Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

In China, iPhone Is Put on Hold

By Dave Mock - Updated Apr 5, 2017 at 10:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Talks between China Mobile and Apple are on ice.

I didn't hear the ringside bell, but Round 1 of negotiations between Apple (Nasdaq: AAPL) and China Mobile (NYSE: CHL) to offer the iPhone in China have apparently reached an end. While talks have been under way since late last year, a representative from China Mobile has confirmed that "negotiations have ended for now."

It's not surprising that talks haven't gone fast and smooth. Many carriers around the world have bristled at the terms Apple requires for offering the device. And China is not an easy market to break into -- it took Qualcomm (Nasdaq: QCOM) nearly a decade to win adoption of its technology after much haggling. Granted, adapting one phone is not as complex as pitching a whole new wireless network platform, but Chinese companies resist giving control to outside companies unless it's clearly to their advantage.

And I imagine it's tough to convince a company already signing up 5 million to 6 million customers a month that it absolutely needs the iPhone. In the U.S., the hypercompetitive environment worked to Steve Jobs' advantage because AT&T (NYSE: T), just after the BellSouth merger, was keenly interested in being the clear leader in wireless when it struck a deal with Apple.

With discussions on ice about a deal in China, many are wondering if Apple will be able to reach sales goals for the iPhone for 2008. Many see China's No. 2 wireless carrier, China Unicom (NYSE: CHU), as a much less attractive partner for Apple, with a subscriber base only one-third the size of China Mobile's.

But Unicom's 120 million subscribers is nothing to sneeze at, and while the bulk of consumers likely can't afford an iPhone, I'm guessing a surprising number will find the money to carry the trendy device. (The high-end market in China will be tested soon when Research In Motion (Nasdaq: RIMM) launches the BlackBerry there with China Mobile, although the exact launch date is still not set.)

Being runner-up, China Unicom might be more willing to accept revenue-sharing terms Apple is demanding. Even though Jobs commented that 4 million iPhones have been sold so far, expectations are still high for Apple, which might lead the company to other partners who are willing to speed the introduction along.

For more Foolishness:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$174.34 (1.85%) $3.16
China Mobile Limited Stock Quote
China Mobile Limited
CHL
AT&T Inc. Stock Quote
AT&T Inc.
T
$23.14 (0.24%) $0.06
BlackBerry Stock Quote
BlackBerry
BB
$9.34 (0.54%) $0.05
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$182.79 (-0.51%) $0.93
China Unicom (Hong Kong) Limited Stock Quote
China Unicom (Hong Kong) Limited
CHU

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.