For the iPhone in China, Freedom Is the Great Wall

Now that the iPhone is officially on sale in China — a huge market that few once thought it would be allowed to enter — the focus has turned to its high price, and whether that will hinder its prospects in the region. China Unicom began selling the phone today; a 32GB iPhone 3GS goes for 6,999 yuan ($1,024) without a service contract, according to the Wall Street Journal. “Add in the cost of a service contract, and over two years a Chinese subscriber will pay around $3,000, approximately the yearly average salary,” notes TheAppleBlog.

It goes on to note, however, how Apple has proven many times over that people who can pay more for a superior product will do so. Indeed, price isn’t necessarily going to hinder the iPhone’s success in China so much as issues pertaining to freedom, functionality and a Chinese predilection for open source platforms.

As TheAppleBlog reports:

More than 100 million Chinese use their mobile phones to access the Internet. Considering the iPhone’s superior web browsing experience, it’s easy to imagine millions of iPhones sold in China. In fact, it’s already happened. The gray market of around 2 million iPhones is possibly the biggest competitor to the official model. All of those imported units have Wi-Fi, too, unlike the iPhones currently being sold by China Unicom due to government restrictions. However, the ban on Wi-Fi has been lifted, so future iPhones in China will have Wi-Fi.

China Unicom and Apple have a non-exclusive three-year agreement to sell iPhones in China, and OStatic previously reported on how the Chinese government was favoring limitations on Wi-Fi. Lack of Wi-Fi in first-generation Chinese iPhones is a significant limitation. More importantly, China Unicom is doing its own application platform, which will no doubt be heavily promoted for Chinese users and lag far behind Apple’s App Store.

As has always been true — from the birth of the personal computer to the success of the iPhone — great applications help ensure the success of hardware technologies. In the U.S. market and elsewhere, great applications are driving the iPhone’s rapidly increasing adoption. For censorship reasons, and many others, the Chinese government is unlikely over time to be as open as other governments are to a free-flowing, homegrown iPhone application ecosystem.

In the best analysis that I’ve seen on how the Chinese government may hinder the success of the iPhone through closed attitudes, standards guru Andy Updegrove recently noted that an open source platform such as Android may have the brightest prospects:

“A smartphone based on an open source platform clearly offers more opportunities for creativity, extension and (in China) hacking to get around government-imposed technical requirements…in China, it will be interesting to see whether savvy users opt for a platform that gives them the most freedom, or one where what they can buy is controlled by a government that places the highest priority on maintaining a ‘harmonious society’…”

Indeed, freedom, or lack of it — more than price — will help determine the iPhone’s prospects in China.

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