A touch of genius

Look, but don’t iPod Touch

Steve Jobs is very mindful of what runs on his Apple products. Earlier this year he prevented the firm’s iPhones and iPads from running Adobe’s Flash – a move that led the software firm to accuse him of running a closed system. But Jobs didn’t budge. Instead he issued a long open letter announcing that Flash had “technical drawbacks”, claiming he much preferred HTML5 instead.

It doesn’t always go his way, however. Witness the US federal ruling last month that upheld customers’ rights to ‘jailbreak’ their iPhones (jargon for tampering with them in order to install third party applications).

Further afield in China, Apple is facing another challenge. And this one looks like it might encourage a mass jailbreak. The saving grace (a limited one, from Apple’s perspective) is that at least it only facilitates switching from one of the company’s products across to another.

That’s because customers ready to spend Rmb388 (about $57) on an ‘Apple Peel 520’ can now upgrade their iPod Touch from media player status into a full handset capable of phone calls and text messages. The transformation creates something that looks (and behaves) very much like an iPhone – and at a fraction of the price. The state media is celebrating it all as a case of Chinese invention in action.

The company behind the Apple Peel 520 – Shenzhen Yosion Tech – is offering a soft plastic adapter jacket (the “peel”) that wraps around an iPod Touch, enabling calling and text-messaging applications. Users can then insert a SIM card and make calls, using a headset. It looks like a classic China play; a product engineered to capitalise on a brand developed elsewhere, and sold at a lower price.

Apple has faced criticism for being slow on its commercial feet in China, especially in a distribution deal with official partner China Unicom. While that was being set up, millions of iPhones were purchased through grey market channels.

There have been other mix-ups too, according to Caixin magazine. Apple’s Beijing store was recently discovered to be selling the new WiFi-enabled version of the handset at a Rmb1,000 discount to units sold through China Unicom channels. Company officials say that the mistake won’t be repeated for the release of the iPhone4 in early September, or for the sale of the iPad, for which China Unicom will again serve as the exclusive partner.

Yosion’s founder says he invented the Peel because he could not afford an iPhone himself. At the moment the lowest official price for the iPhone is Rmb4,999. But the cheapest iPod Touch sells for about Rmb1,500. Even with the cost of a Peel “upgrade”, savings of more than Rmb3,000 look to be on offer. Apple might have a pricing problem.

If the critics are right about Apple’s controlling instincts, China must be one of its most unsettling markets. At least the development team seems to be able to churn out compelling new products at regular intervals: it makes it a little tougher for the copy-cats to keep up. And perhaps even the Peel’s arrival might have a silver lining, boosting sales of the iPod Touch to a large segment of consumers who can’t afford an iPhone itself.

Currently only a small order of Peel 520s has been manufactured. But Yosion now wants to boost sales volumes and is looking for investors. One problem for interested parties, says the Economic Observer, is that the Peel’s legal status remains unclear. Yosion also admits that it doesn’t have the time or money to bother with patenting the Peel itself.

That means it won’t want to delay bringing in new shareholders. It already has competitors of its own, including the tPhone, which has a longer battery life. Perhaps that’s why the company’s chief executive is ready to think bigger picture as far as partners go, asking his CNN interviewer to put him in touch with Steve Jobs to see if he would be interested in collaboration.

That sounds like one phone call that will go unanswered.

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