The iPhone in China -- and what it means for the U.S.

By Josh Fruhlinger  Add a new comment

According to an unsourced report from a Chinese newspaper -- surely the best foundation upon which to set elaborate speculation! -- the iPhone looks to finally be arriving in the world's biggest mobile market. Supposedly, Apple has signed a three-year deal with China Unicom that sets a "minimum threshold" of $731 million in iPhone sales (though it's not clear to me who's guaranteeing these sales to whom, or how).

Anyway, this move is interesting beyond just the "iPhone hits the biggest market it hasn't cracked yet" factor. China Unicom has a healthy 135 million subscribers -- nearly twice as many as AT&T in the U.S. But in the enormous Chinese market, it's not even close to the top player; the state-owned China Mobile is the 800-pound gorilla there, with nearly three and a half times the subscriber base that China Unicom has. So why would Apple go with the smaller fish? Well, one reason is that China Unicom runs a standard GSM network, like AT&T and, well, pretty much every other country on earth; China Mobile's network is based on a CDMA variant used nowhere else, which means that Apple would have had to build a new phone to sell there. In addition, as I discussed earlier, China Mobile apparently wanted to use its own App Store on the iPhone rather than the standard Apple-run store.

So how does this relate back to the U.S.? Well, last week, AT&T's CEO wistfully noted that AT&T's exclusive iPhone deal won't last forever, which led to a flurry of speculation that the iPhone will be available on Verizon, like, any day now. It won't be, mainly for the technical reasons I keep harping on over and over here -- Apple won't make a CDMA iPhone, and Verizon's GSM-compatible LTE network won't be available even in big cities until next year at the earliest, and until it's more or less universal a GSM iPhone would be completely useless as soon as you get outside those big cities. But it's also worth noting that, like China Mobile, Verizon is readying its own App Store, and the conflict between a store run by the carrier and one run by the handset maker could get ugly just as quickly in the U.S. as it would in China. Like AT&T's CEO, I'm sure some descendent of the current iPhone will be running on Verizon's network within the next few years, but the technical and organizational hurdles will guarantee that everyone convinced they'll be able to flee AT&T by next spring will be sorely disappointed.

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Josh Fruhlinger is ITworld's associate online news editor.

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