at the intersection of brands, media and culture

The Real Reason China Mobile Said No to the IPhone

In Brands, communications, Consumers, market research, marketing, research, strategy on January 14, 2008 at 12:27 pm

Engadet and others reported today that China Mobile backed out of negotiations to carry the iPhone.

“after saying the “iPhone model was not suitable for China” back in November, a spokesperson for China Mobile now says they’ve “terminated” discussions with Apple to bring the iPhone to China. China’s largest carrier gave no reasons for the decision though the fee sharing agreement is likely a contributing factor.”

But I would point back to the initial statement ” [the] iPhone model was not suitable for China” as the true reason the negotiations broke down.

I was in China in mid-2007 doing research on the mobile phone category and specifically looking at convergence devices. While the market there is filled with convergence devices, more respondents were carrying around multiple gadgets that they saw as best in class vs. relying on one device. Music players that were the size of a matchbox w/ readable song names (take that shuffle), Video players that were almost viewable by someone under 30 and nifty little phones.

The quote I most remember came in response to a prototype I was showing, “it’s too big to be my music player and too small to be a good video player.” I imagine that this consumer sentiment is what caused tepid negotiations between China Mobile and Apple. Except add in, it’s too big to be a phone.

In addition, consider that according to Business Week, “cell-phone replacement cycles in China that run 6 to 12 months faster than those of Europe or North America” which would presumably make long-term contracts less appealing. And, that Apple as a brand doesn’t possess nearly the cache in China that it does in the United States or even Europe. Again from Business Week, “the Mac platform only has 0.2% of total PC unit shipments, according to IDC,… Mac sales never took off there, in part due to perceptions that they’re too costly compared to Windows machine.”

At the end of the day, Apple needs China more than China Mobile needs Apple.

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