China Mobile Prepares for War

China Mobile (NYSE: CHL  ) is gearing up for an iPhone invasion.

Days after signing a deal with Dell (Nasdaq: DELL  ) to build a smartphone for its customers, China's largest telecommunications provider inked another agreement -- this time with Taiwan's HTC, BusinessWeek reports.

Fools might remember HTC as the company that beat Apple (Nasdaq: AAPL  ) to market with a touchscreen phone in Great Britain. Today, HTC is the world's fourth-largest supplier of smartphones with a 6% share of the market, researcher Gartner reports.

And that's important. Apple and Research In Motion (Nasdaq: RIMM  ) are the established heavies in smartphones here in the U.S., but on a worldwide basis, Nokia (NYSE: NOK  ) , HTC, and Samsung -- another China Mobile partner -- sell some of the most popular handsets. For example, advertising network operator AdMob, which tracks smartphone usage, says that the HTC Dream was the world's sixth most-used smart handset in June, fifth if you exclude the iPod Touch.

What's more, HTC's handsets are arguably the gold standard of all that rely on the Android operating system. The Big G gave out 4,000 HTC smartphones during this year's I/O developer conference. Dell also plans to use Android for its mini3i.

So let's review:

  • China Mobile is lining up deals for Android smartphones.
  • Increasingly, these deals are with big-name suppliers and Apple rivals.

Anyone else wondering who at Apple insulted China Mobile chairman Wang Jianzhou when the two companies were negotiating in 2007?

Regardless, there's mounting evidence that these two are preparing to clash. The Wall Street Journal this morning reported that Apple is nearing a deal to distribute the iPhone via China Unicom (NYSE: CHU  ) .

The winds of a very cold war are whipping across China's green smartphone fields. Get a coat, investors. This battle could take a while.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned stock and options positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy didn't much enjoy its Shanghai surprise but treasures the occasional Singapore Sling.


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