Chinese iPhone talks ended over app control

Negotiations between China Mobile and Apple to bring the iPhone to the world's largest mobile subscriber market broke down after the two firms reached a stalemate over the sale and distribution of mobile applications. Citing a source with the China Mobile Research Institute, Interfax reports that China Mobile and Apple spent about 18 months hashing out an agreement to introduce the iPhone to Chinese consumers--during the first of three rounds of negotiations, Apple demanded between 20 percent and 30 percent of the operator's revenues from iPhone users, a stipulation rejected by China Mobile. After the firms returned to the bargaining table, Apple offered to sell iPhones to China Mobile at $600 per unit while stipulating that the carrier subsidize any iPhone service bundles offered to users--again, talks broke down.

The third and final round of negotiations ended after Apple demanded it retain control over iPhone application sales, insisting consumers purchase apps directly from the App Store. According to the source, China Mobile president Wang Jianzhou viewed Apple's offer as a threat to the operator's mobile web dominance: "Wang said China Mobile should operate the application store itself in order to maintain its advantage," the source said. In addition, China Mobile argued the App Store billing model would prove problematic, arguing Chinese consumers prefer to pay for services by depositing money into their mobile accounts instead of funding purchases via credit card.

For more on the Apple/China Mobile talks:
- read this Interfax article

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