Apple Looking to Bypass Chinese Carriers by Selling Unlockable iPhones Through Retailers?

BusinessWeek reports on a note from Wedge Partners research analyst Matt Mathison, who believes that Apple is looking to make a deal with Chinese retailer Di Xing Tong to offer iPhones that could be unlocked for use on the network of China Mobile, the world's largest wireless carrier.

Despite ongoing talk about possible tie-up with the mother of all cellular carriers, China Mobile, equity research firm Wedge Partners believes Apple may have found a new way to sell iPhones to some of the carrier's half-a-billion subscribers. Wedge's managing principal, Matt Mathison, thinks Apple will ink a deal with a large cell-phone retailer called Di Xing Tong, which owns hundreds of storefronts in China. The chain is owned by Foxconn, the massive contract manufacturer that builds so many of Apple's products.

Following announcement of a deal with China Unicom last week that has been confirmed to be non-exclusive, reports have emerged that Apple is continuing to negotiate with China Mobile despite little success in the multi-year talks so far.

BusinessWeek notes, however, that China Mobile has just announced its own smart phone operating system, Ophone, which may lessen the company's incentive to strike a deal with Apple for the iPhone and make sales of potentially unlockable iPhones through third-party brick-and-mortar retailers more likely for Apple. Mathison is careful to note that, while Apple likely would not directly offer unlocked iPhones, it might be willing to turn a blind eye to the practice in order to reach more customers.

Mathison claims that Apple has concerns about partner China Unicom's marketing prowess and network quality, factors which may push Apple to vigorously continue to pursue distribution on other carriers' networks there. Mathison sees such a deal with Di Xing Tong as possibly doubling the number of iPhones Apple could sell in China in 2010.

Related Forum: iPhone

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