At Long Last, An iPhone Deal with China Unicom

Finally.

After months of speculation, China Unicom (CHU) has finally announced a deal to sell the Apple (AAPL) iPhone in China. The wireless carrier said it reached a three-year deal to sell the phone, starting in the fourth quarter. The company will sell both 2G and 3G versiosns of the iPhone; pricing was not announced. As the Wall Street Journal notes, China Unicom said it will subsidize the phone, but it gave no details. The China version of the iPhone will have WiFi disabled, to comply with local law.

According to Reuters, China Unicom said it bought the phones in a bulk purchase from Apple, and would not use Apple’s traditional revenue sharing model, but did not offer any details. There were recent unconfirmed reports that the company had purchased 5 million phones.

AAPL Friday morning is up $2.07, or 1.2%, to $171.52.

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Comments

[WhenThinkin...:]

The endless prognostications on the iphone deal with China miss the most essential subtext that underlies each parties position. There are two parties here, each with their respective camps. On the other side of the largest pond you have china unicom, one of the chinese baby bells (keep in mind that the monolithic national telephone company gave birth to c. Mobile, c. Unicom, and c. Telecom and are being raised by their guardian, MIIT aka the telecom ministry which itself is a proxy for China itself). On this side of the pond, you have not just the silicon valley wonder Apple Inc. but what it symbolically stands for in the international context: American ingenuity and intellectual property rights. Next, consider the sensiblities involved. China unicom and its wellwishers/mentors and its various constituents and sponsors (in a word china, which has that kind of developing-world sense of cohesion) have the sense that they have been the great enabler of these emerging technologies and products by providing two very critical platforms: the assembly line and the underpriced yuan/renminbi. Take a deep breath: this is no empty claim. So now they might say, you are going to make it in my backyard at lowball cost and charge me a cut of my revenues? What are we, chopped liver? Well. Consider now Apple’s position and sensiblity. Yes, China has been great. But, frankly, nations are queueing up with offers of all kinds of incentives to get our business on better terms. When we relocated our notebook assembly from Ireland to the fareast, it wasnot easy. India or others might dangle a few carrots to get this kind of business. Secondly, with all due respect, we designed and invented the product and we aim to sell it at a price fair to our business and our shareholders. Most importantly, the value of these products are in their intellectual property rights and that comprises a value far beyond the physical price of the components (just like an Old Master). You can see what kind of cul de sac those positions can lead to. In short, China wants technology transfer like all developing nations and wants it on Apple’s dime and Apple does not want to provide that at expense to its existing business. To the extent that Apple wants to protect its intellectual copyrights and well-deserved and rightful profits, this is an important issue for American businesses and economic foreign policy. Both parties need to look at future opportunities that they can plan on co-operating and sharing expenses/profits.

Aug 28 04:53 PM

[Techtrader11:]

1 billion+ people are about to be fully exposed to one of this decades game changing products. If you haven't already jumped on the AAPL bandwagon, you'd better hop on fast.

Aug 29 05:07 AM

[mollytjm:]

there's no stopping Apple now or catching up with them. China wasn't essential, but it was very important. I'm very happy with the news and agree about the stock price. Apple will keep the pressure on to innovate and future products from them will continue to amaze and lead the pack.
Long APPL

Aug 29 10:38 AM

[martyg:]

how long before some tech head figures out a fix to enable wifi?

then the floodgates will open.


/

Aug 29 12:18 PM

[RudyS:]

This long awaited final confirmation wil definately boost the APPL stock over time. It is not only an iPhone deal it is a break through in China for Apple´s product portfolio, as we have seen in other countries over the last 2-3 years.

Aug 29 12:28 PM