Interfax reports on details of the long negotiations between China Mobile and Apple. The report cites a source at the China Mobile Research Institute quoting the carrier’s president Wang Jianzhou, that the 18-month old negotiations between China Mobile and Apple have broken down for the third time.
The first two rounds of talks broke down over how much China Mobile and its customers would pay for the iPhone: In the first round of negotiations, Apple asked for between 20 percent and 30 percent of China Mobile’s revenues from iPhone users, which was rejected by China Mobile.
In the second round, Apple offered to sell iPhones to China Mobile at $600 per unit and required that China Mobile subsidize iPhone service bundles offered to users. Again, the two parties failed to reach an agreement.
The third round has the two haggling over which company would sell iPhone applications directly to customers. As it does everywhere else, Apple wants to sell directly to consumers through its App Store. Wang apparently considered the notion of Apple interacting and directly collecting payment from Chinese consumers as a “threat” to the operator’s dominance over the country’s mobile internet market.
These are very similar to arguments/agreements that other global telecoms have had with Apple. The big difference is that Apple could play them against their competitors. Since China mobile controls most of China’s mobile handsets, they have a lot more leverage against Apple and handset makers in general.