Apple has held months of talks with China Unicom, the country's favoured carrier for an iPhone deal, in search of an inroad to China's huge market. But those talks have been hindered by disputes such as what proprietary software to pre-load on the handset and whether the phone would include Wi-Fi.
Apple appears to have conceded its demand for Wi-Fi capability. The sample iPhone Apple submitted for testing to China's regulatory authorities last week has Wi-Fi disabled, said Zhang Jun, an analyst at research house Wedge MKI.
China is allowing Wi-Fi on handsets only if they support a domestically developed security protocol. Authorities have approved the first such Wi-Fi handsets in recent weeks.
Still, the handset could finish the tests and receive its network access licence within three months, possibly helping speed talks with China Unicom, Zhang said. Sales could then start by Apple's target period early next year, he said.
Though its sale is currently illegal, the iPhone is already popular among fashion-conscious Chinese urbanites. Unlocked iPhones smuggled from abroad are openly sold beside look-alike clones at Chinese electronics markets. There are already 1 million iPhones in China, consultancy Ovum estimates.
China Unicom could launch the iPhone late this year, though no recent signs of progress have come from its talks with Apple, said Liu Ning, an analyst at BDA, a telecoms research company.
Liu also said Apple had submitted the iPhone to the government's China Telecommunication Technology Labs, which grants network access licences.
The iPhone for China may support 3G. An unnamed Apple handset that China recently licensed to use a specified frequency range supports WCDMA (Wideband Code Division Multiple Access), the 3G standard being promoted by China Unicom. The handset, which was listed as approved on a government website, appears to be an iPhone.
Apple said in April that it hoped to start iPhone sales in China within the next year.