Contributions Apple Alliance Contribution China Unicom Alliance Contribution
Physical Resources Apple will provide the iPhones for sale in China. ChinaUnicom has already ordered 5 million iPhone 3G’s from Apple as of August 2009. Shelf space in China Unicom stores and kiosks across the country will be dedicated to selling Apple products. The wireless cell and data services will be available for iPhone buyers to subscribe to. 3G cell service is provided by China Unicom in 285 Chinese cities, later growing to 335.
Brand Equity Apple is a highly desirable brand that will attract many customers to China Unicom’s cell network for as long as the company is the sole official distributor of Apple products in the country.
Intellectual Property The Apple iOS operating system that comes on its phones is a versatile software that requires little tweaking to work on Chinese cell networks. Apple is also working with the Chinese government to get around WiFi rules requiring the “Great Firewall of China” be installed on all WiFi devices.
Market Access By providing the iPhone to China Unicom, Apple is helping the company tap a highly desirable smartphone space in the Chinese market. While China Unicom monthly plan pricing is expected to be a bit high, the demographic of Chinese smartphone user who is not yet on China Unicom will be attracted to the network by the iPhone. China Unicom, the second-largest mobile services provider in China, has a large customer base that is eager to purchase emerging smart phone technologies and brands, specifically the iPhone and soon the iPad and iPhone 4. China Unicom also has existing distribution networks that Apple plans to leverage in selling its products. iPhone sales are to begin in October 2009 and are expected to be brisk.
Profit Sharing In a bold and unexpected move, Apple has agreed to divert from its standard profit “dividend” model in favor of undelayed access to the Chinese market. Apple agreed to share 20-30% of the “profit dividends” with its distributors.
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