July 18,2009

iPhone Tested, Expected to Debut in China As Early As September

By CSC staff, Shanghai

After over a year of haggling, China Unicom and Apple have finally reached a consensus on the details of iPhone's entrance into the Chinese market, and iPhone may be on the shelves as early as September.

China Telecommunication Technology Labs (CTTL) is testing the 3G iPhone in WCDMA form. Conventionally it takes at least a month for a complete test, so September seems the earliest launch date. China Unicom and CTTL are not, however, spilling any beans.

But the China launch of iPhone is still exciting the whole industry. The first beneficiary of iPhone's entrance into China should be Foxconn, iPhone's producer.

After the 3G iPhone was first launched, Foxconn began to contact and promote it to Chinese operators. But as these operators have had many requirements for any iPhone sold in China, Foxconn's R&D specialists have had to adjust and test iPhone according to agreements between the operator and Apple.

It is reported that the 3G iPhone to be sold in China does not have Wi-Fi, but has kept Bluetooth and other functions. Foxconn's factory in Shenzhen has begun to produce a 3G iPhone specially designed for China Unicom.

Foxconn has not confirmed the news, though, and a Foxconn insider said iPhone has not yet been included in Foxconn International's business.

But recently, Hon Hai Precision Industry, a subsidiary of Taiwan-based Hon Hai Group and for which Foxconn is a trade name,  declared its income in June totaled NT$ 128 billion (about $3.871 billion), up 39.6% over May and 19.9%, year on year, to a new high this year.

Industrial insiders said Hon Hai Precision Industry's performance rebound in June was mainly boosted by the huge sales of the new edition iPhone. Apple said at the end of June that over one million new edition iPhones had been sold within three days after the new product was launched on the market.

Although the 3G iPhone will enter China soon, it is still a mystery how China Unicom will promote it. Analysts and industrial insiders think China Unicom and Apple may cooperate in a special way. For example, China Unicom may pay a subsidy to Apple, and take the charge of the sales of a specified number of iPhones. It may also claim income from value-added services according to proportion. In return, maybe only China Unicom's sim card will be usable in the iPhone.
However, China Unicom has confirmed nothing. It is at present still focusing on the network construction. The real competition in 3G business lies in content and application. Compared with China Mobile, which is promoting its application program store Mobile Market, China Unicom's weakness in content and application is very apparent.

But an important reason for iPhone's popularity around the world, besides its amazing interface, is its various functions. Apple said on July 14 that its online application program store had provided consumers in 77 countries with 65,000 applications, and that downloads had exceeded 1.5 billion. To some degree, this may offset China Unicom's weakness.

China Unicom's most important task is to improve its content and application business. Nokia's WCDMA cell phone, with its own online store, and Sony's WCDMA cell phone, with kaixin001.com, are cooperating with China Unicom.

China Unicom's introduction of iPhone is in line with its strategy for 3G, which can be summarized as "introducing star products and boosting market demand." iPhone may be just the star product it needs. Besides increasing user's digital business usage and lifting China Unicom's image on the 3G market, it may also help China Unicom attract high-end users.

But a problem exists, and that is that at least one million iPhones have already been smuggled into China, at over 4000 yuan per unit. It will be a challenge for China Unicom to decide on a price and promotion platform of a 3G iPhone without Wi-Fi function.


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