iPhone talks crash and burn in China

China Mobile and Apple have "temporarily stopped" their negotiations, according to a spokesman for China Mobile and reported by the FT.

The Chinese mobile phone provider is the largest in china with 363 million subscribers out of the 522 m Chinese mobile phone subscribers.

Apple has long been looking to grab a slice of China's huge market and a positive outlook would have been welcomed news at Steve Jobs' Keynote today at Macworld.

The talks have broken down, nearly two months after they started and apparently stalled when Apple insisted on the 20 to 30 percent revenue share from iPhone customers.

While Europe and America have been relatively easy for Apple to break penetrate - due partly to the fact that competitors like T-Mobile or O2, could be played against each other - Asia, more particularly China, could represent a much tougher environment.

Eric Wen, an Analyst at BNP Paribas, said that this might be the opportunity China Unicom, China's second largest mobile phone company, has been waiting for to swerve in and broker an exclusive agreement with Apple.

Apple is hoping to capture 1 percent of 2008's Global mobile phone market share, selling 10 million iPhones in the process.

The news did not have any noticeable impact on Apple's shares.