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China Mobile questions iPhone business case

CEO tells developers that there are profit, not technical issues holding up iPhone launch, also moves to self-branded handsets


Published: 6 December, 2012

READ MORE: China | iPhone

The president of China Mobile is the latest cellco executive to cast doubt on the business case for the iPhone. Echoing several operators which have critized the impact of Apple's heavy subsidy burden on profits, he told a conference that this issue was behind his hestitation in launching an iPhone, not compatibility with his firm's unique TD-SCDMA 3G network technology. This comes at a time when Mobile wants to increase the control it has over the mobile user experience - another area where it has clashed with Apple in the past - and is planning its own-branded smartphones.

According to Unwired View, President Li Yue told the China Mobile Worldwide Developers Conference: "Technology is not a problem, it's mainly about business model and benefit sharing issues." He added: "Apple is one of the greatest terminal manufacturers around the world. We started making contact in 2007. China Mobile and Apple still have to solve many issues, such as the business model, articles of cooperation and revenue division."

Such public comments are likely to be a bargaining ploy rather than outright rejection of the iPhone - particularly the rumored TD-LTE version which could reach Mobile's trial 4G networks next year. Indeed, Yue concluded by saying: "I believe we will reach an agreement eventually."

However, his discussion highlights that Apple may not be able to dictate terms so successfully to large cellcos in future.

Meanwhile, China Mobile plans to start selling handsets under its own brand, mainly to fill gaps which it feels are not well addressed by the big name OEMs. Li Yue, speaking at the same conference, compared the strategy to that of US retail giant Wal-Mart. "We will not compete with other industry mobile phone vendors," he said. "When Wal-Mart sells other producers' merchandise, the company also provide customers with its self-branded products."

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