China Mobile: We Want A Cut Of App Store Revenue Or No iPhone

China Mobile: We Want A Cut Of App Store Revenue Or No iPhone

Photo by existentialism - http://flic.kr/p/bjKTv

Apple would love to sell the iPhone to China Mobile’s 628 million subscribers, but there is a hitch to any agreement: the carrier wants a piece of the App Store pie. But a pact isn’t needed, argues one Wall Street watcher, especially since there are already 10 million Apple smartphones on the China network.

In what has become a slow-motion negotiation session, talks may have reached the molasses stage upon hearing China Mobile wants a cut of App Store revenue, a bargaining point the tech giant has never given any of its global carriers. We now see why there is little real reason for Apple to ink any deals: Sterne Agee analyst Shaw Wu tells investors China Mobile has been signing up million of iPhone owners, anyway.

“What many customers are doing is buying unlocked, unsubsidized iPhones in the black and gray markets, as well as directly from Apple,” writes the analyst. Although Apple doesn’t support the home-brewed TD-SCDMA 3G network, China Mobile is enticing iPhone users, offering gift cards for free Wi-Fi service. No 3G? No worries. Seems the current 2G network is just fine.

Turns out, the iPhone is also a big hit in Taiwan and Hong Kong, even further slowing Apple’s roll toward any sudden China Mobile pact.

So, if Apple isn’t steaming toward an actual agreement with China Mobile and there is no slated TD-SCDMA-compatible iPhone in the works, what’s the Cupertino, Calif. company up to? “Effort is being focused on developing 4G TD-LTE models,” Wu writes. Apparently, a China Mobile agreement could coincide with a 4G LTE network.

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  • Chris

    where’s their right to claim a cut of AppStore profits? the AppStore has nothing to do with the carrier

  • Shaunathan Sprocket

    @60a2d5d31a41afd2ae8aecc5184a6469:disqus , they don’t have one, but all’s fair in open negotiation, you can ask for anything; that doesn’t mean you’ll get it.
    Honestly I think China Mobile needs this more than Apple, apple can just continue to leak phones into their market without inking the deal, and if China Mobile finds a way to turn them off well then maybe Apple skips them and open up to other Asian markets and let the Chinese user put pressure on them to reconsider.  It’s not like apple is hurting for money.

  • Jordan Clay

    You could argue that 1/2 the applications are downloaded over the network. 

    If you remember, dump phones, especially Verizon phones, use to come w/ an App Store that had grossly  over priced apps.  The carriers lost this revenue when the hardware manufacturers came out with their own app stores.

  • Mike Rathjen

    Presumably they charge for data downloaded over their network, so they are already getting paid for that.

    The overpriced apps available from carriers’ stores never sold well. In many cases not at all, so there is no loss of revenue from dropping their stores.

  • CharliK

    Given that the carriers get paid via their monthly rates etc I doubt that Apple would give any app store cut to anyone. especially since giving into one person would open up having everyone demand it. 

  • hannacun

    Now that the iPhone 4S has a better antenna, I’m kissing my iPhone 4’s death grip goodbye.
    http://www.cashforiphones.com/

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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