Apple IPhone Will Be Sold in China in Fourth Quarter

Apple IPhone Will Be Sold in China in Fourth Quarter

Aug. 28 (Bloomberg) -- Apple Inc.’s iPhone will go on sale in China in the fourth quarter, entering a market that has more subscribers than the combined populations of the U.S. and the 16 nations that share the euro.

China Unicom (Hong Kong) Ltd., the country’s second- biggest provider of mobile-phone services, will sell the original IPhone 3G and the 3G S model in the nation, Chairman Chang Xiaobing told reporters in Hong Kong today.

Apple will compete with Research In Motion Ltd.’s BlackBerry and handsets powered by Google Inc.’s Android software in China, where shipments of smartphones may triple by 2013, according to research company IDC. The world’s third- biggest economy has defied a global recession by continuing to grow, fueling demand for luxury products including the iPhone from its 695 million mobile-phone users.

“It’s essential for Apple to be in China; it’s a huge market,” said Bertram Lai, deputy head of research at CIMB Securities (HK) Ltd. in Hong Kong. The iPhone “is not just the premium product, it’s an aspirational product,” he said.

The iPhone may help Unicom, which trails China Mobile Ltd. in the wireless market, win higher-spending users and bolster demand for more profitable non-voice services including Web- browsing and games. Unicom announced the agreement with Apple as it reported a 45 percent decline in first-half profit today.

‘Priority Project’

“Unicom definitely needs the iPhone, or any type of competitive edge, as a game-changer,” said Duncan Clark, chairman of BDA China, a Beijing-based technology researcher. The company is the only Chinese carrier with technology that is compatible with the iPhone, prompting Apple to reach a deal, according to Clark.

Unicom had 141.1 million wireless-phone users at the end of July, fewer than a third of China Mobile’s 497.7 million. The company said it will invest 100 billion yuan ($14.6 billion) in mobile services in the two years through 2010, with most focused on third-generation networks.

Unicom’s shares closed unchanged at HK$10.68 in Hong Kong trading today. The stock has gained 15 percent this year, compared with a 0.2 percent decline for China Mobile. China Telecom Corp., the third-ranking wireless carrier with 41.7 million users, has climbed 39 percent.

Awarded Licenses

Unicom will subsidize the handsets, Chairman Chang said, without saying how much they would sell for. Prices of the iPhone 3G in Hong Kong range from HK$4,488 ($579) to HK$6,288 in Hong Kong, according to Apple’s Web site. The average income per capita in China was $2,370 in 2007, according to the World Bank’s latest statistics.

China is a “priority project” for Apple, Chief Operating Officer Tim Cook said last month. He said he expected the iPhone to be available in the country in the next 12 months. AT&T Inc., the exclusive carrier for the iPhone in the U.S., last month reported profit that beat analysts’ estimates as the company added more customers for the device.

Apple, based in Cupertino, California, sold 13.7 million iPhones last year, beating its target of 10 million, after introducing a 3G version of the device. The company boosted iPhone sales to 5.2 million in the second quarter, after it started offering an enhanced model.

Apple said it plans to offer iPhone 3G S, the newest model, in more than 80 countries, after starting sales in markets including the U.S., France, Japan and Australia in June and July.

Shipments to Triple

The U.S. company will offer iPhones initially in China without the Wi-Fi communications standard, Unicom said. The technology was previously banned on mobile phones by the Chinese government. The restriction was lifted in May, according to researcher BDA.

In January, Unicom, China Mobile, and China Telecom were awarded licenses to operate 3G services, which allow faster data downloads on mobile phones.

China Mobile said this month it will work with Dell Inc. and HTC Corp. to develop handsets that use its own operating system. The software is based on Google Inc.’s Android technology. In 2005, the carrier started offering Research in Motion’s BlackBerry e-mail devices.

Shipments of smartphones, more advanced handsets that offer e-mail and document-editing programs, will more than triple in China from last year’s 11 million handsets by 2013, said Aloysius Choong, a Singapore-based analyst at IDC.

Profit Decline

More than 1.5 million iPhones have already been sold in China through unofficial distributors, according to BDA.

Unicom’s first-half profit fell to 6.62 billion yuan from 12.09 billion yuan a year earlier, the company said.

Earnings will stabilize in the second half of the year, Chief Financial Officer Tong Jilu said today.

In October, Unicom bought China Netcom Group Corp., the dominant fixed-line carrier in northern China, after selling the smaller of its two mobile-phone units to China Telecom, as part of a government-led industry restructuring to boost competition.

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