iPhone is doing better in Japan than Wired.com expected … much better! Nikkei.net has posted a report on Japanese tech market research company’s (BCN’s) survey of Japanese handset sales. This was not just a tiny sampling. 2,300 stores that sell mobile phones participated in the BCN survey.  The results? In the smartphone category, the iPhone 3G 8GB easily came in at number one followed by the 16GB iPhone. The NTT CoCoMo Aquos SH-04A came in at number three. The iPhone 3GS launched just days ago (too late for the BCN survey) and with its enhanced camera and video capability, it’s a fair bet that iPhone 3GS will quickly move up the list of hot smartphones in Japan.

Smartphone best sellers in Japan:

1. iPhone 3G 8GB
2. iPhone 3G 16GB
3. Aquos SH-04A

Shiho Hishida poses with her new Apple iPhone

The report said that while ordinary cellphone sales are plummeting, smartphone sales have grown by nearly 80 percent in a year.

Perhaps it’s time for Wired.com to re-write (again) their anti-iPhone hit piece (Why the Japanese Hate iPhone)? It seems that carrying an iPhone in Japan doesn’t make you “look pretty lame” as Wired erroneously concluded.

Here (below) are the top ten telecoms by subscribers. No surprise that China Mobile comes in at #1 with 478 million subscribers. It should be noted that an estimated 279 million of China Mobile’s total are “prepaid” – not on any contract (pay-as-you-go services). Apple’s rumored (yet to be announced) carrier partner China Unicom, comes in at the number 5 spot with 137.7 million subscribers. Like China Mobile, a healthy share of China Unicom’s customers are prepaid.

The top US carrier, Verizon, barely made it on the list (10th). Deutsche Telekom makes the list in 6th place (T-Mobile US is owned by Deutsche Telekom).

World’s largest wireless telecom carriers by subscriber-base:

1. China Mobile 478.8 million
2. Vodafone Group 247.3 million
3. Telefonica Group 190.1 million
4. America Movil Group 174.9 million
5. China Unicom 137.7 million
6. Deutsche Telekom Group (T-Mobile) 127.1 million
7. Telnor Group 96.6 million
8. Airtel (Bharti) 93.9 million
9. MTS Group 92.2 million
10. Verizon Wireless 86.6 million

A amazing new translation app is now being used by U.S. Troops in the field. How long before this is available via the App Store? “Soon” is a fair bet, and in many different languages we hope …

Scroll down to read iPhonAsia reply comment to this article …

China Mobile calls on operators to hold firm against Apple’s revenue-sharing demands

by Cindy Geng

Beijing. June 26. INTERFAX-CHINA – A China Mobile employee has called for a united front between the country’s three telecom operators in order to challenge Apple’s precondition on any iPhone deal with operators that it retain a high proportion of the revenues from the sale of iPhone applications.

Huang Yan, manager of the planning section of China Mobile’s business support department, said that Apple’s insistence on taking a large share of revenues from the sale of iPhone applications is a “threat to the value chain of China’s telecom industry.”

“Apple’s revenue sharing plan relegates telecom operators to mere custodians of the network, and denies them adequate revenue to cover the huge amount of bandwidth that iPhone users require,” Huang said.

Yan added that China Mobile ended negotiations with Apple due to Apple’s demands for a high proportion of revenues from application sales.

“Although the three operators in China are competitors, we should be unanimous when our business model is being challenged,” Huang said.

China Unicom is currently in talks with Apple over offering iPhone services in China. However, sources at China Unicom have told Interfax that the revenue-sharing plan being offered by Apple is below the operator’s bottom line.

A Wi-Fi-disabled version of the iPhone is in the process of getting a network access license from the Ministry of Industry and Information Technology (MIIT).

iPhonAsia’s response to Interfax Article:

Hi Cindy,

I love the opening quote in your article:

“A China Mobile employee has called for a united front between the country’s three telecom operators in order to challenge Apple’s precondition on any iPhone deal with operators that it retain a high proportion of the revenues from the sale of iPhone applications.”

This sounds like a jilted “love interest” (China Mobile) who wants to throw a cold pale of water on a new blossoming romance between Apple and China Unicom.

Not only does it sound petty, but in many parts of the world, when companies conspire to fix pricing, that’s a violation of anti-trust laws. While China Mobile’s Huang Yan does not appear to be demanding fixed pricing, it’s somewhat perplexing that he is calling on all three major telecom operators to come together to challenge Apple. Huh?! Last time I checked, Apple has not yet sold one “official” iPhone in the People’s Republic of China.

Why would Apple, with 0% “official” market share, be perceived as such a threat to China Mobile?  It’s really a rhetorical question … I know the answer. This campaign against Apple’s revenue model is really just a subterfuge. This is a power struggle between carriers and all smartphone manufacturers who might dare challenge the monopoly of the carriers. While Nokia and other original equipment manufacturers (OEMs) sell tens of millions handsets in China, they cannot yet match Apple’s platform or value proposition.

Right now Apple has the most compelling products (iPhone and iPodTouch) and a wildly popular value-added services platform (iTunes, App Store, OS 3.0 and regular “free” software upgrades for iPhone and nominal fee for iPod Touch). If Apple’s wireless value added services win the populatiy contest, then carriers might be perceived as “dumb pipes.” Hence, I see today’s quotes from Huang Yan (China Mobile) has a tactic strait from the Sun Tzu’s “Art of War.” Instead of going to battle against all competing tribes (Nokia, RIM, Palm, HTC, etc.), pick out the most serious treat to dominance, and crush them, thereby instilling fear in all others who would dare to pose a challenge.

But is Apple really posing a threat to carriers’ value chain? I would say no! Emphatically no! The reality is that carriers are not precluded from imitating Apple’s game, as long as they respect Apple’s intellectual property. And imitation is exactly what they are doing – China Mobile with their OPhones and OPhone OS (Android-based) and Mobile Market … and China Unicom with their UPhone (also Android-based) and UniPlus OS and their own app store. The difference is that China Unicom is going to follow the path of “coop-a-tition” (cooperation + competition) while China Mobile is apparently doing what they can to torpedo Apple’s budding relationship with China Unicom.

I am actually somewhat amused to see China’s dominant carrier (China Mobile) in such tizzy that they would send out a manager (Huang Yan) to attempt create controversy; “it’s us against Apple.” Perhaps this is more a reflection of China Mobile’s anxiousness over China Unicom’s WCDMA 3G? There are now well over 1,000,000 iPhones running on China Mobile’s EDGE 2G network. Many of these will be ripe targets for upgrade to WCDMA 3G on China Unicom’s network.

In the second to last sentence in today’s report, you noted that; “China Unicom is currently in talks with Apple over offering iPhone services in China. However, sources at China Unicom have told Interfax that the revenue-sharing plan being offered by Apple is below the operator’s bottom line.”

Interesting information. I suspect this may be somewhat of a face saving quote from China Unicom. They do not want to be perceived in the industry as having given up too much in their negotiations with Apple.

I am also curious as this quote appears to be in conflict with statements attributed to China Unicom in your April 7 post - China Unicom to get majority of revenues from iPhone App Store – source

“Apple Inc. has agreed to grant China Unicom the majority share of revenues from its App Store as part of ongoing discussions between the two parties regarding the introduction of the iPhone to China, a China Unicom source told Interfax on April 7.”

So now I wonder which China Unicom source is/was correct? The source quoted on April 7, who revealed that an agreement on App Store revenue sharing was complete? Or the source today, who now suggests the revenue-sharing plan being offered by Apple is “below the operator’s bottom-line?”

If your April 7 report is accurate, Apple has already agreed to give a “majority share” of App Store revenues to China Unicom. Where will this majority share come from? There are three hungry people at the table – Apple, China Unicom and Developers – and the pie can only be sliced so many ways. Apple may giving up some of its 30% share and/or developers may need to take a less than 70% share. If your latest (today’s) report is true, then China Unicom may be angling for an even greater slice of the pie. I suspect this “pie allocation” has already been settled per your original April 7 report.  I further suspect that China Mobile is just kicking up dust today in the hopes that they can embarrass Apple and China Unicom.

As far as the “fairness” of Apple’s app revenues share split … I would point out that there are very different cost-to-value propositions between Apple’s App Store and China Mobile’s new Mobile Market app store.

A bit of background …

China Mobile’s app store (Mobile Market) remains under development and will likely launch with only a fraction of the apps in Apple’s China App Store. How enthusiastic is China’s developer community to build for Mobile Market? In May, China Mobile announced their decision to share only 50% of Mobile Market revenue with developers while retaining a full 50% share for themselves. Many developers have quietly grumbled that this split is unfair. By comparison Apple’s model gives a full 70% share to developers (albeit this may be different in China). In addition to a smaller slice of the revenue for developers, Mobile Market developers will also need to work harder if they hope to make decent money on their apps. They will need to code apps for each mobile operating system (China Mobile’s OPhone [Android-based], Win-Mobile, Symbian, etc.). It is also my guess that China Mobile will need to subsidize some of the app development on Mobile Market. Hence their actual revenue share may wind up being less than the advertised 50%.

While it has not been discussed publically, China Unicom will almost certainly utilize Apple’s China App Store (versus their own “under development” app store) for delivery of apps and games to iPhone owners. Thousands of iPhone apps are already “good to go” on Apple’s China App Store. This is relevant has there are far fewer costs, if any, to be borne by China Unicom. Developers too will find the iPhone 3.0 SDK a pleasure to work with, and they can take advantage of “in app” purchases, subscriptions and integration with hardware devices to boost their revenues.

Apple’s App Store in China is a proven quantity. iPod Touch owners in China are already downloading apps and there is no complex build or ramp-up stage in order to launch for iPhone owners in China. The point being that it is hard to find justification for China Unicom’s demand for a greater than 50% share of Apple’s App Store revenues. I am certain that there are other rationales for China Unicom seeking out more revenue (e.g. to offset subsidy payment [if any] to Apple). China Unicom may also be looking to squeeze more reveune as they will need to price the iPhone competitively in PRC in order to effectively shut down grey market smuggling of iPhones into China. Competitive pricing may be even more important if WiFi is disabled on the official iPhone. It should be noted, that notwithstanding the grey market origin, Apple makes money on each “real” iPhone sold in China.

In the final analysis, I suspect China Unicom’s share of App Store revenues (likely finalized back in April) will turn out to generate more in bottom line revenue than the 50% share that China Mobile will take from Mobile Market.

Thanks again Cindy for your good reporting on Apple and iPhone in China negotiations.

~ Dan Butterfield

Editor, iPhonAsia, http://iphonasia.com

The iPhone 3GS goes on sale tomorrow in Japan

There are already long lines at Softbank storefronts awaiting iPhone 3GS launch on June 26. See more photos > クエストホール入りました、プレゼンは１時なのに。。。 iPhone前夜祭 表参道｜恩田フランシス英樹 の VelVet Society / Hideki Francis Onda’s VelVet Society

Thanks to Boxerconan at AAPL Sanity and グリーン・アップルと田舎暮らし greenaapl.exblog.jp for the heads up and links

FWIW … here are my replies to posts on my favorite Apple (AAPL) stock message board – AAPL Sanity

Re: China and the GFW

<< So essentially they’ve likely been negotiating for a model of iPhone with enhanced parental governmental controls. >>

Actually, yes … all “officially approved” WiFi-enabled phones in China must also include China’s home grown WLAN authentication and privacy infrastructure otherwise known as “WAPI“

China only recently approved the use of WiFi on handsets as long as these phones include WAPI encryption … WAPI (wireless authentication and privacy infrastructure) is still not an ISO/IEC approved standard. The ISO/IEC has previously been rejected WAPI. One reason for rejection was concern over a theorized WAPI “backdoor” that would allow government to monitor users:

This “backdoor” may or may not be true:

“One of the problems with China’s attempt to get WAPI wider acceptance is that they refuse to provide the full specification or its encryption algorithm. I can’t think of a standards body willing to adopt a standard they can’t see.”

… “with WAPI’s algorithm still hidden in the shadows, one has to wonder who WAPI’s adoption would make more secure: consumers or the Chinese government?”

… and remains a raging debate amongst “techies” who know more than I … but it’s one reason why there is no clarity as to whether the TBA “official” iPhone in China will come with WiFi … If it does include WiFi … then it is virtually certain that it will be dual WiFi/WAPI … otherwise iPhone would not be approved by MIIT.

The buzz from China is that MIIT is testing an iPhone with WiFi disabled … if true, then Apple has made the decision to forego inclusion of WAPI.  NOTE: These restrictions will apply to ALL smartphone manufacturers who offer WiFi enabled phones in China – Apple, RIM, Palm, Nokia, HTC, et. al.  They will either include WAPI or they MUST disable WiFi.

Background article:  China to Propose WLAN Security Standard for Global Use Again by Owen Fletcher, IDG News Service Tuesday, June 16, 2009 4:00 AM PDT

Re: Hey idannyb… any new china news for Apple? <eom>

All quiet from sites and sources I monitor … My SWAG is that a deal announcement will happen sometime in July with a launch later in the summer. But this is more a gut feel than based on any solid intel. In any case, a deal announcement won’t happen until formal MIIT issuance of iPhone’s network access license (NAL) … which could happen at any time.

I suspect Apple will defer the iPhone in China launch date until the 55 major cities in China are showing good coverage via WCDMA 3G … and that’s progressing.

A few items that might have some relevance …

• The iPhone 3GS will go sale officially in Hong Kong July 19 (just a rumor – no confirmation). But Apple has already stated it would be avail in HK in “July,” so this is no huge revelation.

• China Unicom’s WCDMA 3G network build out continues at a brisk pace.

• Apple/China Unicom official deal announcement could happen in concert with iPhone’s NAL issuance by China’s MIIT.

Word is that MIIT’s iPhone tests have been underway for several months now. So approval (NAL) could theoretically happen at any time. The wildcard is whether Apple is has provided the MIIT a WiFi/WAPI enabled model for tests … or just a model with WiFi disabled (as rumored). China’s authorization of WiFi/WAPI combo was only made public a few weeks ago. Should Apple elect to go this route (go with WiFi/WAPI) it might add time to testing/approval process. I have no reason to believe that Apple will go with WiFi/WAPI. Smart money says that Apple will disable WiFi on the official iPhone in China.

I’ve chatted via Twitter with several beta testers of China Unicom’s WCDMA 3G. They are primarily in Shanghai and Beijing. Since updating to iPhone 3.0 OS on their “unofficial” iPhone 3G (not S), they are reporting improved WCDMA coverage. Major cities in China (55 cities) are now up and running on WCDMA. But there are many secondary cities in China that are still in the early stages of installing WCDMA base stations. … new base stations are going up every day.

When the WCDMA 3G network is completed, I expect the coverage in China to be very good. Much better than in the U.S. Thanks to China’s economic stimulus package, the spend on 3G in China dwarfs what U.S. carriers have spent to set up their own networks. China Unicom’s WCDMA 3G network plans to cover China’s 284 cities with 78,600 base stations. That’s more 3G base stations than all carriers in Western Europe have rolled out in 9 years since 3G wireless standard has been in existence.

Media, Street traders and litigators feign outrage over Apple’s failure to Tweet daily on Steve Jobs’ health

It was revealed on Friday that Steve Jobs had a liver transplant back in March. After a several months of recuperation, Steve Jobs will soon return to work at Apple. Story over, move on! Steve is … and so are Apple (AAPL) shareholders.

Alas, no … the sanctimonious financial media, once again, trotted out their legal beagles to weigh in on “ethics” and “disclosure responsibility” of Apple Inc. surrounding Steve Jobs’ health status. Never mind that Apple went to great lengths in January to explain that new tests revealed that Steve Jobs’ hormonal imbalance (causing his weight loss) was more complex than first thought … and that based on this new medical information, Steve would need to take a 6-month leave of absence. Okay … we all know about Steve’s past Whipple procedure and islet cell neuroendocrine tumor treatment. Given the new revelations in January, and Steve’s need to take a leave, AAPL shareholders understood that Jobs’ condition was not trivial. Clear message sent. AAPL shareholders understood that this was a serious situation that needed Steve’s focus and full attention from his medical team.

Apple COO, Tim Cook

As an Apple (APPL) shareholder, I can say “we get it,” and we respect Steve’s right to privacy during this leave of absence. The only ones freaking out are the pretenders. Serious AAPL investors are very comfortable with Tim Cook and the rest of Apple’s deep bench (Peter Oppenheimer, Jonny Ive, Phil Shiller, Ron Johnson, Scott Forstall, Bob Mansfield, Mark Papermaster, Dan Cooperman, Bernard Serlet, Sina Tamaddon, et. al.). Moreover, select members of Apple’s Board have been consulting with Steve’s doctors and closely monitoring Jobs’ health status. Finally, whether Steve Jobs moves to a less than full-time role (e.g. moving to Chairman with Cook as CEO) or not, Jobs’ DNA is deeply embedded in the company and Apple’s product menu is well defined for years to come.

To the “slimebucket” posers that continue to scream over inadequate disclosure (daily Tweets from Steve Jobs’ doctors would not be enough due to 140 character limit), I say you are not speaking for AAPL shareholders (certainly not this shareholder). You are, in fact, doing the dirty work for Wall Street’s “shoot first” traders, and “sue always” lawyers.

Here’s my favorite quote of the day courtesy of kylobbist over on AAPL Sanity …

“So let me get this straight … The Masters of the Universe on Wall Street, along with the executives and boards of the major banks and investment firms basically were running a big ponzi scheme among themselves and screwed the markets, the economy and their customers, which required a massive and unprecedented infusion of taxpayer dollars to save their hides along the way … but we are supposed to be outraged at the “ethics” and “immorality” of whether and how Steve Jobs got a liver transplant??? … Yeah, whatever”

Video: Steve Jobs’ Stanford Commencement Address 2005 – Steve talks movingly about life’s journey

Apple Sells Over One Million iPhone 3GS Models - iPhone 3.0 Software Downloads Reach Six Million

Apple issued a Press Release this morning to announce over one million sales of the new iPhone 3G S in its debut weekend. This number exceeds most analysts projections. Many Street mavens and pundits had presumed that Apple (AAPL) would not break 500,000. The most optimistic analysts had projected that Apple might sell about 750,000 in the opening weekend. Today’s 1 million+ sold announcement is a clear “beat” (above Wall Street expectations).

The Apple PR also highlighted that iPhone 3.0 Software downloads have now reached six million. The new iPhone operating system brings over 100 new features such as Cut, Copy and Paste, MMS*, Spotlight™ Search, landscape keyboard. The new 3.0 OS also adds new tools for iPhone developers, including the ability to:

• create push notifications
• add APIs for integration with hardware devices
• add “in app” purchases

Today’s Apple PR is also notable as it contains a direct quote from Steve Jobs, who has been on a temporary leave of absence;
“Customers are voting and the iPhone is winning,” said Steve Jobs, Apple’s CEO. “With over 50,000 applications available from Apple’s revolutionary App Store, iPhone momentum is stronger than ever.”

It was revealed over the weekend that Apple’s CEO underwent a liver transplant two months ago. His recovery is progressing well and Steve Jobs is expected to return to work at the end of June. More on this story via Apple 2.0

NOTE: This video interview was released on Friday, June 19 … On Sunday, June 21, there were still reports of lines at Apple stores to buy the new iPhone 3G S. Launch weekend sales of iPhone 3G S are off to a very strong start and Gene Munster’s initial guesstimate (500K sales projection for the 1st weekend) may be too conservative.