China Mobile: 400,000 unlocked Apple iPhones on our network at end of 2007

“The shock wave caused by the Apple iPhone has been spreading from the US to China at an unbelievable rate. Savvy entrepreneurs have been purchasing hundreds of thousands of iPhones in the US and Europe, then “cracking” the operating system to allow the device to be used on any GSM network. According to China Mobile, the biggest wireless carrier in China, there were about 400,000 cracked iPhones using its cellular network service at the end of 2007, representing one out of every 10 iPhone shipments announced officially by Apple. The figure surprised us as it is fourfold of that we estimated before,” Anty Zheng reports for In-Stat China.

MacDailyNews Take: There’s nothing like granting Steve Jobs massive bargaining power and carte blanche to negotiate from a position of strength.

“We have never doubted that the iPhone will achieve greater success than iPod in China if Apple teams with China Mobile to launch its Chinese version. There are two reasons. Firstly, different from the US where the smartphone market is fairly limited, appealing primarily to business users, The smartphone market in China, though, is an entertainment-oriented individual consumer market. The main reasons that Chinese mobile users purchase smartphones include entertainment (such as music players, cameras and video) and to access mobile Internet applications (such as IM, e-book, and games). We believe the iPhone will be favored by these consumers as it can better meet such demand. Secondly, high-end handset buyers significantly outnumber high-end mp3 player buyers. We estimate that 20% of handsets sold in China in 2007 cost more than 4,000 RMB (US$533). In another words, there are an estimated 28 million potential users for the iPhone in China.,” Zheng reports.

“Further, the iPhone is not just a successful product. In-Stat feels that the iPhone is leading the way to a new generation of smartphones that are very different from their older counterparts. One important trend is that revolutionary UI and UE, enabled by touchscreens and 3D sensor technologies, will be widely used in the next generation of smartphones in China and around the world,” Zheng reports.

“Also, the trend toward the mobile Internet will drive handset makers to deliver more smartphone models. More Internet applications, such as social networking, maps, search, and e-mail, will be developed for smartphones, and these will make the iPhone and other smartphones more attractive to mobile users who like to use their handsets to pass the time. In turn, the mobile Internet will become a new selling point for smartphones, and drive up sales. Taking the long view, In-Stat believes that the smartphone is evolving into a increasingly wide range of mobile devices, where cellular voice communications are just one function of the converged appliance,” Zheng reports.

For more information about Chinese smartphone market, check out In-Stat’s recently published report titled “Mobile Internet and GPS Change the Future of Smartphones in China,” available online at: http://www.instat.com/Abstract.asp?ID=279&SKU=IN0703655CWW

[Thanks to MacDailyNews Reader “Mike in Helsinki” for the heads up.]

Well, now, there’s a rotating, mile-high by mile-wide, blinking neon billboard screaming “Apple’s iPhone will rule the world!” One question remains, of course, is that large and bright enough for Wall Street to finally be able to see it, read it, and understand what it means?

47 Comments

  1. “Apple’s iPhone will rule the world!”

    With well over a dozen iPhone type phones already available and more on the way – many with superior features at lower prices – this statement looks really really stupid.

    But, keep it up and I’ll keep shorting AAPL all the way to the bank over and over and over again.

  2. The unlocked iPhones are indeed a “good problem to have” for Apple. It’s like “pre-selling” the iPhone into these untapped markets. Their popularity demonstrates potential sales to would-be wireless partners and improves Apple’s negotiating position for the exclusivity contract. And once Apple starts selling iPhones in those markets legitimately, a good percentage of those pre-sold iPhones will join the official network; Apple will then start earning the recurring revenue from many of those 400,000 older iPhones in China.

  3. “The unlocked iPhones are indeed a “good problem to have” for Apple.”

    It’s also beneficial in helping more people to distinguish the real thing from cheap knock-offs or wannabes like the HTC Touch running Windows Immobile crapware.

  4. I don’t see why anyone would think this would make Wall Street happy. The number of iPhones sold is already known. All this says is that 400,000 of them are not giving any residuals. If I were Wall Street I’d be pissed. Oh look. It is.

  5. @MIE
    You must be joking, right? Those phones the author “is just a sucker for” are pieces of junk compared to the iPhone. The author could have written glowing words about the phones he loves without mentioning the iPhone once (he even goes so far to throwing a comment about iPods having “breakage problems”), yet that he repeatedly scorns the iPhone before he gets to highlighting his “favorites” is an indication that this is a paid for piece of PR writing meant to undermine iPhone sales with a little fear and give his obvious clients a bit of breathing space and a few more unit sales before Apple’s product kicks their ass.

  6. I’d say Wall Street wouldn’t like it, but it is some revenue where there otherwise would be none. I don’t think Apple’s eating the cost on these devices, so it could be a situation of a win-win. The funny thing is if Apple really wanted to permanently brick unauthorized iPhones, they probably could — and now we can see the extent of the damage it would cause. In the black market of devices, you get what you pay for. Yes, you don’t have to pay the carrier a fee, and Apple doesn’t receive it, but your future is forever clouded and uncertain.

    In any event, the next generation device is only a few months away. It may bring with it higher security features. That would give Apple greater leverage in negotiating exclusive deals.

  7. “…With well over a dozen iPhone type phones already available and more on the way – many with superior features at lower prices – this statement looks really really stupid…”

    Irrational Exburance really is irrational, is clueless about the differences between second-rate copies and the original Mac OS. The iPhone hardware is great to be sure, but it’s all about the Mobile Mac OS X and future potential, D**Khead.

    From now forward, Apple will always be ahead thanks to furiously-paced features development…Those knock-offs you speak of are pathetic imitations.

  8. But… but. you need those stinking little keyboards…lol
    All those iconographic languages will use the gesture pad, if not need it. why do you think the SDK is in the works so long? A revolution, and not a anglo-centric one, is in the works. Windows mobile— how arcane!

  9. the original white paper showing this data is for purchase only.
    i therefore have not read that original research.
    however, 400,000 is not credible.
    we need to understand how those data were collected.
    it simply is not correct or at least overstated.

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