China unlikely to see Apple's iPhone soon: execs

MACAU Wed Nov 14, 2007 6:27am EST

Journalists test an Apple iPhone following its introduction in Berlin September 19, 2007. Apple Inc's iPhone is unlikely to hit Chinese shelves soon because of technical and fee issues, industry executives said on Wednesday, a day after shares in the U.S. company shot up on hopes of a deal with China Mobile. REUTERS/Fabrizio Bensch

Journalists test an Apple iPhone following its introduction in Berlin September 19, 2007. Apple Inc's iPhone is unlikely to hit Chinese shelves soon because of technical and fee issues, industry executives said on Wednesday, a day after shares in the U.S. company shot up on hopes of a deal with China Mobile.

Credit: Reuters/Fabrizio Bensch

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MACAU (Reuters) - Apple Inc's (AAPL.O) iPhone is unlikely to hit Chinese shelves soon because of technical and fee issues, industry executives said on Wednesday, a day after shares in the U.S. company shot up on hopes of a deal with China Mobile.

Shares in Apple rose more than 10 percent on Tuesday -- snapping a four-day losing streak -- after China Mobile Ltd (0941.HK) (CHL.N) Chief Executive Wang Jiangzhou said his firm was in talks about a possible tie-up. China Mobile stock also jumped 9 percent on Wednesday.

Wang brushed off suggestions an agreement might come soon when he spoke to reporters on the sidelines of a conference in Macau on Tuesday. And a senior telecoms executive familiar with the situation told Reuters on Wednesday that Wang's comments had been blown out of proportion.

The iPhones -- one of the hottest gadgets to hit U.S. and European stores this year -- might be incompatible with the Chinese telecoms market because of their "locked" SIM cards -- meaning the device would not be able to piggyback on another operator's network.

"You have to realize Chinese SIM cards are not locked up, as the iPhones' are," the executive said on condition of anonymity.

"Secondly, our business model does not entail sharing revenue with terminal producers -- we don't share revenue. That's a Chinese rule," said the executive. "All it is right now, on the iPhone and Apple, is that the firm welcomes their approach."

China Unicom (0762.HK), the smaller of the country's two wireless carriers, said it had no immediate plans to bring the iPhone to China but said it could be open to the idea.

"Right now, we don't have any plans to introduce Apple's iPhones in China," Unicom Executive Director Li Zhengmao told reporters on Wednesday.

"But of course, we're always willing to discuss a good business opportunity if it presents itself," he said. "As for whether we'll talk about iPhones with Apple, you'll have to ask Apple."

Li said he could not judge whether Apple's iPhone would gain a wide following eventually, but said it would need to support text messaging in Chinese language to be accepted.

The iPhone, a cellphone that accesses the Internet and plays music, moves for about US$500 in the United States -- about double the average monthly salary in China.

"As long as there is a good product and a good business, we are always willing to talk, and find common ground," Li added.

Gartner analyst Sandy Shen said it might be premature to start factoring in the launch of the iPhone for China, not least because of the high price the device would command, and because China Mobile would resist departing from age-old practices.

"It's going to be just for the high-end users, a very niche product, for niche users," she said.

"For the iPhone, they're asking for sharing of the monthly fee, including the voice charge as well," she added. "This has never been done in China before. I'm not sure whether China Mobile would be willing to share a total monthly fee."

Shen added that, unlike in the United States, where Apple operates a popular "iTunes" song-download service, Chinese users might be left bereft of content initially.

(Editing by Dominic Whiting & Louise Heavens)

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