Apple on Track to Sell iPhones With Wi-Fi in China

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It may seem implausible to buyers of Apple's (AAPL) iPhone in the rest of the word, but in China, they're sold without Wi-Fi capability. In the U.S. and elsewhare, iPhone users hook up to Wi-Fi connections to get faster downloads and Web-surfing speeds. The inability to do that must be costing Apple and China Unicom (CHU), its official carrier partner on the Mainland, plenty of sales (no public estimates are available).

Now, Unicom says it's working with Apple to add Wi-Fi to the iPhone this year, according to a Wall Street Journalreport on comments from Unicom Chief Executive Chang Xiaobing. China has its own version of Wi-Fi called WAPI, and any device in China that is Wi-Fi-enabled must now, by law, be WAPI-capable as well. This is an improvement: Until last spring, regulations in the world's most populous country didn't allow Wi-Fi consumer devices to be sold at all.

Xiaobing also said he would like to lower the cost of the iPhone in China. The Unicom price for the handset can be as high as $1,000 if wireless subscribers discounts aren't factored in. Unicom should be anxious to lower what it charges for the iPhone and upgrade it to Wi-Fi compatibility. The wireless subscription market in China is huge -- about 700 million people.

The factor that may undercut Unicom's plans is the large number of iPhones sold in China through the gray market. Those handsets, which come into the country via places like Hong Kong, are "unlocked," and thus can work on networks other than Unicom's. Because those iPhones were made for markets where Wi-Fi isn't banned, they're almost certainly Wi-Fi-enabled. And because they're cheaper than China Unicom's iPhones, their market penetration may make it harder for Apple and Unicom to sell a Wi-Fi iPhone of their own.

China is an "open" consumer electronics market, at least for devices that aren't sold through traditional outlets. That will make Apple's goal of picking up market share harder there than it is in countries like the U.S.
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