were talking about the App store, can't you?

Dude, get over it. I already told you what I was talking about. Don't worry about it.

lazyrighteye · Feb 9, 2009

Yuk. Sounds complex.

Stephen123 · Feb 9, 2009

Giving China Mobile control of the App Store might lead to a violation of the GNI ethical guidelines.

http://www.globalnetworkinitiative.org/

billandy · Feb 9, 2009

frankly the iphone won't bring much to china mobile, because of its already dominant 70%+ market share. and since apple started selling unlocked contract-free iphones in apple stores in hk, there're already tons and tons of oem unlocked iphone 3gs in the market up for sale.

personally i think the situation of iphone in china is going to remain like now for the time being. and it's actually not at all bad to consumers. chinese people rather pay £500+ for an unlocked handset than singing up contracts for subsidised phones, probably because of the flow of people and the lack of credibility in most individuals.

iphone now sits at around £350 in china, which is a perfectly competitive price compared to many £500+ samsung or lg handsets.

some may point out the fact that without the support form china mobile users wouldn't be able to have visual voicemail. but, as a matter of fact, chinese people don't use voicemail at all! it's just cosumer's habit...

Abstract · Feb 9, 2009

Apple wants $600 in subsidies for the iPhone, and also sell apps at their store and make money? What does China Mobile get out of this? They're already in a dominant position in China (or at least the parts I've been to). I'm glad China Mobile isn't taking the deal.

Giving away control of things they normally have control over isn't something CM is desperate to do, and I'm glad one company isn't bending over backwards to sign any deal involving the iPhone.

zombitronic · Feb 9, 2009

kas23 said:
And this too. I also think 30% is a bit steep for Apple's cut (but not necessarily highway robbery). Apple really doesn't do anything. Apple doesn't help market the apps in any way, nor do they organize them in a user-friendly way. Why should they get a whole third of the money developers make? And don't say; "without the app store there wouldn't be any apps." Before the App Store, apps were thriving. They were doing so well Apple decided they wanted a piece of the pie.

This may be sacrilegious around these parts, while it may help the average person, the App Store offers me no advantage. I would rather just have the apps posted on a website, like appshopper.com. Now, I never go onto the App Store to look for Apps. It's impossible. I just go there to purchase them.

I don't have the pre-App Store app numbers to contradict you, but the iPhone was around a full year without the App Store. I'm not sure how many apps there were during this first year.

In comparison, in less than a year of App Store existence, there are over 15,000 Apps and more than 500 million downloads. Again, I don't have pre-App Store numbers but it seems unlikely that they were this high.

Also, I'm not sure how the App Store should be more user friendly. What's wrong with categories and searching?

xxii · Feb 9, 2009

I know they have a lot of people, but forget China-- they don't deserve the iPhone until the playing field is level. Apple just needs to keep putting cool products (or videos of them) in their physical stores over there, make them drool over what they can't have. They'll just make rip-offs anyway.

Details of iPhone Negotiations Between Apple and China Mobile Emerge

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