This report comes from a Bloomberg reporter (John Liu) stationed in Shanghai. He quotes Rainie Lei a spokeswoman for China Mobile. It should be noted that this is not the first time that “talks have ended” statements have come from a China Mobile spokesperson only to hear later that “talks continue.” Moreover, and most importantly, Sina.com has said the companies (Apple and China Mobile) will meet for another round of talks.
In my opinion, this January 14 report is more than rumor, yet this does not necessarily mean that negotiations have definitively come to an end. Ask yourself this basic question … Why has China Mobile seen fit to leak this to the press once again? Apple is not making any public proclamations that a “deal is in the works” with China Mobile. The probable answer is that Apple has now agreed (with China Mobile’s understanding) to move away from exclusive talks with China’s largest mobile provider, and engage in discussions with other potential distribution partners (China Unicom, et. al). Yet China Mobile does not want to completely walk away from an iPhone deal. China Mobile knows that a “talks ended” statement to the press will put pressure on Apple to rejoin discussions albeit on terms more favorable to China Mobile. For a more detailed analysis of negotiations (including who said what and when), see – China Business – The 2008 iPhone Games
Here (below) is the January 14th Bloomberg Article –
By John Liu
Jan. 14 (Bloomberg) — China Mobile Ltd., the world’s biggest wireless-phone company by users, said it ended talks to sell Apple Inc.’s iPhone handset in China, declining to say why the discussions were discontinued. ”We have stopped talking to Apple,” Rainie Lei, a Hong Kong-based spokeswoman for China Mobile, said today by telephone. Jill Tan, a Hong Kong-based spokeswoman for Apple, declined to comment.
The negotiations ended because Apple wanted a larger share of revenue from game, music and video downloads than China Mobile would offer, the Sina.com Web site reported today. Apple shares rose the most in more than a year in November after China Mobile Chairman Wang Jianzhou said the Beijing-based carrier was in talks to sell the IPhone.
“It’s bad news for Apple,” said Johnny Yeah, an analyst at Quam Ltd. in Hong Kong, who rates China Mobile’s shares ‘buy.’ “China Mobile would have helped immediately sell lots of iPhones because they have such a large user base; Apple entering China without China Mobile won’t be as substantial.” China Mobile, which already has an agreement to sell Research in Motion Ltd.’s Blackberry handsets in China, added 6.5 million subscribers in November for a total of 362.8 million. China is the world’s biggest mobile-phone markety by users, with more subscribers than the populations of the U.S., Japan, and the U.K. combined. The country was home to 539.4 million wireless customers as of the end of November, according to government data.
Service Fees (i.e. Revenue Sharing)
The mobile carrier stopped talks because Apple wanted 20 percent to 30 percent of fees from providing data services to iPhone users, Sina.com said, citing Gao Nianshu, director of China Mobile’s data services. China Mobile charges users for downloading games, music and Web sites over its wireless network. Talks between China Mobile and Cupertino, California-based Apple stopped because the carrier considered the U.S. company’s terms unfavorable, the YCWB.com, a U.S. Web site, reported on Nov. 30. The companies will meet for another round of talks, today’s Sina.com report said, without providing details. China Mobile’s Lei said she was unaware of plans for further talks. Sophia Tso, a Hong Kong-based spokeswoman for China Mobile’s smaller rival, China Unicom Ltd., declined to comment on whether the company had talked to Apple about selling the iPhone. China Mobile’s shares fell 1.1 percent to HK$132.40 as of the 12:30 p.m. midday break in Hong Kong. Apple’s stock fell 3 percent to $5.33 in New York on Jan. 11.
To contact the reporter on this story: John Liu in Shanghai at email@example.com
Last Updated: January 14, 2008 01:31 EST