China Mobile in talks with Apple to sell iPhone
China Mobile is in talks with Apple to sell the iPhone in China, the company's CEO said on Tuesday. But he's not keen on the type of revenue-sharing model that Apple has insisted on elsewhere in the world.
Context & Ripple Effects
Days after the iPhone reached the UK through O2 and Carphone Warehouse on November 10-11, 2007, attention turns to the biggest prize Apple has not yet touched: China. China Mobile's CEO said Tuesday his company is talking to Apple about selling the iPhone — though the talks themselves remain unconfirmed beyond his statement.
The sticking point is structural, not logistical. Apple has insisted on a revenue-sharing model with carriers in every market so far, and the China Mobile chief explicitly said he is not keen on that arrangement. That makes this less a distribution story than a test of whether Apple's carrier economics template survives contact with a carrier of China Mobile's scale.
First-order effects
- China Mobile's public resistance to the revenue-share model puts the negotiating burden on Apple: absent new terms, the iPhone has no announced route onto China Mobile's network, leaving Chinese access to unofficial channels.
- For Apple, each new market negotiation now doubles as a precedent-setting exercise — the terms offered here will be read against the split-and-exclusivity package it took to O2 in the UK.
Second-order effects
- Other large national carriers gain leverage from China Mobile's stance: if a carrier of this size refuses Apple's revenue share, rivals negotiating their own iPhone deals can point to it when pressing for conventional wholesale or subsidy structures instead.
- Competing handset makers selling into China through standard carrier channels face a different threat calculus depending on whether Apple concedes terms — a flexible Apple enters the market faster than one holding out for its original model.
Third-order effects
- If scale carriers hold firm, carrier-handset economics bifurcates: revenue-share deals persist in markets where operators are weak, while the largest operators force a shift toward traditional device purchasing — eroding the recurring-revenue component of Apple's carrier strategy market by market.
The trend: Carrier partnerships for flagship phones are moving from uniform revenue-sharing exclusives toward market-by-market terms dictated by operator scale, with China as the decisive test case.