Friday, March 19, 2010

Red iPhone Rising?

The chairman and CEO of China Mobile demonstrated Thursday that even the world’s largest mobile phone company is not immune from iPhone envy.

At the same time CM announced that it had reached 522 million subscribers, CEO Wang Jianzhou said that he hoped the company could land the iPhone. As AFP reported:

"We're hoping we'll come to an agreement (with Apple) on the iPhone as soon as possible," he told a news conference in Hong Kong to release the company's 2009 results.

"We will continue to express our interest in the iPhone. But not just the iPhone, also the iPad."
CM hopes to build on its success obtaining promise of a BlackBerry for its non-standard 3G network. As Reuters (via the FT) reported, Jianzhou said “including TD-SCDMA is not that hard to do – RIM is doing it.” Analysts speculate that CM needs a proven handset to drive 3G data demand — as the iPhone has done elsewhere in the world.

The problem is that despite its size CM is the only carrier in the world using the homebrew TD-SCDMA. China Unicom is using W-CDMA, while China Telecom has been growing rapidly (from a small base) using cdma2000.

Last time I checked, major chip suppliers like Broadcom and Qualcomm were not providing multi-mode (or single-mode) TD-SCDMA chips (despite rumors to the contrary). Among Western suppliers, the chips are available from ST-Ericsson, the joint venture of Ericsson and STMicro, but I’ve seen no evidence of a relationship between Apple and the vendor. (However, STMicro may want to sue Apple for the iPad trademark).

The idea of the iPhone on China’s dominant carrier has been long-rumored. However, beyond the technical issues, there is the business model issue. Apple wants a premium price for its premium product, but China Mobile has been reluctant to transfer wealth to handset suppliers.

FT and the WSJ say CM’s handset subsidies will go up 30% this year — a good sign for Apple and other premium suppliers — while MarketWatch says they’re going down. An increase would suggest that CM has decided it needs to switch to the handset-centric model used by Western carriers to promote 3G adoption, a rare example of convergence between the Middle Kingdom and the Rest of the World.

No comments: