Report: China Unicom/Apple strike deal to sell iPhone 3G in China

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Apple and Chinese carrier China Unicom have struck a deal that will allow the iPhone 3G to be sold in the largest mobile market in terms of subscribers, according to insiders in the mobile carrier talking to Chinese news portal 163.com (link provided is a machine translation of the page).

According to the report, the iPhone 3G will be sold at 2,500 yuan under a two year contract, and is to come out to the market in October this year. According to the Wall Street Journal, Apple is expected to remove the Wi-Fi feature from the phone to comply with local regulations. It is unknown if the iPhone 3GS will be sold as well at a later date, and if a Wi-Fi enabled phone will ever hit the market.

However, it faces a huge challenge, according to the WSJ, as many users prefer prepaid services than to subscribe to a monthly service; with average monthly revenue per user in China being less than US$6, compared to the about US$60 average monthly revenue from AT&T, the exclusive carrier for the iPhone.

If this is true, this would skyrocket the number of iPhone users, as China has around 700 million phone users, compared to the United States’ 270 million. “Industry insiders” are expecting an official announcement to be made by the second-biggest carrier in China, and the only one that has the specific 3G network band that the iPhone uses, tomorrow in Hong Kong.

According to statistics from research firm IDC, only 7 percent of the total sales of the phone came from the Asia Pacific – which includes New Zealand, Australia and India; compared to the 49 percent and 25 percent of total sales in the United States and Western Europe respectively. The phone is also available in Canada, most of South America and Eastern Europe, and in some parts of the Middle East and Africa.

Despite not officially sold, the iPhone is already a huge hit in China. While IDC’s numbers do not show what is happening in China, analysts from Beijing-based research firm BDA China say that there is about 1.5 million iPhones in China in use, with many opting to buy it from an online retailer and in electronic malls, and “unlock” (meaning to break it from its connection with AT&T) the phone so they could use their SIM cards to make calls and send SMS.

Because of its popularity, it is expected that China Unicom’s profile will be raised.