China Mobile still in iPhone talks after Unicom deal

China Mobile is still in talks with Apple about offering the iPhone in China even though rival China Unicom last week announced a distribution deal for the handset.

The talks between Apple and China Mobile, the world’s biggest carrier by subscribers, have reached no conclusion yet, a China Mobile spokeswoman said Tuesday. An Apple spokeswoman confirmed the company's three-year distribution deal with China Unicom is not exclusive, but did not say if the company is in talks with other potential partners.

China Unicom will offer the iPhone 3G and iPhone 3GS, with the first handsets going on sale in the fourth quarter. China Mobile started its talks with Apple two years ago, but China Unicom, which operates a 3G network compatible with the iPhone, became seen as the favorite for an iPhone deal in recent months.

One snag in China Mobile's talks with Apple was the carrier’s plan for its own mobile application store, in potential competition with the iPhone App Store. Another was China Mobile's use of a mobile standard for its 3G network that was domestically developed and is not compatible with current iPhone models—although many Chinese owners of unlocked iPhones smuggled into the country use the handsets on China Mobile’s 2G network, which uses the GSM and GPRS standards supported by Apple’s first iPhone model.

The app store and 3G standard snags could remain in any talks. The China Mobile download store went online last month and supports handsets including “Ophones,” or devices that run a China Mobile operating system but have a layout very similar to an iPhone.

Some details of the iPhone launch could still pose problems for China Unicom as well, including how and whether revenue from the App Store should be shared, one analyst said.

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