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iPhone Negotiations With China Unicom Have Reached Possible Agreement

Recent information sheds light on negotiations between Apple and Chinese telecom provider China Unicom, and the possibility that both sides have reached an amicable agreement.

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In early February we first reported about the ongoing talks between Apple and China Unicom. As we previously explained, even though feverish reports came in claiming that all talks had broken down about bringing the iPhone to China, these reports were a bit premature. Amidst all of the treacherous negotiations between China Mobile and Apple, China Unicom were the ones to step and take control of the prospective partnership.

Contrary to recent reports that talks between Apple and Chinese mobile provider China Mobile had broke down because of App Store negotiations, it’s now being reported that the iPhone will be arriving in China on May 19th with China Unicom.

Reports that negotiations between Apple and China Mobile had broke down were true, albeit a bit premature. As it turns out, previous negotiations surrounding China Mobile and the potential iPhone 3G agreement were “becoming a threat to Apple’s business.” The “business model differences” as well as the inability to agree on distribution benefits made it so that negotiations had reached a stalemate. This is when China Unicom stepped in to takeover negotiations with Apple around September of 2008. Due to a shakeup in management on the Chinese telecommunications side, Unicom Chairman Chang Xiaobing has been appointed as the head of the team leading negotiations with Apple. If everything goes smoothly, the iPhone is expected to launch in mainland China on May 19th, 2009. Apple is expected to get between a 20% and 30% “share” of iPhone sales. Whether China will subsidize the iPhone is still unconfirmed.

At the time of those initial China Unicom reports, we were a bit skeptical at first. However, we diligently spent nearly 4 hours tracking down and locating connections and colleagues in China who were able to confirm the information and relay what was being reported in local news. The general understanding was that talks between China Unicom and Apple were healthy, and the iPhone was something executives in China did not want to miss out on.

As Chinese news source gansudaily notes in a report about the subject, China Unicom will be restructuring its cellular network to support WDCMA, alongside a newly secured arrangement that will allow them to license certain 3G technologies. These cellular network technologies will be deployed into Chinese mobile markets making way for the iPhone, which is slated to arrive around May 19th. The iPhone 3G has simply plaid too big of a role in shaping the global market and Chinese telecom executives do not want to miss what is going on. They are deeply intrigued by the success of the App Store and have been paying extra close attention to the development of 3G networks outside of their markets.

Backing up these reports is some new information that has been made available today via ChinaTechNews.com. “Foreign media are quoting representatives from Ovum, a British consultancy, as saying that China Unicom and Apple will achieve cooperation soon and if everything goes smoothly, the 3G iPhone will enter the Chinese market in May 2009 at the earliest, but no more detail is given. Prior to this latest rumor, other rumors abounded both China Mobile and China Unicom intended to introduce Apple’s iPhone into China. China Mobile started early in the negotiations with Apple, but the two sides have not reached any agreement.”

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