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Analyst: 20% of iPhone Sales to Come From China

Apple's deal to introduce the iPhone to the Chinese market figures to be a huge opportunity, with one analyst projecting that sales of the popular device in China will account for 20 percent of the company's global handset revenues next year.

After forging a partnership with China Unicom last week, Apple (NASDAQ: AAPL) will sell between 5 million and 7 million iPhones in China in 2010, Brian Marshall, an analyst with Broadpoint AmTech, told InternetNews.com.

On Friday, China Unicom, that country's No. 2 carrier, announced a three-year agreement with Apple, in what Marshall said is a "big win for Apple, a huge opportunity."

Though it trails China Mobile in sheer numbers, China Unicom offers a coveted demographic, Marshal said. "In terms of opportunity, China Unicom's total wireless subscription base is 140 million, but if you look at post-paid, a little more than half are post-paid, which is what Apple wants," he said. "That compares to China Mobile, which has more subscribers, but 80 percent are pre-paid."

Marshal estimates that China Unicom has about 70 million post-paid subscribers, compared to China Mobile's roughly 92 million. Measured by total subscribers, the gap is much larger. China Unicom has just 140 customers compared to the China Mobile's 460 million.

Under the new deal, China Unicom will begin selling iPhones as soon as October, and Marshall believes Apple is poised for huge growth pinned to the Chinese market.

"Apple should sell between 5 to 10 million in China for 2010, with about 37 million worldwide, so for China to be about 20 percent of that, I do think that's a realistic assumption," he said.

Apple and China Unicom did not immediately return calls seeking comment.

The companies did not disclose pricing for the device and service plan, though Chinese news Web site has reported that consumers will be able to snag an 8 GB iPhone 3G with a two-year contract for a monthly rate of $27.

It is also widely expected that, as required by Chinese regulations, the Wi-Fi access will be disabled on the iPhones sold there, at least initially.

Despite the lack of details on pricing, revenue share, subsidies and models, Marshall said the entry into the Chinese market is a huge score for Apple.

"Basically what it comes down to is that it's a pretty big deal for Apple. They're in over 80 countries, which represents half the planet, but the key going forward is to add new ones as well, so clearly China is a big opportunity for them from the handset perspective," he said.

Overseas markets, along with price cuts on the iPhone 3G, are already proving profitable 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 increase in shipments and helped Apple maintain the No. 3 spot in the smartphone market, a position it's held since the third quarter of 2008. Sustained sales increases have helped improve the company's share of the smartphone market from 2.8 percent to 13.3 percent year-over-year, according to Gartner.

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