Apple 2.0

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China Mobile's iPhone negotiations enter endgame

June 27, 2008: 11:10 AM ET

The overseas iPhone deal that could prove to be Apple's most important has cleared its final hurdle, according to two reports out of China.

"Apple is no longer insisting on a revenue-sharing policy," China Mobile spokeswoman Rainie Lei told Reuters on Friday, "so the biggest hurdle for China Mobile to bring in the iPhone has been cleared."

"We've broken through the biggest obstacle," Gao Songge, deputy director of China Mobile's general department, told Agence-France Presse. "And we are negotiating at the working level."

China Mobile is the world's largest mobile phone carrier, with more than 380 million customers. Talks with Apple had reportedly broken off over Cupertino's insistence on getting a share of the carrier's monthly revenue, something China Mobile said it would never agree to.

Although Apple (AAPL) has since dropped that demand in many of the overseas contracts signed this year, most observers assumed that the China deal wouldn't materialize before 2009.

But Steve Jobs told CNBC two weeks ago that he expected deals with both China and Russia -- the other big hold-out -- to come a lot sooner than that.

"We just didn't have a chance to get close with Russia and China," Jobs told the network. "And I think you'll see them happen later this year." (link)

In a separate news item, MarketWatch reported Friday that China Mobile will be providing 3G cellular service at the Beijing Olympics using its own Time Division Synchronous Code Division Multiple Access, or TD-SCDMA, standard. Visitors to Beijing using WCDMA-based devices will get much slower connection speeds as service automatically drops to 2.5G. (link)

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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