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Posts Tagged ‘Wang Xiaochu’

Update – March 23, 2009: Based on recent progress in Apple and China Unicom negotiations, it appears more likely that Apple will grant a 3G exclusive to China Unicom. Much more > HERE

China Telecom has also now engaged with Microsoft on a search deal and is rumored to be in discussions with Research in Motion on a Blackberry deal, although both China Telecom and RIM have denied that a deal has been concluded. 

iPhonAsia comment: Will China Telecom play Cinderella and be invited to the iPhone Ball? The two step sisters – China Mobile and China Unicom have been getting all of the attention in the “iPhone cinderellain China” drama. After all, these two carriers have the right wireless pedigree and they have subscribers… lots of subscribers! China Mobile has 458 million and China Unicom has 135 million. And poor Cinderella, China Telecom, has a mere 28 million wireless subscribers (primarily in Southern provinces). So what could China Telecom offer the princely Apple? How about 40 million relatively affluent broadband subscribers, 210 million landline subscribers, and a brand new WiFi for mobile service – eSurfing! The new eSurfing service plan is available to PCs, Macs and mobile phones. China Telecom has also kicked off an array of eSurfing promotions under which subscribers to the wireless broadband monthly plans and the voice service (under eSurfing) are entitled to 300-minutes of talk time each month at no charge. Combining CDMA2000 3G and WiFi is part of China Telecom’s core strategy. 

china-telecom4Should Apple choose to slip the glass slipper on China Telecom’s dainty foot, strong WiFi capability may be one of the key decision points. By the end of 2009 China Telecom will establish 25,000 eSurfing Wi-Fi hot spots nationwide and about 3,000 of these spots are going to be in Shanghai, an iPhone hotbed.  

xin_260503241009490215842But no romance is without its challenges. If the relationship is to be, Apple will have some technical issues to resolve, including 3G compatibility and meeting China’s WAPI WiFi standards (China’s WAPI = Wide Authentication and Privacy Infrastructure, or GB15629.11-2003 national standard differs from international WiFi standards). 

China Telecom CEO Wang Xiaochu

China Telecom CEO Wang Xiaochu

China Telecom is the proud owner of a new CDMA2000 3G license. The current model iPhone supports W-CDMA 3G (a world standard 3G network currently being built out by China Unicom) but does not support China Mobile’s “indigenously innovated” TD-SCDMA 3G nor China Telecom’s CDMA2000 3G.  

Would Apple consider building a CDMA2000 (EV-DO) ready iPhone?  The crystal ball says; “prospects look favorable.” Apple has been scouting out EV-DO and CDMA Engineers for months in their online iPhone job postings. And oh, by the way … a CDMA2000 (EV-DO) ready iPhone model for China Telecom would likely run on Verizon’s network in the U.S. Hmmm? Another post for another day.

cinderella-mini-glass-slipper-replicaapple_unicomTake heart China Mobile and China Unicom … The dance floor is spacious and it wouldn’t be a Ball with only one princess on the dance card … In fact, rumor has it that China Unicom is now (or very soon will be) in Cupertino trying on the glass slipper.  picture-12

 

 

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Preamble: The following is a SWAG and I will no doubt be wrong about plenty … yet I believe there is some basis for the following negotiation scenario and my speculation over forthcoming changes in China’s telecom industry.  FWIW … 

Apple negotiating team to China Mobile team:

“We’re coming out with a 3G iPhone and the chipset will support important world standard 3G protocols including TD-SCDMA including W-CDMA.  And oh by the way, this new iPhone will be seriously “hack proof” (okay, much tougher to hack).

China Unicom tells us their CMDA mobile division is being acquired by China Telecom (TBA post Olympics).  China Uniom will then merge with China Netcom and the combined company will be granted a 3G license and rights to build out the (proven) W-CMDA 3G network.  They want an iPhone exclusive and they’re making a compelling pitch to us:

1)    They say W-CDMA 3G is going to eat TD-SCDMA for lunch and they’re going to steal away millions of your most coveted subscribers … those on contract with a data-plan.

2)     Unicom/Netcom wants to jumpstart their new TBA 3G mobile business by offering subscribers the most sought-after smart-phone for Net-surfing fun, “wow” audio/visual and intuitive UI – the iPhone.  

3)   Unicom/Netcom has heard the rumors about 400,000 unlocked iPhones on your (China Mobile’s) network.  If we (Apple) sign an exclusive with them, they plan to offer iPhone subscribers very competitive rates and an unlimited data-plan option. Say good-bye to 9 out of 10 of your iPhone customers.    

We know that you’ve (China Mobile) been growing subscribers at a clip of 5 to 8 million per month.  Congratulations!  We also know that despite this growth, your average revenue per user (ARPU) has not hit your targets. We understand that a key strategy for China Mobile is to grow your value added services (e.g. Monternet platform and other mobile data services). And finally, we know how critical mobile TV and delivery of video is to your future growth plans.

There is no phone that offers audio/visual and boosts data use like the iPhone! … Ask Google or any carrier who has officially launched iPhone.  But then again, we know you’ve already asked … Net surfing increases 50 times and overall data-usage doubles or triples! 

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The iPhone is not a prisoner to fixed buttons.  It runs OSX and software upgrades allow iPhone to evolve.  It will only get cooler.  You don’t need to spend a dime (.7179 Yuan Renminbi) or lift a finger … we’re going to cover all costs and handle delivery of these upgrades … quick and simple via iTunes. We want to do the right thing and make these upgrades free to all iPhone owners. Software updates will improve user experience and encourage maximum data use. We are offering significant value here and this does not come without cost to Apple. All we are asking is a small share of your monthly data-plan revenues to compensate for this value and expense. A happy iPhone owner is a retained “on contract” customer! 

There is one more important value-add that comes with iPhone … our amazing developer community!  Wait till you see the SDK unveiling.  Our software development kit (SDK) will bring a whole slew of new apps to iPhone.  All Apple and developer community apps will be delivered via iTunes.  Again, no cost to China Mobile.  Showtime in a just few days!  谢谢开发商! “

End of pitch …

Now if competitive dynamics take too long to evolve in China (i.e. 3G licenses or restructuring of telecom industry are delayed into 2009), China Mobile might not feel compelled to capitulate (agree to any terms Apple may desire) … Not a problem for Apple.  They can offer a fully sanctioned “unlocked” iPhone without an exclusive carrier deal.  This distribution could easily be done via deals with D-Phone, Shenzhen Aisidi, Apple.com (China) online and via new Apple stores in China.  It will be a premium-priced iPhone, but not above the price that black-market buyers are currently paying.

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image courtesy BDA  – http://www.bdaconnect.com:80/  

Carriers offering both a locked and unlocked option: I have received some justified critique for implying (via this post) that iPhone can be made hack proof.  I will concede that for every lock there is a locksmith and while a next gen iPhone can be made more hack resistant, it will not be hack proof.  

Don’t be surprised if we see a two-tiered offering for next-gen iPhone (ala Orange in France where law prohibits handsets from being locked to a network for more than 6 months) – a locked iPhone in each nation and an “official” unlocked iPhone at a modest premium price. If the premium is too high, black-marketers will engage in arbitrage (unauthorized unlocking options at a lower cost).  If the premium is modest, or “just right,” buyers will opt for the “official” easily upgradable iPhone that will come with a warranty and w/o the need to hack or jail-break. 

Again, the preceding “negotiation scenario” was guesswork and I am no doubt wrong about many aspects of the on-going (or not) iPhone in China talks.

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