Saturday, November 21, 2009

The iPhone debate: what can Apple do

Apple Inc.Image via Wikipedia
Last week Shaun Rein advised Apple what they should do to save their iPhone in China, after their sales appeared to be minimal. His advice (and you can read a longer edition here) had three elements:
  1. Listen to local consumers
  2. Pick China Mobile as a partner rather than China Unicom
  3. Treat China as a part of the global market, not as a separate one
Not everybody agreed and in the comments a debate emerged. PTaylor wrote to Shaun Rein:
This is not a very well informed critique of what Apple is doing in China:

1: The monthly subscription plan problem is a decision by the State Owned telecom company, Unicom. Apple knows that 80% of phones in China are sold outside the carrier channel (through retailers). Their hands are tied though because MIIT and the carriers are paranoid that the iPhone is going to disrupt the telecom market in China.

2. Unicom is the only choice Apple has for the 3G market. China Mobile -- the largest carrier by far -- has been forced to use the China-developed TD-SCDMA standard. Only Unicom's signal (CDMA) will be compatible with the iPhone.
3. Apple has been trying to get the phone into the market for two years. The Chinese government's ridiculous meddling with the market (banning Wi-Fi on mobile phones is just one small example) is the problem.

Not surprisingly, our mostly well-informed Shaun Rein was not amused by the comment and wrote back:

Thanks for your comments and insights. I agree with much of what you said -- you are correct in outlining some of the obstacles Apple had in China.

I always like it when people say it is all the government's fault and there is nothing companies can do to get around it. That is sometimes true but smart companies will evolve business plans for local conditions to factor in local regulations and market conditions. Apple did not do that well enough.
When people say that, they just don't know enough about how to get things done in China or, as is often the case, local execs do know what to do but they can't get buy-i from the home office.
For instance, eBay failed in China more because of meddling from the home office than from folks in China -- they were actually quite good but just ignored.
So, Ptaylor, my advice -- learn how to deal with obstacles rather than just
shaunreinShaun Rein by Fantake via Flickr
complain about them.

So who do you think is right? PTaylor or Shaun Rein?

Update: The China Law Blog add their arguments. They largely agree with Shaun Rein, but have a few smart observations to add themselves.
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