More than 400,000 Apple iPhones are already in use in China, according to data supplied to InStat by China Mobile, even though the device hasn`t been commercially released in the country.

This figure equates to nearly half of iPhone devices that have not been activated with one of Apple`s partner carriers in the U.S., Britain, France, or Germany. Many such devices have been sold on the gray market in various countries where the iPhone is not yet commercially available.

InStat says that it expects the iPhone to achieve even greater success if Apple is able to cut a deal with China Mobile and launch a countryspecific version of the device. Unlike North America, where most users see smartphones as businessfocused devices, Chinese customers tend to purchase smartphones on the basis of their entertainment and multimedia features.

Apple reportedly held talks with China Mobile about an iPhone partnership last month, but these negotiations broke down when two companies could not agree on how to share service fees. As it stands now, the Chinese carrier is able to collect 100% of iPhone download fees, but cannot directly sell the handset or capitalize on its powerful brand recognition.

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