CURRENTLY China Represents 20% of the iPhone’s Market

Everyone is gaga about the iPhone–summer silly season–even in China where it is available only on the black market. Although Apple has no deal with a Chinese operator. Kevin Li, an analyst at In-Stat China estimates there are over 1 million of them in the middle kingdom. With 5.4 million iPhones sold since introduction, 19% of production is going to China–where the iPhone isn’t legally sold.

On February 3, 2008, I reported at my blog Mobile Point View that there was a revenue gap between Apple and ATT, and roughly 25% of iPhones were being hacked or hijacked to overseas markets–the consensus at the time was 400,000 iPhones were in China. That number has grown significantly. Notwithsanding the price. An IHT artilce reports that in Bangkok, Patpong’s vendors are selling the eight gigabyte iPhone for 29,000 baht, or US$ 860. In China, along Huaihai Road in Shanghai, at the Cybermart mall you can get an unlocked non-3g iPhone for 3,000 yuan, or $438. If you’re willing to go with the Chinese knock-off copy, only 1,000 yuan, or US$146.

One of the access points for China’s iPhones is now Hong Kong, where Hutchison Telecommunications (3HK) has been overcome with requests from internet applications to become iPhone-istas. All mobile handsets are unlocked in Hong Kong–no subsidization there. So it will be a growing channel point for iPhones into mainland China. An unlocked iPhone costs 4,680 Hong Kong dollars, or US$600, but customers must sign up for a two-year contract, with the least-expensive monthly plan costing HK$ 188 dollars or US$ 24. No word on early deactiviation penalty. Given the travel flow between the mainland and HKSAR, Hong Kong in some form will become a main entry point.

iPhone Wi-Fi as China’s Great Firewall Killer?
If and when the iPhone comes to China, the Chinese government has a dilemma. iPhone’s wi-fi feature will have to be removed. Otherwise web surfers will be able to circumvent China’s restrictive internet access security. Moreover, China Mobile has it’s own full music download service which iTunes would be a head to head competitor of. iPhone with no wi-fi dimenishes the user experience, which may drive more iPhone wannabes to seek out the pirated version over an eventual CMCC version.

China Mobile now in new Talks with Apple: When will iPhone legally be Available in China?
Speculation abounds whether China Mobile (CMCC) will succomb to Apple’s shared revenue business model. According to Market Watch on July 9, China Mobile has re-entered talks with Apple. Supposedly Apple has dropped its requirement of revenue sharing of services and airtime.

At this point, my earlier prediction of no iPhone in China looks pretty good. Additional rumors in the Chinese internet are that now China Unicom (CUNC) has signed and will introduce the 3G iPhone in August. RIGHT. Don’t hold your breadth. From all my contacts there, everything from IT deals to just plain business meetings are being put off until “After the Olympics.”

Ox iPhone
Whether it is China Mobile or China Unicom, here’s a refined prediction for legal iPhone sales in China…look for the iPhone to enter China during the Chinese New Year in 2009, the year of the Ox-enduring prosperity and strength. A natural fit…gift giving, cash flowing, iPhone buying.