Posted by: Peter Burrows on July 10
The Chinese government received an application from Apple today, seeking a Network Access License to sell the iPhone for officially-sanctioned use in the country. So says Wedge Partners, a Colorado-based stock research firm.
Maybe more surprising is that the application is for an iPhone that doesn’t include wifi connectivity. This has been a sticking point in negotiations with the Ministry of Industry and Information Technology, which wants the phone to only run on the cellular networks. “Apple was hellbent on having the iPhone be wifi-enabled,” says Wedge analyst Matt Mathison. “The Chinese government has been just as adament that it not be.”
This removes one more obstacle towards getting official clearance to sell iPhones in China—beyond the million or more people who are using unlocked versions of the phone brought into the country from elsewhere. Now, that official launch may come three months or so earlier than expected, says Mathison. He says it typically takes four to six months for such an application to be accepted. And he believes the approved license will accelerate talks with China Unicom, one of the three big state-controlled carriers in China. As such, “we now expect it to come before the Spring Festival in [January] 2010.”
Wedge believes the iPhone outlined in the application runs on the GSM standard, like all other iPhones, and is not a new model that runs on the CDMA standard used by huge Chinese carriers such as China Telecom. That jives with what Apple has said in the past, despite talk of it doing a deal with Verizon, another huge CDMA-based carrier. Apple chief operating officer Tim Cook told stock analysts in April that CDMA “doesn’t rerally have a life to it after a point in time,” since it would be largely replaced by the LTE standard within a few years.
Apple did not comment on Wedge’s report, except to note that Cook said during that April earnings call that the company “would like to be in China within the next year (i.e. anytime within the next 12 months) and we’re clearly working on that.”
If Wedge’s timetable proves to be accurate, it will be another case of Apple under-promising and over-delivering—by about three months.
Interesting that the Chinese refuse to allow WiFi connectivity. Is this generally perceived as a security issue--Big Brother can't keep track of who is using the WiFi connection?
It is shocking & sad that apple is going to kow-tow to the MIIT on the wifi issue, like some vassal state paying tribute like in the days of yore!
Apple has stood up & defied the mightiest organization in the capitalistic world - and yet now will cave before the communists?!
For shame!
The elimination of economic competition from voip is the ostensible reason that MIIT wants to prevent the use of wifi on mobiles -
but the real motivation at MIIT is that they desperately want to forestall the possibility of ad hoc & mesh communications networks that would by-pass the political control of the communist government!
This craven lack of backbone by apple is deplorable.
Apple could quiet happily continue to supply the mainland via the grey market in Hong Kong: there is no insuperable financial damage to apple's china business by sticking to one of the core elements in the iphone's value proposition: namely, the middleman (whether an arrogant carrier or a despotic dictatorship) should not control the relationship between the producethane the consumer!
I am disgusted that I have spent decades defending & evangelizing apple's credo (the tools should not get in the way of the creator's & his work) in the face of a (now convicted) cyber gangster like Microsoft .... only to find myself associated with a deal every bit as venial as the Stalin-Hitler non-aggression pact: ie an insult & slap in the face to every true-beliver acolyte who has steadfastly manned the barracades with the battle cry of "think different"!
apple's prospective capitulation to MIIT is a renunciation of it's own seminal '1984' advert, not to mention it's later irridesscent "Here's to the Originals" campaign.
Apple: "je accuse"!
Apple: you disgust me to the edge of despair: how am I supposed to demonstrate with my Chinese friends who apologize for the CCP when I am stranded in apple's moral quagmire of actively collaborating with a junta's vast apparatus of repression?!
eheu!
Wow.. this WIFi issue.. Did the US State department help out? Wondering if this is a restriction on trade.. Security... I don't see new security issues, if one already has deployed WiFi, what's the difference? If China really thinks restricted trade is the way to go, then there's all sorts of goods they are shipping here that their action says we are free to restrict. I'd hope for fair and free trade, but I'm OK to let China decide how we trade.. it'd hurt them worse to play it their way.. if our state department grew a pair.
Oh, come on all you hypocrites!
Why does Apple have to compromise it's enterprise for politics that it can't change.
Business opportunities like this can catapult Apple's bottom line to surpass Microsoft.
Now that's certainly a reason to tailor product specs to meet local government demands.
China can do whatever it wants to in it's own country. If Apple is willing to make compromises, that's fine with me. Better to sell crippled iPhones in China than none at all. I'm more interested in Apple revenue than Chinese philosophy. I'll bet the average guy on the streets of China wants the same things we do in the West. Things will probably change in due time.
I think that China doesn't want the carriers to have any of their money siphoned off since they invested so much in the 3G infrastructure. I think it sucks for the average user but if there's no other way, go with it. I just hope Apple sells millions of iPhones and the people of China love using them. Maybe things will change in the future if carriers can figure out a way to charge money for WiFi usage. Not having WiFi could really overload the network if the Chinese use the iPhone like we do in the States.
Right. Is the progressive cause helped more with or without
the iPhone being openly marketed in mainland China?
Do you think Apple's competitors would also willingly
sacrifice a lucrative market for a principal?
The U.S. already does a huge amount of trade with
mainland China? Why should Apple be an exception?
Don't ask Apple to fight your battles for you. Write
a book, if you feel that a strongly. Who's stopping you?
Suny Guy
Guys,it is a great opportunity for Apple to expand its market and increase revenues. Apple will be able to sell its applications as well as music hopefully so it's like selling iphones in China kills three bird with one stone. That's great!! One thing that worrrys me though... Chinese don't know they need to pay a fair amount of money when they get songs and movies. Nothing is free peoples of China....:P
By selling iphones in the main land, Apple is likely to be a bigger player in Smart Phone market as well as in the wireless industry. Other cell phone manufacturers watch out!! Good for Apple.
This likely comes down to manufacturing/programming concerns rather than politics. Dumbing down the iPhone sans WiFi necessarily means an inconsistent hardware/software world for Apple, essentially custom programming in a not-insignificant way for a very very large customer. You may say this is freedom related, and for China it may be so. Someone in power must be hurt by having a pocket sized versatile wireless device. But for Apple this is as tough a business decision to calculate as it is political one.
p.s. It's "adamant" not "adament" - spell check folks...
I don't think a deal with China Unicom is going to eliminate the Hong Kong grey market. We need to sell as much to China in any case.
Will iPhones be running "Green Dam Youth Escort" software too?! ;)
I love the comments espousing the free market. Essentially there's no use fighting a government (especially not a foreign one), it's up to the Chinese to change their system if they want WiFi, Apple has massive profits to make (or not make).
I wonder what you'd think if our own government was as heavy handed.
The point is that markets don't have any morality built in; it's up to the players in the market to act with integrity. But our values have changed and now we see profit as justified no matter what the cost.
One way or another, Apple will sell. Guys with WIFI deployed at home or work place will buy iphone in grey market which saves APPLE a lot of money for after-sale service.
One way or another, Apple will sell. Guys with WIFI deployed at home or work place will buy iphone in grey market which saves APPLE a lot of money for after-sale service.
People can buy Hong Kong phones in China that have wifi. I'm sure they could do the same with I-Phone.
A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.
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