Apple 2.0

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New Chinese iPhone talks target May 17 -- UPDATE

February 13, 2009: 5:20 AM ET

china-iphoneHas Apple switched horses in China?

That's the thrust of a pair of news reports out of Beijing this week that suggest a deal to carry the iPhone in China could be reached as early as May 17.

The first report, published Monday by Interfax-China, offered a recap of the sticking points that seem to have scuttled negotiations between Apple (AAPL), which is desperately seeking a partner in the world's largest cell phone market, and China Mobile, the country's -- and the world's -- largest carrier (415 million subscribers at last count).

According to a source who claimed to have been briefed by China Mobile president Wang Jianzhou himself, the "third and final round" broke down over which company gets control of the App Store in China. (link) [See UPDATE below for the latest twist.]

The second story, filed Wednesday by China Business News via China.org.cn, reports that Apple is now negotiating with China Unicom, the country's No. 2 mobile carrier (about 130 million subscribers).

"Yes, we are in talks with Apple Inc.," a China Unicom manager told the newspaper. (link)

According to this account, the two companies have had several rounds of negotiations, beginning as early as last October, and have stumbled over some of the same issues as the China Mobile talks -- including government restrictions on cell phones with integrated Wi-Fi.

But China Unicom has an edge over its larger competitor: On May 17, it will launch China's first 3G service based on the WCDMA (Wideband Code Division Multiple Access) protocol -- the one Apple employs. That would allow China Unicom's customers to use off-the-shelf iPhone 3Gs without modification.

China Mobile, by contrast, is sticking with its home-grown TD-SCDMA (Time Division Synchronous Code Division Multiple Access) protocol for 3G service. In order for Apple to serve China Mobile customers, it would have to build a special Chinese iPhone with a different cellular modem chipset.

So keep your eye on May 17 ... but don't hold your breath.

"We will enter Asia with the iPhone in 2008," acting Apple CEO Tim Cook said nearly a year ago, as AllThingsD's John Paczkowski reminds us.

"We will one day enter China," Cook added. "We're not saying when."

UPDATE: China Mobile and Apple are "currently negotiating iPhone cooperation" according to a report in China Business News Thursday. The brief item, which comes via the English language headline service JLM Pacific Epoch, attributes the remark to China Mobile CEO Wang Jianzhou. iPhoneAsia speculates that "cooperation" might be a ploy designed to keep the estimated 1 million Chinese iPhone owners currently using China Mobile's EDGE network from switching to China Unicom when its 3G service arrives.

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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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