Shedding Some Light on China Unicom’s iPhone Pricing

The following is my most recent post on Digital East Asia.

The well-connected Chinese business magazine Caijing has acquired some info on China Unicom Limited’s ((ADR) NYSE: CHU) upcoming launch of the iPhone from Apple Inc. (NASDAQ: AAPL).  According to Caijing (link in Chinese), China Unicom will launch the iPhone after the upcoming October 1st week-long holiday, and will offer 4 models: 3G 8GB, 3G 16GB, 3GS 16GB and 3GS 32GB (all with WIFI disabled, per Chinese regulations). This differs from what China Unicom previously showed in its 2009 Interim Results Presentation, as the 3G 16GB was not mentioned.

In terms of pricing, while the article didn’t offer the full details, it was revealed that there will be as many as 8 contract packages (perhaps 2 choices per model?). The most basic package will be the 3G 8GB at RMB2,075 (US$304) for the phone and a monthly contract of RMB126 (US$18) for 24 months. That’s a total of RMB5,099 (US$747) over two years.

According to Caijing’s sources, the lowest monthly contract of RMB126 has been strenuously debated internally and is the absolute lowest price that China Unicom can offer. This is still 3 times the ARPU of China Unicom’s GSM subscribers. Additionally, there was no mention of data plans, so we don’t know what that RMB126 actually contains. It’s definitely a high end offering for the urban elite – the question is will the iPhone be strong enough to lure these customers away from China Mobile Ltd. ((ADR) NYSE: CHL). And perhaps the biggest hurdle is that currently users cannot retain their numbers if they switch networks – this is a deal-killer for business users. China Unicom should be lobbying heavily to get that changed.

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