China Unicom (CHU), the second largest Chinese wireless carrier, has officially revealed that it has sold more than 100,000 iPhones since the device’s launch in late Oct 2009. The company had previously reported having signed only 5,000 iPhone customers in the first weekend after launch.
 
China Unicom achieved a major milestone with the launch of Apple Inc’s (AAPL) iPhones (3G & 3GS) across 285 cities in mainland China on Oct 30, 2009. The company inked a three-year agreement with Apple in Aug 2009 to distribute the popular handset in China.
 
The reported sales number, although better than the device’s initial uptake, still remains unimpressive considering the booming Chinese mobile market (the world’s largest) with roughly 722 million subscribers. In comparison, iPhone sales had hit 270,000 units in the US in less than two days and sales exceeded 1 million units in the first three months.  
 
iPhone’s lower-than-expected uptake in China can be attributable to the device’s high price. China Unicom has priced iPhone 3GS at RMB6,999 (US$1,024) without a service contract which compares to US$699 (excluding contract) charged by AT&T (T) in the US . Given this exorbitant price tag, many people are buying the device in the grey market cheaper.
 
Moreover, the lack of Wi-Fi (wireless broadband) support in the Chinese version of iPhones is another hindrance in its wider market adoption. However, China Unicom is offering subsidies to customers to boost sales. iPhones sold in the grey markets do not support the device’s 3G capability either, two factors in the carrier’s favor.
 
Nevertheless, the iPhone represents a major opportunity in wireless for China Unicom as it continues to face downward pressure on ARPU due to stiff competition from its peers China Mobile (CHL) and China Telecom (CHA). China Unicom hopes iPhone sales to eventually cross 5 million units.
 
Moreover, iPhone will boost the uptake of the company’s 3G WCDMA network while offering a competitive edge over its larger rival China Mobile, which is aggressively promoting the Android-based smartphones (called Ophone). China Unicom reported that more than 70% iPhone users have signed up for its 3G service under a two-year contract. The company targets adding more than 1 million 3G users per month.
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