Apple's insistence that China Mobile agree to revenue-sharing terms reportedly killed iPhone talks in early 2008. But the talks are back on.
But was Apple's position on revenue sharing really so hard? Last November, T-Mobile offered Germans a €999 unlocked phone, which one could activate with any carrier. T-Mobile's alternative was a €399 phone with a 24-month contract. Not to be beaten (and with regulators watching), Orange offered a no-contract phone for €649 to keep France from intervening in its handset-and-service deals. French regulators weren't the only ones concerned about mandatory hardware/service lockups. With arrangements in place with European carriers that could not possibly have involved subscription revenue sharing (just a big one-time payoff), how could Apple really claim it was unable to see its way free of revenue sharing?
When Apple announced a new subsidized phone deal for its upgraded phone (3G, A-GPS, improved headphone jack -- don't laugh, the old recessed headphone jack really made it useless to those of us who might have plugged it into a regular mini-stereo jack and just killed its use as an iPod replacement), the announced price was a subsidized price. That is, the price to the customer after the carrier tossed in the extra bucks to Apple that used to come from the customer directly (or from siphoned service fees). The new price of the phone with contract is a bit higher (e.g., $1,237), which should not surprise customers looking at a phone for $199 ($299 to upgrade from 8GB to 16GB).
Remember when you upgraded to a desktop computer with 64K, and it cost thousands and was a greyscale machine with no pointing device? How times have changed ....
Now that Apple has devised a way to get paid by carriers from funds they expect to glean from subscribers, and this method -- gasp -- looks exactly like every other handset manufacturer's subsidized set scheme -- China Mobile is now happy to talk turkey with the iPhone vendor. Still, "there are practical issues to be resolved."
Like, how much money Apple wants for these things, in a country where T-Mobile's unlocked price last year is easy to confuse with an annual income. Average annual expenditure on consumer goods last year was $543, which I reckon might not include China Mobile's service plan but could easily encompass the subsidized iPhone price announced in North America. The upside: China's middle class is projected to eclipse the entire present population of the United States in the next dozen years. And India's middle class isn't doing too badly, either. Establishing Apple's software platform in those markets may be an investment worth making, if Apple can keep up the relative value of the platform over time.
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