In the latest round of negotiations between Apple and China Mobile, control over the iTunes App Store has proven to be the most recent sticking point between the two companies. According to TMT China, China Mobile wants to be a co-administrator of sorts over the app store.
The third and final round of negotiations also broke down over Apple’s insistence that it, rather than China Mobile, sell iPhone applications directly to customers via its online store. Wang [edit: Wang is the President of China Mobile] saw the offer as a threat to China Mobile’s dominance of China’s mobile Internet industry, as Apple rather than China Mobile would collect money directly from customers under the deal.
“Wang said China Mobile should operate the application store itself in order to maintain its advantage,” the source said.
Wang also pointed out that iPhone users in other parts of the world pay for applications by credit card, a model which would not be successful in China, where users prefer to pay through deposits in their mobile phone accounts. Under the latter arrangement, China Mobile would have to play a part in administering the purchase of iPhone applications in China, the source said.
If you recall, initial negotiations between Apple and China Mobile stalled over Apple’s insistence on revenue sharing. But once Apple switched to subsidies instead of revenue sharing, some speculated that the chance for Apple to unleash the iPhone in the most populous country in the world was closer than ever. Though it’s probably safe to assume that the iPhone will eventually be released in China, there are clearly a lot of issues that need to be worked out before it becomes a reality. From Apple’s perspective, over 630 million China Mobile phone subscribers are hard to ignore, but the day Apple agrees to relinquish partial control of the app store to China Mobile will be the day that Apple comes out with a special Beatles edition iPhone Nano that magically turns into a tablet via telekinesis a’la Syler from Heroes.