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China Unicom, Apple Seal the Deal

iPhone and China
China Unicom said it has finalized a deal with Apple and will begin selling the iPhone in the world's largest mobile market by the fourth quarter.

After two years of negotiations, the partnership with Apple (NASDAQ: AAPL) became official today, with China Unicom today on its Web site confirming reports following its earnings call.

"China Unicom and Apple have reached a multiyear agreement for China Unicom to sell iPhone in China. The initial launch is expected to be in the fourth calendar quarter of 2009. We will share more details at that time," the company said in a statement on its Web site.

China Unicom is the second-largest mobile phone company in the country and is hoping the iPhone contract will help it gain market share from larger rival China Mobile.

For Apple, the deal means it can sell iPhones in the world's largest mobile market in terms of subscribers: Of China's 1 billion people, nearly 700 million use mobile phones.

Pricing for the phone and service plan were not disclosed today, though reports by a Chinese news have said the nation's consumers will be offer an 8GB iPhone 3G with a two-year contract in connection with a monthly plan of $27.

However, as required by Chinese regulations, the Wi-Fi access will be disabled on the iPhones sold there, at least initially, according to reports.

China Mobile, China Telecom and Unicom are in the middle of a three-year $58.5 billion spending spree through 2011 to build their 3G networks, with Unicom executing a two-year $14.6 billion spending plan to build its wireless network, according to a Reuters report.

Apple and China Unicom did not immediately respond to requests for comment.

Although Apple has successfully launched the iPhone in more than 70 countries, China was the last big holdout. But Apple executives signaled in June that the company had plans for expansion to mainland China.

Overseas markets, along with price cuts on the iPhone 3G, are already proving promising for Apple, according to research firm Gartner's data for the second quarter.

Sales of 5.4 million units in the second quarter of 2009 indicated a 51 percent growth in shipments and helped Apple maintain the No. 3 position in the smartphone market, where it's been since the third quarter of 2008. Sustained sales increases have helped lift the company's share of the smartphone market from 2.8 percent to 13.3 percent year-over-year.

Apple's smartphone surge contrasts starkly with No. 1 player Nokia, whose market share slipped from 47.4 percent market share to 45 percent, and No. 2 Research In Motion (NASDAQ: RIMM), which saw a modest uptick from 17.3 percent to 18.7 percent.