Chang Xiaobing
Update – January 4, 2010: In a today, Merrill Lynch International analyst Cynthia Meng said; “China Unicom and Apple are likely to reach a for more than a two-year exclusive iPhone distribution agreement.” According to a China Unicom spokesperson, the two sides (Apple and China Unicom) are negotiating for an extended iPhone agreement.
Back in the summer of 2009, there was some question over the terms of Apple’s iPhone deal with China Unicom. Many had reported that the iPhone deal with China Unicom was “non-exclusive” leaving Apple open to negotiating carrier/partner deals with China Mobile and possibly China Telecom. In a rare “for the record” comment, Apple spokesperson, Natalie Harrison, issued a succinct via e-mail - “I can confirm it is not an exclusive deal.” There was no further elaboration from Apple.
Despite the claim that the Unicom/Apple deal was non-exclusive, there were other reports (read below) which suggested that the deal did in fact include some “exclusivity.” This exclusivity likely would preclude Apple from building a TDSCDMA 3G capable iPhone for China Mobile or a CDMA2000 3G iPhone for China Telecom.
With the rumors of Apple developing a next-gen iPhone for launch in summer 2010, China Unicom may be working to expand the “exclusivity” terms to preclude Apple from reaching a 3G or 4G deal with China Mobile or China Telecom.
Update – Sept 15, 2009: A forthcoming EDGE network upgrade in China may provide increased speeds for iPhone users. More background at the end of this post.
September 3, 2009: You may recall the confusion over “exclusivity” that followed the August 28th iPhone deal announcement by China Unicom. There was no mention of an “exclusive deal” in the official release on China Unicom’s website. Nor was there any mention of exclusivity during China Unicom’s post earnings (Q2) briefing for analysts. Yet, when questioned by reporters after the briefing, China Unicom Chairman and CEO, Chang Xiaobing, made reference to a 3-year “exclusive” iPhone deal with Apple. Hmmm?
This apparent contradiction generated a barrage of questions from confused reporters (exclusive deal??? … yes or no?). On August 31, an Apple spokesperson, Natalie Harrison, issued a succinct via e-mail - ”I can confirm it is not an exclusive deal.” There was no further elaboration from Apple.
And the big deal about exclusivity is? The big deal is that non-exclusive terms would allow Apple the freedom to do a deal with China Mobile, the world’s largest wireless carrier, with some 478 million subscribers.
Here’s the rest of the story … Apple’s deal with China Unicom may include “limited exclusivity” terms. A China Unicom source, who wished to remain anonymous, spoke to Interfax TMT on Sept 3rd. The source explained … “Apple has developed 3G iPhones exclusively for use on China Unicom’s WCDMA network, and is not developing iPhones for use on any other 3G standards, including China Mobile’s TD-SCDMA network.”
Spruce Goose
Whether these “3G exclusivity” terms were made official (part of the deal contract) or not, this makes perfect sense. Apple would be only too happy to give China Unicom a “3G” exclusive. China Unicom runs WCDMA, an international 3G standard that is supported by the latest generation iPhones (3G and 3GS). China Telecom owns a license for CDMA2000 3G, a standard that Apple will likely never support. China Mobile runs TDSCDMA 3G, the “Spruce Goose” of 3G standards. Like Howard Hughes’ ill-fated behemoth, TDSCDMA may lumber around China for a brief while, but it will be supplanted by TD LTE 4G just as soon as China’s new “indigenously innovated” 4G standard can be readied for launch (circa 2011).
Apple would have no problem giving China Unicom’s “tried and true” WCDMA a “3G” exclusive for 3-years. What about a 2G or 4G exclusive for China Unicom? Um, no! As I have suggested for many months through various iPhonAsia posts, it is my belief that Apple would be keenly interested in doing a 2G deal (EDGE network) with China Mobile. Apple would also entertain conversations about TD LTE 4G (launch circa 2011), a standard that will belong exclusively to China Mobile. There is also a chance that Apple would talk with China Mobile about the iTablet device (huh? what iTablet device?) that no one is supposed to know about.
All Things Digital reporter John Paczkowski, posted a quote from iPhonAsia that fits nicely here >
According to China Mobile CEO Wang Jianzhou, Apple hasn’t passed it up [an iPhone deal with China Mobile]. During the company’s quarterly earnings call on Aug. 20, Jianzhou said specifically that talks between the two companies continue. Just what they might involve is anyone’s guess, although Dan Butterfield at iPhonAsia speculates that they would likely be for an EDGE 2G-only version of iPhone.
“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,” Butterfield writes. “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.”
Update – September 15, 2009: Rethink Wireless analyst Caroline Gabriel posted an article outlining a forthcoming EDGE network enhancement in China. Here is the relevant passage:
“One of the Chinese operators has been working with Nokia Siemens on new generations of EDGE, and the vendor yesterday announced the world’s first successful trial of EDGE Evolution Downlink Dual Carrier (DLDC) with an “unnamed” Chinese carrier (which has to be Unicom or Mobile, since Telecom has CDMA). This technology claims to double data speeds on EDGE networks and also boosts system resource efficiency to support more traffic. This would be just the sort of technology that could enable a decent iPhone experience even on a 2G network, and is also important in reducing the gap in user experience when a consumer moves from the 3G to the 2G network while roaming outside a 3G zone.”
Read full post > HERE
“like howard hughes ill-fated behmouth”? Behmouth? Could be ill-fated spelling: while I don’t think it was Bigmouth, maybe you meant behemoth?
@Moofmate fixed
. Thanks. I’m my own editor … that’s often dangerous.