iPhone Comes to China Without Key Feature

The world's most crowded mobile phone market includes a new product, Apple's iPhone is already lounched in China. China Unicom Ltd. Is official partner of apple company. It started selling iPhones equipped for third-generation service Friday night at 2,000 stores in areas as farflung as Tibet. Chinese news reports say Unicom hopes to sell 5 million in three years, but the company declined to confirm that.

Unicom's first iPhones lack WiFi, a possible handicap with sophisticated, demanding Chinese buyers. The technology, a key part of the iPhone's appeal, allows the phones in other markets to use free wireless networks in cafes and offices to download e-mail and the latest applications. Apple Inc. and Unicom also could face competition from an unusual source: unlocked iPhones brought in from abroad that have WiFi.

There are already an estimated 1.5 million to 2 million such phones using China Mobile 3G service that allows Internet access and other features. Unicom's prices range from 4,999 yuan ($730) to 6,999 yuan ($1,025) for the high-end, 32-gigabyte iPhone 3GS. That is 20 percent above the 5,700 yuan ($835) charged by merchants at Chinese street markets for a 3GS with WiFi.

The iPhone's awkward, delayed entry into China reflects the regulatory and technical hurdles of a fast-changing market where other global technology companies have struggled to establish themselves. Unicom's iPhones lack WiFi because it was temporarily banned by Beijing, which was promoting a rival Chinese system, according to BDA. The ban was relaxed in May after manufacturing had begun.
China has more than 650 million mobile phone accounts, despite an average annual income of $3,000 per person. Some users trade in phones several times a year to get the latest features. China Unicom has 143 million mobile accounts, which would be an impressive figure in any other market but lags far behind China's Mobile's 508 million accounts.

Unicom, China Mobile and the third company, China Telecom Ltd., all emerged with mobile and fixed-line services. The lack of WiFi means Unicom iPhone customers will have to pay to connect to the phone network for every function. BDA's Clark said that could alienate users if it leads to high monthly bills.

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