China Mobile still fighting iPhone's revenue sharing

Its 380M users are too many to ignore, says analyst; Apple will 'suck it up' and do a deal

Concerns about the iPhone's revenue-sharing business model have kept China Mobile Communications Corp. from negotiating with Apple Inc., the CEO of China's largest mobile service provider said this weekend.

China Mobile's chief executive, Wang Jianzhou, told reporters Saturday that Apple's current model, which requires operators to share monthly subscriber revenues with the iPhone maker, has prevented the two companies from engaging in formal talks.

Wang, however, said China Mobile hadn't completely dismissed the idea of some sort of deal. "Our door will remain open as long as there is customer demand," he said at an economic development conference in southern China, according to the state-run Xinhua news service.

Earlier reports claimed that China Mobile and Apple have held informal talks, but that the Chinese company broke off the discussions in January because it balked at Apple's insistence that it receive 20% to 30% of iPhone customers' monthly fees.

Apple has said several times that it will introduce the iPhone to an Asian market this year, but it has not specified in which country or countries it will launch the smart phone during 2008.

Some analysts have said that, revenue model or not, Apple must take the iPhone to China at some point. "It's all about China," said Ezra Gottheil, an analyst with Technology Business Research Inc., in an interview two weeks ago. "Apple needs China to make those kinds of goals, and if that means doing without [the revenue-sharing business model] in China, they'll just suck it up and do it."

According to analyst estimates, Apple takes in anywhere from $10 to $18 per month per iPhone customer from its revenue-sharing arrangements with service providers.

"I think that they've already signaled that they could be flexible" on sharing customer revenue, Gottheil added. "They'll take the straight profit from the iPhone if they have to."

Wang also told Xinhua that China Mobile has been adding 6 million to 7 million new subscribers each month and currently has about 380 million customers on its rolls.


Copyright © 2008 IDG Communications, Inc.

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