When the first iPhone craze swept over the US, I opined on Apple’s strategic mistake treating the China market: the largest in the world. IPhones are not supported in China. If you wish to use this cool gadget there, you need to jailbreak it and void all warranties. Thousands of people did just that, paying two surcharges: the more expensive handset that did not come bundled with AT&T and the jailbreaking fees.
With its deal with China Unicom, a much smaller player in China, iPhone now has an official presence in China. But the venture faces a thriving industry of jail-broken iPhones.
A customer has choices: buy a jail-broken iPhone and stay with the their current China Mobile account or a legitimate one with a new phone number. This week, they learned that door #2 is more expensive. The 3GS version (16GB) costs $440 and without the WiFi feature, compared to the US Apple store price of $200, full featured.
Apple picked a weak partner, irked the customer with its pricing, and ignored the competing channel. Essentially, it continues to cultivate competition by marketing the touch-screen smart-phone segment and weak-playing the largest market in the world.
Let’s see how other handset vendors play this.