Rich Fiscus
14 Nov 2011 9:29
With as much success as Apple has had in attracting major carriers for the iPhone, their inability to ink a deal with China Mobile stands out as perhaps their biggest failure.
China Mobile is the largest mobile carrier in the world by any objective standard. They have more than 600 million customers and their network covers more area than any other provider worldwide.
It appears the sticking point in negotiations between the two companies isn't over the phone, which would have to be modified for China Mobile's network, but rather the iTunes App Store. Specifically, it's a question of app store revenue. China Mobile wants a cut.
Citing information from Sterne Agee analyst Shaw Wu, All Things D reports that China Mobile has told Apple they are not interested in selling the iPhone without a revenue sharing deal for app store purchases.
If true, there is some irony in the situation. Apple's demand for revenue sharing with carriers was one reason they were able to secure very few carrier deals for the original iPhone. In fact, China Mobile was one of the carriers who turned them down.
With the launch of the iPhone 3G in 2008, Apple dropped that demand and resumed talks with China Mobile. However, those talks appeared to stall again because the carrier wanted to provide apps for it through their own app store.
Apple chose, instead, to introduce the iPhone to China through a smaller carrier.
China Mobile's position is materially different than other carriers vying for iPhone deals. As a state owned company, they don't have the competitive concerns faced by most other providers.
Interestingly, Japan's largest carrier, NTT DoCoMo, is also partially (33%) state owned, and has also rebuffed Apple's efforts to work out an iPhone deal.
Perhaps the two companies' similarities are coincidental. Or maybe it's a sign Apple has a lot to learn about doing business in the region.