First Marco Polo now the iPhone in China

Apple iPhone is arriving in China by the end of 2009. It may not bring the myriad benefits of noodles and gun powder back to the west, but it will certainly bring a substantial expansion to the size and opportunity of the App Store.

As the ink on the deal begins to dry, it looks like Apple went with the second largest carrier, China Unicom, and agreed to a custom opening screen with the cheery greeting, "Dear user, you are welcome to use the China Unicom’s business."

The size of the Chinese mobile market is estimated to be about 700 million users. Every 1% gained in that market is 7 million iPhones sold. Apple is estimated to have about 2% of the world market in mobile sales. If Apple could match that number in China that would be about 14 million iPhones. Considering Apple has sold about 25 million iPhones in 2 years in 80 countries, that would be a phenomenal increase in its overall market share. And like the wake behind a giant cargo ship pulling out of Yangshan port, so goes the iPhone App Store.

Being second or being a fraction, the rule in China is that nothing is small. The other rule is that nothing is easy. All gold rushes are fraught with peril as well as potential.

The first white water that Apple must negotiate is the law in China that does not allow the use of WiFi. For Apple, that rock has already been struck with the removal of that service from the iPhone. Why? China wants another standard, WAPI, a standard that they want to be a world standard but that is not going to happen any time soon. This subject is a story in itself, please refer to the citation below for ConsortiumInfo.org

The next stone in the stream looms large and is macro economic and geopolitical in scale.

The WTO battle in which the United States was semi triumphant but China is appealing, ruled that China cannot force US copyright holders to exclusively engage only Chinese government controlled distribution companies. This moment has sent a round of applause up from the content creatives in the US, but could be short lived. More on this issue at the Wall Street Journal.

How will these issues affect the Apple iPhone as hardware? It seems at present little, they have struck the deal that both sides can live with. Hardware, even marginally hobbled, is more neutral than software.

Where does this leave the iPhone application developer? At present there are no clear answers. It could be that keeping to applications about celebrities and basketball may skate the typical application through the maze that is Apple's acceptance regimen, the Chinese authorities innate need to control all the content their public consumes and the proclivities of the Chinese consumer.

Maybe the best lesson for the typical iPhone developer can be gleaned from the dinosaurs: when the comet came it was the small and furry that eventually ruled the day.

Citation:

International Business Times

Apple execs visit China to push iphone

http://www.ibtimes.com/articles/20090803/apple-execs-visit-china-push-iphone.htm

China Unicom Press Release

China Unicom (Hong Kong) Limited Announces 2009 Interim Results

http://www.chinaunicom.com.hk/en/press/press_release/news.html?id=456

ConsortiumInfo.org

ISO Says "No" to WAPI, China is Not Amused, and Intel is "Mute"

http://www.consortiuminfo.org/news/archive.php?page=10&Category=2&SubCat=China#

The Wall Street Journal

Hollywood Upstages Beijing

WTO Hands China Its Biggest Defeat in Trade Battle Over Movies, Music, Books

http://online.wsj.com/article/SB125008679464026013.html