Mac with Chinese Characters

There is now a Mac Store in China! The unveiling of the first Apple Store in China took place Saturday at the new Villages mall at Sanlitun. Over the weekend there were huge crowds packed in, especially around MacBook Airs, checking out all the products. The only place where there weren't lines was at the cash registers. Of course there was one very popular Apple product that was nowhere to be found, the iPhone. Domestic import/luxury taxes on Mac goods make them far more expensive than overseas, but this store is more a showpiece for Mac rather than a place expected to be an instant retail success. Photos follow below:

Lots of Apple talk on the web these days, about an Apple store opening at the remodeled Qianmen before the Olympics and talk about what a Chinese version of iTunes may mean to those in China. First, an simpler to deal with, is the Qianmen store, news of which comes way of tuaw.com (hat tip to China Economic Review). It will be great for Mac to finally have its first official presence in China, though current authorized sellers like Dragonstar have done a good job at replicating the Apple store image in China. It will be strange having an Apple store which won’t be selling iPhones (unless a deal can be reached by the time the store opens) and won’t be using iPods to promote iTunes. At the same time, it will be awesome to finally have a REAL Mac presence in China.

As for iTunes, well, that’s connected to part 2 of the China Game’s post regarding Apple in China. I’m sorry, as I said before, the China Game is a great blog, but as a fellow Mac lover, I can tell we have a divergence of opinions on the impact Mac can play in China. In the entry, China Game talks about renting DVDs through iTunes as a great option and possibly the way to fight counterfeit DVDs in China.

There are a number of major problems with this idea that China Game doesn’t touch on or glazes over. The biggest is that he claims that pirated DVDs purchased in China are low quality and typically “shot inside a movie theater”. I wonder when was the last time he bought a DVD in China? I’ve bought over 50 DVDs in the past 6 months (don’t tell Hollywood!) and out of those exactly 1 didn’t work and 2 others looked like they were shot in a movie theater. The majority are excellent, high quality and come straight from real DVDs, often they even turn out copies of awards copy videos provided to the judges of the Oscars and other awards shows. Some stores even offer a choice between DVD-5 for between RMB8-10 and a higher quality DVD-9 for RMB16-20. Out of all the DVDs I’ve bought, the only one that didn’t work came from the guy selling DVDs outside of the Guomao subway many nights for RMB5.

Would I choose to pay RMB21 or more (the equivalent to US$2.99) to rent a movie online or would I prefer taking the (relatively small) risk of buying the RMB5 DVD on the street? Umm, I’m going with my street seller everyday, but that’s just me. In a move to combat pirating, Hollywood came out with RMB20 versions of popular movies with no added content other than subtitles and these failed miserably, what makes anybody think people would download movies for the same price (or more)?

iTunes taught many Americans that paying for music and movies online is the thing to do. No viruses, guaranteed quality, no chance of lawsuit, and a low price was better than the great abyss of downloading music/movies. Even if every Chinese is given an iPod and an internet connection that will automatically hook up to iTunes, it won’t teach Chinese to pay for what now is free for them. There are too many sites that link to free mp3s, even major sites like Baidu, Sina, and Yahoo.

This is another huge problem, music. iTunes already carries a limited selection of popular older Chinese music and newer, cutting edge music. They charge the usual $0.99 per song and $9.99 per album, how could they go about charging ￥0.99 for the same song in China? If they charge close to the equivalent of a dollar, say ￥5 a song, very few Chinese would go for that. If they did go with ￥0.99, would they include all western music? If so, they'd need to do something to prevent foreigners from getting on the Chinese version to buy the cheaper songs. Even if there was a Chinese version, it would be hampered by the fact that so few Chinese have credit cards that could be used to make online purchases.

iTunes revolutionized the way Americans (and Europeans) bought music, but the heights that must be climbed to change China seem too high even for Steve Jobs to scale. Yet reading about the lawsuit that Baidu, one of the most popular sites for downloading illegal mp3s, faces from the Chinese music industry, well, nothing is impossible.

No iPhone in China: Who is to Congratulate and Who is to Blame?

I try to read as many other blogs as my time allows and there are many times I will have some kind of response to what someone else posted, but its rare that they will drive me to post. Well, here goes. As someone who paid close attention to the China Mobile-Apple negotiations and was really hoping to get my hands on a licensed iPhone (as on my last trip to the US I discovered I was too late to get one that could be easily unlocked), the breaking off of negotiations between those two parties left me somewhat sad.

In reality, it didn't stop iPhones from entering the China market through the backdoor, as the New York Times has explained. Is Steve Jobs being too greedy or did China Mobile have too much confidence in its hand? The reality is somewhere in between, but if anything, its probably easier to blame Jobs.

Therefore, I was a bit surprised to see The China Game, a recent blog that is a pretty good read, take the side of Jobs, even stating:

While everyone was slamming poor old Steve, I wished to congratulate him at
least for holding his ground. So many have gone to China and given away the
store, and here you had a guy who knew where he stood, someone unfazed by all of
the China hype. Bravo

Okay, the "China hype"? "Given away the store"? This language seems to be going back to the wild, wild west days when JVs were the name of the game.

China Game wrongly states that Chinese consumers who got an iPhone through the backdoor don't have to use China Mobile. While it is true that a user could probably go with China Unicom, despite its horrible GSM services, its highly unlikely. China Unicom's focus is on CDMA and therefore any iPhone purchaser is probably choosing China Mobile and its also highly unlikely that Apple will do a deal with Unicom.

Consumers are paying a premium for the iPhone here, but none of that money is going back to Apple, because the phones are usually purchased in the US or Europe. Just think, they could offer the iPhone in China for a price of up to US$100 more than it sells in the US and still have no problem garnering major interest. A licensed iPhone through a Chinese carrier offered at the same price as it is in the US would almost immediately make it the top selling phone in China, especially if you look at what is currently available in the RMB2500-3000 price range.

Also, while China Game sees Apple as creating "customers" in China, the reality is that they are only creating "window shoppers." The current price of the iPhone, hiked up by greedy importers, is making it a tough sell. I've yet to see an iPhone used by someone in China who isn't an expat or an overseas Chinese. The idea that the iPhone is a "hit" in China is insane, sure, as the NYT says "thousands" have been smuggled back into China, but 1. they aren't selling like hotcakes, and 2. "thousands" is a miniscule number in the Chinese mobile phone market. The price issue matches much of the talk you hear from Chinese about Apple products. While many love the design and are highly interested in Apple's other products, price and concerns about software often keep them away from purchasing computers, legit iPhones could have been the first step in really creating "customers."

Granted, China Mobile lost out on getting a cut of sales from the iPhone (at least for now), but as for services, most people are still choosing to go with China Mobile. Equally, the corresponding cut Apple would have gotten from China Mobile on iPhone service usage would have been much greater to what China Mobile would get from sales. If a customer uses an iPhone or not, there are still a lot of premium services that China Mobile offers and that bring in a lot of money. Unlike in the US and Europe, its unlikely a Chinese version of iTunes would be released (and even if it did, there's no way Chinese would pay for music online), so the one new area of revenue that China Mobile would have seen (other than sales of handsets) was a moot point.

Neither of these companies are hurting, but the iPhone was Apple's chance to enter China in a big way and it fell through. If anyone comes crawling back to the table, its going to be Jobs.

A Week Can Make All the Difference...

A week ago I was getting ready to post an entry that started out like this:

According to a source Sinobyte says that the iPhone could be out in China as early as Spring 2008. As an aside, it looks like Sinobyte's going to be a great new blog for anyone interested in technology in Asia.

While Sinobyte still looks like its going to be a great blog, I, like many others, am left playing Monday morning quarterback as to why Apple and China Mobile have halted negotiations on bringing the iPhone to China. Last week, I was contemplating whether iTunes would open up a China store and if it could lead to people starting to pay for music through high-quality downloads and other new features (I know this is basically an impossibility, but its something to ponder on a slow day). This week, I'm left wondering whether I will be able to get my hand on an authorized release of an iPhone in China before the Olympics.

These negotiations dragged on for a long time with more than a few fits and starts and this was mainly caused by the fact that neither party really needed the other. Sure, China Mobile is going to lose a bit of money, but they are still the biggest player in the world's largest wireless market. The Apple juggernaut isn't going to be slowed down by lack of entry in China at this point, either.

From all the media reports that have come out so far, it seems like Apple overplayed a relatively weak hand and China Mobile called their bluff. Now Apple can choose to wait things out, go to China Unicom, or crawl back to the negotiating table. Waiting it out seems like the most likely option, as Apple has only slowly started entering the China laptop/mp3 market, though the iPhone could serve as their first real mainstream entry and draw people toward other Mac products, much like the iPod drew people in the US toward Apple laptops. Grey market iPhones will still be readily available, but rarely purchased due to the high price tag and the glut of reliable dealers selling them.

I'm most interested now in seeing if China Unicom can capitalize as this could be the big draw they need to attract customers and take a bite out of China Mobile, but on the other hand, doesn't this make Apple look like the spurned prom date who waited too long and is now desperate to say yes to anybody? This isn't like being in the US and switching from T-Mobile to Cingular AT&T, its more drastic as Unicom is, for all intents and purposes, only a CDMA network. My guess is that Apple will attempt to first wrap up negotiations in other major national markets as not to weaken their position first and then come back to China Mobile accepting a lower percentage of the profits.

Is the iPhone taking over China?

Wired has a really interesting story on iPhones in China discussing how readily available they are now and how popular they've become. I know about the black market versions (ie most likely fakes) and when in Shenzhen I saw a few authorized Apple dealers that had unlocked iPhones in stock (this is not to say they don't exist in Beijing, I just haven't been shopping here that much). However, I've yet to come across anyone using an iPhone in China. My feeling is that Wired overstates the trend.

The number of authorized Apple dealers has certainly skyrocketed over the past few years and genuine Apple products are fairly easy to find, however the price still prevents many Chinese from purchasing them. In Shenzhen, where free wireless is abundant, it was common to see a number of foreigners using Apple, but you'd rarely see Chinese using them. Also, on the subway, foreigners seemed to be the sole users of iPods. In my short time in Beijing, I've noticed a number of Chinese iPod users, but that's about it. And when it comes to computer usage in China, it seems like there is only one choice for business people, Lenovo/IBM.

Apple definitely has room, and potential, to grow in China, but I think its still far from that point. Like in the US, I believe the cheaper, cool items like the iPod and iPhone will serve as a gateway, people will get hooked and then end up buying the computers, like in the US. The Wired story captures the iPhone/Apple popularity in China, but it is discussing a basically non-existent trend, though its easy to imagine that iPods and iPhones will be as ubiquitous in China could come close to matching the US if given more time.

Stupid, Annoying, F%&^*ing QQ!!!

While it is so absolutely uncool to be a young, urban professional in one of China's main cities and still admit to using QQ instead of MSN (despite the fact that a large number of those same individuals in fact DO use QQ), I will come out and admit to using it on a regular basis (when I can actually sign on to it). For those who are unaware of QQ, you must either be outside of China or under a rock, because its by far the most popular chat software in China with huge market penetration, a major place in China's modern culture, and has even led to a spin off clothing line.

Unfortunately, as a Mac user, using QQ is not so easy. Tencent has yet to release a version of QQ that can be used by Mac users. Instead, those who are mac users and still hope to use QQ have a few choses, iQQ, LumaQQ, and Adium. LumaQQ is probably the best choice, though with Adium you can run both QQ and MSN. According to some, if Tencent and Mac teamed up to come out with a QQ version, Apple would instantly become far more popular in China.

For those in China who are Mac users, especially those who have computer problems, you may want to check out this post (as well as the comments) from Danwei, recommending places to go in Beijing, as well as Shenzhen, for fixing a Mac.

Boys Love Toys

I love gadgets and as such, I'm constantly switching cell phones. It was pointed out to me that in the past year, I've used 3 different phones, none of them cheap. But the mother of all phones, the iPhone, is going to be coming out next month and looking at the pictures, it leaves me drooling.

Plus, this bad boy is only available on Cingular, the provider that I use and currently my contract is up for renewal, which means I'm able to get a new phone. Hello, my pretty...

For those in China, you may not be used to the US mobile phone market where everything has to be done through providers and choice is severely limited. You have choices between 5 or so service providers and then, on top of that, the choice of 6-10 different phones, of which 3 or 4 are the same no matter the provider and many of them are cheap and crappy. Ultimately, everyone basically uses the same phone, something I attempt to buck by getting my phone in China. Unfortunately, my beloved Nokia 8800 is now going haywire.

The problem is, unlike in China, there aren't Nokia service centers all over the place and thus, I basically have a very expensive, beautiful, and useless phone that can't be fixed in the US. Anyways, in China (and Asia as a whole), one's mobile often is meant as more than just a phone, but an attempt to grasp for individuality, decorating it with covers, different wallpapers, ring tones, and trying to get a unique (and thus expensive) phone. In the US, for the majority of people, a mobile phone is wholly utilaterian.

The iPhone is the most desired phone around and I'd imagine its going to become almost as ubequitous as the iPod is now. This part discourages me about it, as well as the fact its brand new, so will probably have more than a few bugs which will slowly be revised. I'm also more than a little concerned about its lack of any regular buttons. The "buttons" will appear on the phone's touch screen. This isn't a big issue for making a phone call, but as someone who sends a lot of text messages, I'm very, very concerned about this element. Obviously, the big plus side is the coolness factor and the (likely) extreme ease of synching the phone with my Mac computer. Ultimately, the price will be the biggest issue in my current jobless and financially challenged state. I just hope its $400+ and will thus totally discourage me from purchasing it, though I'm guessing with an extended contract, it will probably be around $300 (or am I just dreaming?).