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January 13, 2012

Tomorrow is Friday the 13, but that still won't deter the people of China. There are already thousands of people outside of China’s five official Apple stores in readiness for tomorrow’s launch of the iPhone 4S. And the queue is getting longer by the minute. For example, at the two stores in Beijing, and the three in Shanghai, there are clearly lines stretching hundreds of meters, with reports of hundreds of queuers at each, snaking around several city blocks.

Most Apple stores have a ticketing system to deter queue-jumpers, but that won’t stop the scalpers who buy the phones just to resell them later at a profit to people that didn't want to stand in line.

The first SMS message some of our readers got this morning was from China Unicom, Apple’s official partner for the iPhone in China, reminding them that the popular device goes on sale online on Unicom’s own site at 12.01 AM on Friday morning. So queueing outside in the cold – it’ll be 3 degrees C tonight in Shanghai, and probably less in Beijing – really isn’t necessary.

But perhaps all those folks want Apple’s unlocked device and not be lumbered down with a one, two, or three-year contract with Unicom.

As we saw last week, China Unicom is offering the iPhone 4S for free with some pricier two or three-year 3G subscriber contracts. But that still means that most people would still end up paying thousands of RMBs just to get the phone.

Hopefully tomorrow will pass without incident and there won't be a repeat of last summer’s incident at the iPad 2 launch when a grey-market scalper got beaten up outside the Beijing store for being a jerk in the queue.

In other mobile news

Nokia’s new Lumia 900 smartphone is now available in the United States with its 4G features on AT&T's network. The launch is critical for both Microsoft and Nokia since any hopes for the Windows Phone depend on a strong U.S. entry of the Lumia 900. In March 2011, Microsoft paid Nokia more than $1 billion to help it promote Windows-based phones, but so far the partnership has yet to produce any significant numbers for Microsoft, and the heat is on. As has been the case since Microsoft and Nokia signed the deal, critics have praised the new partnership of a new hardware style with Windows Phone.

And consumers aren’t exactly lining up to purchase the new phones either; sales have been dismal from day one.

But the Lumia 900 could give the project some hope. It’s a rather large phone but thin at the same time, and it supports LTE (Long Term Evolution) 4G service, which is a necessity if Nokia and Microsoft are going to compete. With all else being equal, LTE makes a better use of wireless spectrum and is more efficient than 3G.

Nokia’s Windows Phone device needs Verizon for LTE more than AT&T. The consensus view is that Nokia will face difficulties in the U.S. and potentially abroad. However, AT&T offers Nokia’s new Lumia device some marketing support. The largest challenge for Nokia and other Android and Apple rivals is shelf space.

It’s difficult to get most telecoms to push for new handsets since there are so many to select from. Nokia and AT&T have been longtime partners and that may give the devices some marketing air cover. And of course, it doesn’t hurt that Microsoft will throw some cash behind the Lumia as well.

Nevertheless, the Nokia-Microsoft devices hit some features that still matter. Nokia CEO Stephen Elop said that battery life may be a differentiating feature. If Nokia can thread the battery life-4G needle, then it will have a real advantage.

And consumers could get on the bandwagon soon. Some critics are OK with the Windows Phone, but consumers haven’t bought in yet, and that's where it hurts the Microsoft-Nokia partnership. If consumers get behind Nokia, word of mouth may give it some momentum, but it still remains to be seen what the outcome will be.

The current view is that Nokia smartphones are just different enough that no one will buy the devices. Americans just don’t know Nokia anymore, and the brand is better known in Europe and Asia.

Verizon has said that all of its smartphones will be 4G LTE soon. If Nokia can get into Verizon quickly then it’ll have more sales. More distribution combined with better battery life could give Nokia a much-needed boost in the U.S.

Nokia could have a sustainable slew of devices to keep consumers interested, however. Some wireless industry analysts noted in December that the Lumia 800 interest may be tapering off already, but the Lumia 900 could attract a few buyers.

But make no mistake-- the smartphone market is extremely competitive and Nokia will still need a steady range of devices to compete.

In other mobile news

Yesterday at CES 2012 in Vegas, the first Intel-based smartphone has been launched, but it won't be available at AT&T, Verizon, or T-Mobile.

Instead, the Lenovo 800-K will start shipping in the second quarter of this year, but only initially in China, so you'll have to get yours from China Unicom.

"I'm thrilled to announce that the best of Intel's knowhow and resources is now coming to smartphones," Intel CEO Paul Otellini told his CES keynote audience late yesterday.

He added "It's coming first to China, the largest market for smartphones in the world, with 100 million users and growing rapidly."

Liu Jun, president of Lenovo's company's mobile internet and digital home group, joined Otellini on the keynote stage for the announcement. "It is my great honor today to introduce to you the world's first Intel architecture–based smartphone, the Lenovo Smartphone K-800," said Jun.

"Overall, we are transforming Lenovo from a leading personal computer maker to an internet device company," Liu added.

Liu described the K-800 as simple, stylish, and feature-packed. Among the features are a 4.5-inch display, 720p video, HDMI-out, near-field communication (NFC), and Intel wireless display technology to stream video to a compatible HD TV. More details are sure to emerge in the run-up to its release.

Otellini claimed that Intel's new 32nm Medfield Atom processor provides significantly better JavaScript and browser-rendering performance than its ARM-based competition, and Liu promised that the K-800's battery life is comparable to other smartphones in its class despite the increased performance.

Intel has been trying for some years now to cut down on its chips' power consumption sufficiently to prompt a smartphone maker to include Chipzilla's devices in mobile handsets. Now, with the Lenovo K-800, they've succeeded what Intel had set out to do.

Lenovo's Liu may have been the only manufacturer who could wave an about-to-ship Intel-based smartphone at CES, but Sanjay Jha, chairman and CEO of Motorola Mobility, joined Otellini to tell show visitors that his company isn't far behind, and that it has the full support of its new owner, Google.

"I am especially proud to announce today that Motorola and Intel have entered into a multi-year, multi-device strategic partnership around mobile devices and smartphones," he said.

Jha added that Motorola Mobility also plans to have devices in wireless carrier validation by June 2012, with commercial launch shortly after that. "Stay tuned for the details in coming months," he added.

So ARM-based smartphones finally have real competition, although exactly how much is still a question to be answered only after mobile users get their hands on Intel-based phones in the coming months.

In other mobile news

It looks like Apple could easily double its potential iPhone subscriber base in China, since there is a new regulatory approval process that it negotiated and secured in China earlier this week, paving the way to double its sales of the iPhone and the iPad.

Apple now has official permission from the China Radio Management Office to offer a mobile handset and a tablet that operates on the CDMA-2000 network standard, which is used by the third-largest Chinese carrier, China Telecom. The news is positive for Apple, and should help it surpass its sales forecast in Asia.

China Telecom would be the second iPhone carrier in China, joining the country’s second-largest network provider China Unicom.

China Telecom would add a potential buying audience of almost 33.5 million mobile subscribers to China Unicom’s network of 36.5 million users.

All that remains is that Apple secure a license from China’s Telecommunications Equipment and Certification Center prior to offering the iPhones and iPads for sale in that country.

And Apple wouldn’t need to do much to offer the right phones for the network-- China Telecom uses a 3G CDMA-2000 network, based on the same standard as Verizon’s mobile 3G network in the United States.

Adding the wireless carrier officially would not only expand Apple’s reach, but also help it win back more legitimate channel sales from the gray market.

Wireless industry analyst Sandy Shen over at Gartner Market Research says that as authorized sales outlets become more widespread, gray market sales drop.

But Apple may soon face some entirely different issues in China, especially if it rapidly scales its potential iOS user base in that country.

Recent reports indicate that Apple is currently being sued by a group of Chinese writers over allegations that pirated books are being offered for sale on the App Store. The group has asked Apple to remove the books, but so far, the company has refused.

The group plans to file another lawsuit on behalf of more authors next week, and says the issue is rapidly escalating.

The group is only seeking around US $1.2 million in damages for this first suit, but moving forward, Apple could alienate content providers located in China, and invite continued legal issues by ignoring the problem.

As China becomes more central to the long-term future of Apple’s iPhone and iPad market, the company will likely have to come up with new ways to address these and other unique issues.

We’ve already determined that localization is key when it comes to making mobile apps successful in Asian App Stores, so it would make sense that Apple may eventually want to set up more local operations and stores for dealing with Chinese App Store content as well, especially given the recent move to make the Chinese App Store open to payments using local currency.

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Source: Apple.

    This article was featured on Business 5.0 and on Tech Blog.