iPhone Comes to China Without Key Feature

In this Monday, Oct. 26, 2009 photo, a pedestrian talking on her mobile phone walks in front of the iPhone display at an Apple store on Michigan Avenue in downtown Chicago. (AP Photo/Kiichiro Sato)

(AP)

Apple's iPhone is making its long-awaited formal debut in the world's most populous mobile phone market, without a key feature and at higher prices than widely available black market models.

Apple's local service provider, China Unicom Ltd., hopes the iPhone will give it an edge against giant rival China Mobile Ltd., the world's biggest phone company by subscribers.

Unicom was to start selling iPhones equipped for third-generation service Friday night at 2,000 stores in areas as farflung as Tibet. Chinese news reports say Unicom hopes to sell 5 million in three years, but the company declined to confirm that.

Unicom's first iPhones lack WiFi, a possible handicap with sophisticated, demanding Chinese buyers. The technology, a key part of the iPhone's appeal, allows the phones in other markets to use wireless networks in cafes and offices to download e-mail and the latest applications for free.

"There's going to be a perception that the phone they have is dumbed down from the one that somebody has in California," said Duncan Clark, chairman of BDA China Ltd., a Beijing-based technology research firm. "We've seen before that Chinese consumers don't like to be treated like second-class citizens."

Apple Inc. and Unicom also could face competition from an unusual source: unlocked iPhones brought in from abroad that have WiFi.

There are already an estimated 1.5 million to 2 million such phones in China using China Mobile 3G service that allows Internet access and other features.

Unicom's prices range from 4,999 yuan ($730) to 6,999 yuan ($1,025) for the high-end, 32-gigabyte iPhone 3GS. That is 20 percent above the 5,700 yuan ($835) charged by merchants at Chinese street markets for a 3GS with WiFi.

The iPhone's awkward, delayed entry into China reflects the regulatory and technical hurdles of a fast-changing market where other global technology companies have struggled to establish themselves.