Analyst: 400,000 iPhones in Use on China Mobile Network

Jailbreak Iphone Vterm2
Image via Paul Stamatiou
It’s an open secret that there are legions of iPhone owners who operate their phones outside of Apple’s officially sanctioned networks AT&T, O2, Orange, and T-Mobile Germany, either because they live outside of the countries where the iPhone is on sale or because they’re aware that AT&T has terrible coverage.

What is less well-known is just how big the problem has gotten. BusinessWeek reported last week that 800,000 to 1 million iPhones have gone AWOL after legitimate purchase. And now this weekend, analyst In-Stat claims that 400,000 of those iPhone are all in operation on China Mobile, the largest carrier in Mainland China.

This makes a few things clear:

  1. Apple should get a distribution deal in China as fast as they can. They’re just leaving money on the table right now.
  2. Apple would be making more money if they hadn’t gone with an exclusive network for each market. If the iPhone ran GSM and CDMA and was available far and wide, they would be making more money and they wouldn’t need to concern themselves with unlocking. By getting into bed with AT&T and making a part of its revenue dependent on “legitimate use,” Apple has taken an anti-consumer stance that will hurt it in the long run. Unlocked iPhones are only a problem because they depend on an outdated business model. Apple should be embarrassed for taking part in it.

Via iLounge

  • Bryan Walls

    I don’t think #2 necessarily follows. Perhaps Apple would be selling more phones, but it’s not at all clear they would be making more money. Not to mention that in the US, at least, it would have been really confusing as to which markets supported which features of the iPhone. Had it become a joke, like Newton handwriting recognition did, Apple may have been selling a lot less than they are.

    It’s not like Apple is losing money on all those phones they are selling, anyhow…

  • callum

    Have to agree, Apple is messing up and otherwise great product by being so slow to roll it out globally. Seriously pissed at Apple here in Canada. Where the fudge is my iPhone?

  • David

    I’ll buy an iPhone on the day it isn’t tied to the EDGE network. I’ve been spoiled with Verizon’s EVDO for two years and won’t go back to (essentially) dial-up speeds!

  • Ian

    Interesting, I have an iPhone and believe me EDGE is anything but dialup speed. It is adequate for me to read and reply to mail and surf the web while on a shuttle bus from the airport to home. Yeah faster would better, but that is true for everything.

    I also don’t share the opinion that Apple could have done anything but get hitched with a US mobile phone company. I don’t see why this approach is anti-consumer, I for one don’t feel at a disadvantage using my iPhone: the coverage, service and the phone itself has been flawless.

  • Greg

    I’m still puzzled as to why Apple didnt get into the China market. Maybe they need to understand Asian culture better.

    I live in Shanghai, and here (DVDs aside) it’s usually foreigners like myself who buy “fake” products. Last years closing of a big market that specialised in selling copied brand names cuased far more angst in the foreign community than the local one. Chinese with the money will pretty much always choose to buy the “real” product for ‘face’ (pride, respect). It’s very important for Chinese people to have the trappings of success, and having the latest gadget is a very important part of that.

    I’m sure some locals would still buy “fake” or unoffocial products, but usually only because they can’t afford the “real” one. As soon as they can afford the real one, they would jump at buying one. They are very brand conscious- brand is in many ways much more powerful than in the west, where people are starting to become a little more cynical about them. here its all still relatively new, and owning certain brands (particularly foreign ones) projects the ‘right’ image if you are young.

    Even at the currently over inflated pirce of the iphone, many locals would love to own one. Young people cant expect to own cars, so owning a really flashy mobile phone is the only thing that to do with your savings.

  • Andrew DK

    That’s some really insightful news there greg. Overall it also seams like good news for AAPL too.

  • Greg

    As a follow up, my wife told me an extrordinary story last night about her Chinese teacher colleagues. They earn maybe $4-5,000 Chinese dollars a month, which is a reasonable salary, but with housing proces in Shanghai being what they are, its not a gold mine (and to purchase a house you need at least a 30% deposit). My wife told me one of her colleagues was complaining about having no money in the bank, and she asked why, “Well, I bought a [name brand] back in the holidays for $9000.”

    I’m not sure how typical this beahviour is, but even if it only iflicts a small percentage of the population, it’s big money for brand names.

  • Greg

    Ooooops… “back” = bag :)

  • parag

    I came across china mobiles Chinese model Handsets which are availabe in Indian market also

About the author

Pete Mortensen

Pete Mortensen is a design strategist for consulting firm Jump Associates and the co-author of Wired to Care: How Companies Prosper When They Create Widespread Empathy, a book and blog that are significantly more interesting than you might initially think. Pete's particular Apple avocations are both around design--interface and industrial. Follow him on Twitter!

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