Apple’s Big Challenge is not Spotify but China
As Spotify goes live on Android and the iPhone for its limited number of premium subscribers in Europe, I hear the glee of the geeks Stateside and here. Among other nifty usability features, Spotify can play your entire catalogue offline through playlist caches, so you can listen to the largest music collection on the web during your long-haul flights to the Valley.
Having worked in partnership with Apple, I’m pleased to see how quickly Spotify secured such placement. But although its launch on iPhone may get bloggers and musos excited, it’s not as newsworthy as the iPhone communicating in Mandarin.
The iPhone is two years old, the same age as my son, who is also speaking Mandarin. As an entrepreneur new to working in China, I find the language as confusing as the commercial and cultural protocol. Over the last couple of years iPhones have taken the US and European markets by storm, selling more than 26m units. During this time Apple has been negotiating with China Mobile. Rather than wait, Chinese consumers adopted smuggled-in iPhones, which are widely used on different networks, although not officially available until later this year.
Some estimate more than 1.5m iPhones are communicating in Mandarin even though the characters have to be typed in rather than being offered as a default. After protracted negotiations, it’s China Unicom which will offer the first official iPhones to the world’s biggest mobile market, with 700m-plus subscribers. Meanwhile, China Mobile, the largest operator in China and the world’s largest based on subscriber numbers, is poised to launch a slew of smartphones based on Google’s Android operating system. Still, instead of courting Apple for an additional non-exclusive contract, China Telecom is focusing on RIM’s BlackBerry and Palm. Unicom is banking on selling 5m iPhones over the next three years to its 141m subscribers.
Why is an official iPhone launch in China exciting? It’s an opportunity for us to learn about one of the world’s biggest and fastest growing mobile markets, one that’s notoriously difficult to navigate and even harder to penetrate. We’ll also witness one of the biggest challenges yet to Apple’s impressive marketing machine, which has thus far failed to inspire Chinese enthusiasm for rarely seen Mac computers.
The model is different. Allegedly, China Unicom and Apple will share subscriber revenue. Unicom will buy devices in batches based on demand and price the device based on subscriber spending habits.
There are also two hurdles in the China Mobile/Apple potential partnership: China Mobile’s proprietary 3G standard is incompatible with the current 3G iPhone and China Mobile is launching its own mobile app store and Ophone, which is remarkably similar to the iPhone’s user interface and design. So who will become more flexible: Apple or China?
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