
Apple and carrier China Unicom have struck a deal to sell iPhones in China later this year, marking Apple’s entrance into the world’s largest wireless market.
China Unicom delivered the news in a press release Friday stating that a three-year agreement had been reached with Apple, and that iPhones would begin selling in the four quarter of this year.
The company did not disclose details on pricing or revenue sharing. However, two weeks ago China Unicom let slip that it has paid Apple 10 billion yuan ($1.46 billion) for 5 million iPhones. An 8GB model of the iPhone is estimated to sell for 2,400 yuan ($350), and a 16GB may be sold at 4,800 yuan ($700), China Unicom said in an interview with the International Business Times — a statement the company unsuccessfully attempted to retract.
The official iPhone heading to China isn’t exactly the same as the ones we see here: Apple removed Wi-Fi hardware from its iPhones for China Unicom to comply with Chinese government standards. Why? The history behind China’s Wi-Fi regulation on smartphones is controversial and complicated. For years, the country has been trying to push tech companies to adopt its own wireless encryption standard called Wireless Authentication and Privacy Infrastructure (WAPI), which competes with the Wi-Fi (IEEE 802.11) standard.
Years ago, the Chinese government failed to impose WAPI as a mandatory security measure in China. Then, 22 companies formed an alliance agreeing to help push WAPI as a standard. China Unicom is part of that alliance.
Though China has about 700 million wireless subscribers (twice the population of the United States), Apple and China Unicom face challenges in this market. They face competition with not only other smartphones, but also iPhones smuggled through the gray market as well as counterfeits of Apple’s popular device. As many as 1.5 million consumers have purchased iPhones through the gray market, according to WSJ.
Toni Sacconaghi, an analyst with Sanford C. Bernstein, told WSJ that he estimates Apple can sell 2.9 million iPhones in China by the end of 2011. That’s a big number, but that of the of the 5 million that China Unicom purchased, that would leave 2 million unsold.
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Photo: William Hook/Flickr


