Apple iPhone Launches In China -- Without Key Feature

First, Unicom's iPhone won't have Wi-Fi capability. In a country that has an incredibly huge demand for Wi-Fi, the lack of this feature is expected to have a significant negative impact on iPhone sales.

How did this happen? You can blame the Chinese government, which put a ban on Wi-Fi earlier this year so that a rival system could flourish (and you thought U.S. government regulators were bad). China relaxed its ban last spring, but unfortunately Unicom's iPhone's had already gone into production. Chinese consumers are as demanding, if not more, as Americans when it comes to technology. So how would a Wi-Fi-less iPhone go over here in the States?

Furthermore, there are already an estimated 1.5 million to 2 million Wi-Fi-enabled iPhones in China that have been purchased in the country or bought via the gray market. If the iPhone takes off in China, it's likely that gray market sales will increase and put a big dent in Unicom's sales estimates (5 million units sold in three years, according to reports). Unicom says it plans to add Wi-Fi capability for the next line of iPhones, but there's no word on when exactly that will be.

Price is another issue, as it often is with Apple. Unicom's iPhones will start at 4,999 yuan, or approximately $730, for the 8-GB model, while the 32-GB model will cost 6,999 yuan, or $1,025. And that's without the 3G wireless service plan, which can run from $18 a month to $130 a month. Couple this with the lack of Wi-Fi and you have to believe that the Chinese iPhone is playing with a serious handicap.

At the very least, the iPhone launch in China will heat up the smartphone war in the world's largest mobile device market. Unicom's iPhone will be competing with rival carrier China Mobile's forthcoming Ophone, which is scheduled to launch next year.

And Unicom is a big underdog in the battle, since its 143 million mobile subscriber base is dwarfed by China Mobile's mammoth 580 million subscribers. Still, demand for Apple's products has never been higher, and the iPhone has already proved a number of doubters -- including Microsoft CEO Steve Ballmer -- wrong.

This article first appeared in Channelweb Connect .