Digital Trends

Market research firm In-Stat reports some 400,000 Apple iPhones are already running on China Mobile's GSM network. That's more than all the iPhones in Europe.

The Apple iPhone has certainly had a tremendous impact on the mobile marketplace, with the last year perhaps fairly categorized as the rest of the mobile industry's attempts to respond to or marginalize the iPhone. Now market research firm In-Stat reports that the iPhone is not just immensely popular where it's available for sale through mobile operators: it's also immensely popular in China, where the company reports about 400,000 unlocked iPhones are already being used on China Mobile. If accurate, that astonishing number would account for about 10 percent of all iPhones sold so far, and more iPhones than are in use in all of Europe.

Apple had been negotiating with China Mobile to carry the iPhone in China, but talks broke down in January over Apple's revenue-sharing requirements. iPhones currently operating on China Mobile (and, no doubt, on other GSM networks in China) are therefore all grey-market units: bought in the United States or Europe, and (very likely) unlocked using software hacks.

A massive number of iPhone's operating on China's phone networks would also partially answer the question of the missing iPhones; that is, the apparent discrepancy between the number of iPhone Apple says its sold, and the number the its mobile operator partners say have been activated.

The number of rogue iPhones operating on China Mobile will no doubt complicate negotiations to officially get the iPhone into China. On one hand, the number indicates a strong market demand for the iPhone, and mobile operators would no doubt want a slice of that business. On the other hand, it puts pressure on Apple, which is not earning any revenue stream at all from the grey-market iPhones…and hundreds of thousands of Chinese mobile users seem perfectly fine with that.