China Mobile’s Li Yue on iPhone 5: TD-SCDMA is not a problem, it’s all about business model and benefit sharing
With iPhone 5 soon shipping in 100+ countries and few hundred operators, China Mobile is the biggest gap on Apple’s smartphone’s availability map.
China Mobile, after all, is the biggest carrier in the biggest smartphone market in the world. With 703 million subscribers – it is bigger than the second (Vodafone) and the third (America Movil) multi-country mobile carrier groups, combined.
We long assumed that one of the main reasons China Mobile does not have an iPhone, is its 3G network technology (TD-SCDMA) which no one else uses, and which is incompatible with worldwide GSM and popular CDMA standards.
But it seems that incompatible network standards are not the problem. At least not anymore, according China Mobile President Li Yue.
Speaking at 2012 China Mobile Worldwide Developer Conference, when asked about availability of iPhone, he told the audience that “technology is not a problem, [it’s] mainly about business model and benefit-sharing issues”.
Translated into the human speak, it means that Apple and China mobile are now engaged in negotiations about order commitments, price, subsidy amounts and revenue sharing.
Apple, so far, has held an upper hand in negotiations with almost every carrier in the world. Faced with an inevitable highest paying customer exodus, carriers had no other choice, but to agree to most Apple’s demands. With multi-year order commitments, sometimes in the billions of dollars, big subsidies and what not. Whether iPhone’s position with them will remain as strong in the coming years, remains to be seen. But in China Mobile, Apple has certainly met its match.
The Chinese carrier was able to hold out against iPhone pressure and availability on competing operators for years, and without big losses. It also helps, that current iPhones are not completely incompatible with China Mobile’s network. 2G/telephone connections work just fine on it. You only can not use 3G data, so outside a Wi-Fi zones you may lose the net connection. That didn’t stop millions of China Mobile customers getting and using grey market iPhones. Lessening the iPhone migration effect carriers in other countries have faced, and strengthening China Mobile’s position in its negotiations with Apple.
It would be interesting to see what the final terms of the agreement will be when it is reached. I would love to be a fly on the wall when Tim Cook and Li Yue are in the same room.