Tired of waiting, Chinese carriers undercut iPhone substantially with own handsets

Apple’s China sales are up sixfold and topped $3.8 billion in June quarter revenues. Per conventional wisdom, Apple could boost iPhone revenues by adding more carriers to its Chinese distribution matrix. But for all the cozying up to China Mobile, the country’s largest wireless operator, the second-largest China Unicom remains Apple’s sole carrier in the country. While Apple has left the 1.33 billion people market largely untapped, its iconic smartphone is now facing competition from both carriers, reports DigiTimes:

China Unicom and China Mobile both have launched own-brand 3.5G handsets using chipset solutions from MediaTek, with prices set below CNY1,000 (US$156), or one-quarter the price of iPhone, according to industry sources. The launches of own-brand 3.5G handsets will help China Unicom and China Mobile save a large of amount in subsidies the two companies have been spending for the promotion of iPhone, the sources indicated.

Granted, the report fails to mention the exact types of phones and wouldn’t event hint at whether they’re high-end smartphones or cheapos. Regardless, this is business as usual as no carrier can depend on iPhone alone. On the other hand, the report notes how both carriers are additionally pushing their own app stores. Looks like Apple will need that inexpensive iPhone sooner than later.

Reuters indicated that China Mobile was holding secret meetings with Steve Jobs regarding an iPhone version for the carrier’s 3G cellular network, which is based on TD-SCDMA radio technology (not related to CDMA technology used by Verizon). China Mobile is serving about 7.5 million iPhone users on its network, even if they can only tap EDGE speeds. Furthermore, Samsung is already shipping a TD-SCDMA version of its Galaxy S II smartphone to China Mobile subscribers. Despite the fact that China Mobile is the world’s largest carrier by both subscribers and revenue, Apple may want to wait out and instead take an alternative route, here’s why…

Bringing iPhone to China Unicom was a no-brainer due to their GSM-compatible 3G network. Contrast that to China Mobile’s TD-SCDMA network that would essentially require a new iPhone hardware with different chips. And due to its limited appeal, a TD-SCDMA would be a low volume product and hence pricier to manufacture versus the existing CDMA or GSM versions. Furthermore, China Mobile will be upgrading to 4G LTE soon and other carriers are already running limited trials of the technology. With a 4G LTE iPhone supporting any compatible network, including China Mobile’s TD-LTE variant, why bother engineering an iPhone for the already outdated technology? There’s also this Reuters report claiming that iPhone is coming to the 106 million China Telecom subscribers this November. China Telecom operates CDMA-compatible 3G network so Apple would only need to commission Pegatron to build more CDMA iPhones. China Mobile had 584 million mobile phone subscribers in December last year while China Unicom had 167.4 million.