Apple poised to double potential iPhone market in China

Apple (s aapl) is one step closer to nearly doubling its potential iPhone subscriber base in China, thanks to a new regulatory approval it secured in that country this week, according to Bloomberg. Apple now has official permission from the China Radio Management Office to offer a handset that operates on the CDMA2000 network standard, which is used by the third-largest Chinese carrier, China Telecom. (s cha)
China Telecom would be the second iPhone carrier in China, joining the country’s second-largest network provider China Unicom. (s chu) China Telecom would add a potential buying audience of 33.4 million mobile subscribers to China Unicom’s network of 36.5 million users. All that remains is that Apple secure a license from China’s Telecommunications Equipment and Certification Center prior to offering the device for sale.
Apple wouldn’t need to do much to offer the right hardware for the network; China Telecom uses a 3G CDMA2000 network, based on the same standard as Verizon’s(s vz)(s vod) mobile 3G network in the U.S. Adding the carrier officially would not only expand Apple’s reach, but also help it win back more legit channel sales from the gray market: Gartner (s it) analyst Sandy Shen told Bloomberg that as authorized sales outlets become more widely available, gray market sales dwindle.
Apple may soon face entirely different challenges in China, however, especially if it rapidly scales its potential iOS user base in the country. Recent reports indicate Apple is currently being sued by a group of Chinese writers over allegations that pirated books are being offered for sale on the App Store. The group has asked Apple to remove the books, but so far, the iPhone-maker has refused. The group plans to file another lawsuit on behalf of more authors soon, and says the problem has become rampant. The group is only seeking around $1.2 million USD in damages for this first suit, but in the long term, Apple could alienate content providers and invite continued legal trouble by ignoring the problem.
As China becomes more central to the future of Apple’s mobile market, the company will likely have to come up with new ways to address these and other unique challenges. We’ve seen that localization is key when it comes to making apps successful in Asian App Stores, so it would make sense that Apple may eventually want to set up more localized operations for dealing with Chinese App Store content as well, especially given the recent move to make the Chinese App Store open to payments using local currency.
It looks like we’ll soon see China’s iPhone use explode, above and beyond the impressive growth it’s already posting in that country. Don’t be surprised if Apple pumps up its local operations as well.