iPhone Launches Today in China

The Associated Press reports on today's launch of the iPhone in China, noting several hurdles faced by the Apple as it attempts to tap into the world's largest market.

Among those hurdles is a lack of Wi-Fi functionality, a restriction that had been imposed by the Chinese government. The restriction was lifted earlier this year, but not until after the Chinese-specific iPhone lacking Wi-Fi had gone into production.

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.

A Unicom spokesman, Yi Difei, said the company hopes to have WiFi in the next batch of phones.

"We are talking with Apple and expect the problem to be solved by the end of this year," Yi said.

The lack of Wi-Fi connectivity also puts the spotlight on the new Chinese iPhone's relatively high price, which may result in the new device competing directly against unlocked iPhone 3GS models with Wi-Fi that have been brought in from other countries. An estimated 1.5 million to 2 million such iPhones are already operating on partner carrier China Unicom's network, and new unlocked imports are currently selling on the street for 20% less than the Chinese model when purchased without a contract.

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 in China 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.

Apple has so far refrained from offering public sales targets for the Chinese market. An early report claimed that China Unicom had committed to purchasing 5 million iPhones for sale on its network, although the rumor was quickly denied by a spokesman for the carrier.