By Bryan GardinerTalks between China's largest mobile operator and Apple about introducing the iPhone in the country have ended, according to company officials.
On Monday, a spokeswoman for China Mobile confirmed with the AP that the two parties have walked away from the negotiating table. At the moment, neither company is giving a specific reason.
"We can only say that negotiations have ended for now," a spokeswoman for China Mobile Communications told the AP. "We have no other news to report." Chinese Internet portal Sina.com promptly started reporting that (surprise, surprise), the deal-breaker was likely the 20-to-30 percent revenue share agreement Apple was likely demanding.
Late in November, a similar report surfaced in various Chinese papers. China Mobile quickly denied that claim and said the two companies were still working on a deal. In fact, many analysts speculated that China Mobile itself was likely the source of the report and was using the rumor as an attempt to win concessions from Apple.
"(China Mobile) knows that Apple is talking to all the Chinese carriers," Blackfriars' Carl Howe speculated a few months back. "So it spreads rumors that the talks have broken down and seeds another rumor that it is bringing in Blackberries for its customers instead."
Apparently, the attempt didn't work. As many analysts have noted, playing hardball with Apple remains a risky endeavor. The company is notorious for dictating terms and then refusing to budge when dealing with outside parties. Yet the fact remains that China and its estimated 300 million mobile subscribers (a number that will grow to 500 million over the next few years) would have been a huge market for Apple. As we noted before, if Apple did land a deal with the mobile provider, it could have been one of the biggest drivers iPhone sales to date.
For that reason, China Mobile may have believed it had a bit more leverage at the negotiating table.
In light of Monday's announcement, focus has now shifted to China Unicom. Market watchers and analysts both seem to think that breakdown in talks between Apple and China Mobile is good news for the company's closest rival. As a smaller company, China Unicom may also be more willing to bend to Apple's demands.
The dissolution in talks also highlights another important fact. Namely, that Apple thinks it doesn't need China to hit that 10 million iPhone mark by the end of the year. Put simply, Apple's willingness to simply give up on a deal with China's largest mobile operator could point to a successful holiday season here in the U.S. for the iPhone, as well as healthy sales in Europe.
Steve Jobs is expected to announce current iPhone sales figures tomorrow at the Macworld keynote.
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