China Unicom not too appealing as partner
Indeed, in China Mobile, Apple may have met its match. The Chinese company's Hong Kong-listed shares have risen 111 percent this year, about the same as Apple's. But China Mobile has a market capitalization of US$384 billion, compared to just US$156 billion for Apple.
If the Chinese operator is playing hard to get in talks over the iPhone, "it just highlights the dominance of China Mobile," said Dave Carini, an analyst in Beijing with research firm Maverick China. "They don't need to make deals like this. There is no need for it to make the kind of deal that American and European operators have been making."
No. 2 operator China Unicom is probably not much of an option for Apple, though. The company has struggled for years, saddled by Beijing with the burden of operating both GSM and CDMA networks. Many people who follow the telecom industry closely believe that there is also a good chance that China Unicom will end up getting folded or merged into one of the country's state-owned, fixed-line operators when China's regulators finally issue the long delayed licenses for 3G service, possibly next year.
"I'm not sure that Apple would want to lock itself into a deal with what is clearly the weaker operator in the market," says Carini. "Apple is very conscious of its image."
China Mobile does face some challenges, though. Its average revenue per user is declining, falling 1.5 percent this year, according to Macquarie, as the company finds budget-minded subscribers in poor rural and inland areas. An alliance with Apple would help the company draw more money from affluent customers in the big cities.
In the meantime, dealers like Liu Yong can take advantage of the opportunity to meet the growing demand for iPhones.
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