Apple 2.0

Covering the business that Steve Jobs built

An iPhone for China on Sunday?

May 16, 2009: 7:25 AM ET

china-iphone

UPDATE: China Unicom, as promised, launched its 3G service in 55 cities Sunday -- with plans to expand to 284 cities by the end of September -- but there was nothing in Chinese press accounts about its negotiations with Apple to carry the iPhone.

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For months, Apple (AAPL) watchers -- counting the days until Cupertino finally brings the iPhone to mainland China -- have had their eye on May 17, 2009.

Not only is Sunday World Telecom Day -- or as the United Nations unhelpfully renamed it in 2005, World Telecommunications and Information Society Day -- but it is the day China is scheduled to get its first 3G service based on WCDMA (Wideband Code Division Multiple Access), the protocol the iPhone 3G uses.

China's 640 million mobile subscribers represent the biggest prize on the planet for cell phone makers — the last missing piece in Steve Jobs' master plan to blanket the earth with iPhones.

China MobileBefore he went on a medical leave in January, Jobs had reportedly been working— without success — for more than a year to negotiate an iPhone deal with China Mobile, the country's (and world's) largest carrier with 477 million customers at last count.

One of several sticking points was the fact that China Mobile is planning to use its home-grown TD-SCDMA (Time Division Synchronous Code Division Multiple Access) protocol for 3G cell-phone coverage. In order for Apple to serve China Mobile's customers, it would have had to build a special Chinese iPhone with a new cellular modem chipset.

China UnicomIn February, a flurry of Chinese language news reports suggested that Apple had switched horses and was in serious negotiations with China Unicom, the country's second-largest carrier (135 million mobile customers), which has planned a high-profile launch of its 3G WCDMA service in 55 cities Sunday.

In March, China Unicom's Shanghai branch briefly posted an ad for the iPhone, as if the device were already in stock.

All the pieces would seem to be in place -- except Steve Jobs is missing and so is the buzz from the Chinese business press that usually precedes a deal this big.

"We would like to be in China within the next year," COO Tim Cook told analysts in a quarterly earnings call last month, "[We] are currently working on that, but I have got nothing specific to announce today." (link)

Dan Butterfield, whose iPhonAsia blog keeps close tabs on Apple's business dealings in the Pacific Rim, wrote last week that the company may prefer to hold the announcement of any China deal until it can combine it with the unveiling of the next-generation iPhone.

Besides, he adds, "it is one thing to announce a deal, and another to actually launch."

"Given production, distribution and other corporate logistics, it is iPhonAsia's view that there will be no iPhone launch in China before July 1. It is more probable that a formal launch won't happen until mid to late summer 2009." (link)

The key dates to watch, according to Butterfield:

  • Sunday, May 17 -- World Telecom Day and China Unicom's 3G launch
  • Monday, June 8 -- The World Wide Developers Conference keynote, a logical place to unveil new iPhone hardware and announce a big distribution deal
  • Late June or early July -- The timeframe in which Piper Jaffray's Gene Munster speculates Apple may host a special event to celebrate Steve Jobs' return and launch iPhone 3.0.

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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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