Xbox One Launching in China Sept. 23

Less than a year after Chinese officials approved rules that allow for the sale of game consoles in the country, Microsoft announced the Sept. 23 launch of its 3,699 yuan ($599) Xbox One.



The upcoming release makes the Xbox One the first console approved for sale in China through the Shanghai Free Trade Zone—a milestone Microsoft marketing vice president Yusuf Mehdi called an honor.

A partnership with E-Home Entertainment's BesTV means Redmond can introduce its Xbox One with a lineup of more than 70 games, as well as hours of movies, sports, documentaries, on-demand TV programs, and more. Free-to-play games join blockbuster titles, like Forza Motorsport 5, which will retail for prices between 99 and 249 yuan.

"We've been working together with Microsoft for more than a year to prepare for the launch of Xbox One and our organizations share a vision for bringing entertainment and gaming innovation to our consumers," Zhang Dashong, senior vice president of Shanghai Media Group and chairman of the board at E-Home Entertainment, said in a statement. "We are excited to start delivering on that promise and are committed to fostering China's original game development."

That original development includes a number of titles not available on any other device in China. Fans will have access to launch-day games like Kinect Sports Rivals, Powerstar Golf, Zoo Tycoon, and Max: The Curse of Brotherhood. More games will follow, including Sunset Overdrive and Halo: The Master Chief Collection.

Twelve of the world's largest game developers—Electronic Arts, Ubisoft, and 2K included—are working to bring some of their best-selling titles to China, where a number of local developers will also lend their talents to the library of Xbox One titles.

"We have made significant investments in China to deliver a tailored Xbox One experience for our fans," Xbox China general manager Enwei Xie said.

Inside every box, consumers will find the Powerstar Golf and Neverwinter Online titles—along with a Special Edition Pack, as well as the BesTV entertainment experience, free access to Xbox Live Gold through March 2015, a localized Chinese interface, translated content, and local payment methods. Plus, a two-year warranty and local customer service support from Microsoft and BesTV is included.
A special Day One limited edition console also comes with Kinect for Xbox One, more games, and other exclusive offers, for 4,299 yuan, while supplies last.

Today's announcement comes just days after Chinese officials showed up unannounced at four Microsoft offices in China, reportedly to investigate antitrust accusations. The disturbance, however, does not appear to have delayed September's console launch.

Once Xbox One sales begin, Redmond intends to stick around China to open two innovation centers, aimed at driving local initiatives in game and app development. With one location set for Shanghai so far, the centers are expected to house some of the world's top innovators looking to accelerate entertainment industry growth in Asia.

The centers will be funded by continuing investments from the local government and Microsoft.

Apple to China: iPhone not a national security threat

Apple wants Chinese customers to know that iPhones do not pose a national security threat. 

A day after Chinese Central Television (CCTV), a Chinese state media organization, reported that a feature on iPhones could possibly reveal important state secrets, Apple issued a statement on its Chinese website assuaging concerns that it violates users' privacy. 

"We work tirelessly to deliver the most secure hardware and software in the world," the statement reads. "Unlike many companies, our business does not depend on collecting large amounts of personal data about our customers. We are strongly committed to giving our customers clear and transparent notice, choice and control over their information, and we believe our products do this in a simple and elegant way."

CCTV, citing Ma Ding, head of the online security institute at People's Public Security University of China, specifically pinpointed the iOS 7 feature called "Frequent Locations." That feature gathers location-specific information to remember places users have been and to help them with directions and navigate traffic. 

As Elizabeth Goitein, co-director of New York University's Brennan Center for Justice's Liberty and National Security Program, said in a recent interview, this accusation underscores the potential dangers that can arise from collecting vast quantities of meta data, or data about data, from unsuspecting users. "Meta data can be used in a way that's harmful to national security," she said in the interview.

However, Apple denies these allegations. In fact, in its statement, it notes that "Apple does not track users’ locations – Apple has never done so and has no plans to ever do so." Rather, when determining a phone's location, the statement points out, Apple collects data on the locations of cell towers and WLAN hotspots that Apple receives from the iPhones. Still, "an Apple device does not transmit any data that is uniquely associated with the device or the customer," the statement reads. 

Apple further notes that users control what information gets collected from their devices. Moreover, it says that customers must voluntarily enable the tracking feature as it is not enabled on the device's default setting and that users can enable the feature for some apps while disabling it for others. 

"Apple does not obtain or know a user’s Frequent Locations and this feature can always be turned “Off" via our privacy settings," the statement reads. 

On Monday, an article in China Daily, an English-language newspaper published in China, seemed to qualify CCTV's initial accusation of the iPhone in the wake of Apple's statement. The newspaper cited Bryan Wang, China head of industry consultancy Forrester Research Inc., who said location-based services on iPhones do not in fact pose a threat to national security.

"Consumer data, particularly through authorization of personal data access on mobile devices, is not new and has been inadequately protected by many phone manufacturers and app developers in China," the newspaper stated.

"The tracking of location features is almost standard across all major smart phone vendors and platforms globally," Wang told China Daily.

This back-and-forth comes at a time of tension for US technology companies operating in China. In March, Chinese hackers broke into the computer networks of a US government agency that contains the personal information of all federal employees, The New York Times reported last week, citing "senior American officials." 

Last month, Chinese state media accused US technology companies such asGoogle, Apple, and Microsoft of spying on China to steal secrets. It was one of a slew of attacks made by Chinese media in the wake of revelations about the National Security Agency spying program made by Edward Snowdenlast year. 

"U.S. companies including Apple, Microsoft, Google, Facebook, etc. are all coordinating with the PRISM program to monitor China," the People's Daily said on its official microblog, commenting on one of the NSA spying programs revealed by Mr. Snowden, according to Reuters. 

This spat also marks a turning point for Chinese domestic technology companies. China is increasingly turning to domestic technologies as opposed to relying on foreign technologies. Last week, a Chinese court rejected a claim made by Apple that challenged the validity of a Chinese company's patent of a software application that closely resembles Apple's own Siri voice-recognition technology.

The iPhone began being sold by China Mobile Communications Corp. in January of this year. But discounts for the phone will raise subsidies for all phones sold in China this year, said Chief Financial Officer Xue Taohai in March, according to Bloomberg. However, if subsidies were to be reduced, more expensive products – like the iPhone – would likely not be as competitive as local, cheaper brands, such as Xiaomi Corp. or Lenovo Group Ltd., Bloomberg notes. 

Still, Apple is the most desirable mobile brand in emerging markets, according to a according to a 2013 report from the marketing firm Upstream undertaken with analysts from Ovum. That report surveyed consumers in Brazil, China, India, Nigeria, and Vietnam. 

China Labels iPhone a Security Threat

China's influential state broadcaster on Friday called a location-tracking function offered by Apple Inc. AAPL +0.07% 's iPhone a "national security concern," in the latest sign of a backlash in the country against U.S. technology firms.

In its national noon broadcast, state-run China Central Television criticized the "frequent locations" function in Apple's iOS 7 mobile operating system, which records time and location for the owner's movements. The report quoted researchers who said that those with access to that data could gain knowledge of China's economic situation or "even state secrets."

Apple didn't respond to requests for comment. The company describes the tracking function as an aid to iPhone users, for example by providing efficient travel routes.

The Chinese broadcast represents a potential challenge for Apple in an increasingly competitive market. The Cupertino, Calif., company holds only a 6% share of China's smartphone market, according to research firm Analysys, while models made by Samsung Electronics Co. and others running Google Inc.'s Android mobile operating system command a greater share.

Still, Apple dominates the higher end of the market. About 80% of smartphones priced at more than $500 in China are iPhones, research firm Umeng said. IPhone users include Chinese government officials and executives. Last year China's first lady, Peng Liyuan, was photographed using an iPhone, though she has since been seen sporting a smartphone made by China's ZTE Corp. 000063.SZ +0.78%

While CCTV's broadcasts don't necessarily reflect the views of China's top leaders, they are influential in China. Some companies have shifted policies or recalled products after critical CCTV reports.

It isn't clear whether the CCTV report will be followed by new rules or limits on Apple. But the broadcaster's reports have had an impact on the company in the past. Last yearChief Executive Tim Cook publicly apologized after CCTV accused Apple of discriminating against Chinese consumers in its warranty policies.

U.S. technology companies have felt a chill in China since last year, when former U.S. contractor Edward Snowden alleged the National Security Agency was spying on Chinese leaders and that U.S. tech firms were providing data to the government. Apple has said it doesn't provide government agencies with direct access to its servers.

A man leaves an Apple store carrying an iPhone and an iPad in Beijing, China, in April 2013. Associated Press

The broadcast on Friday cited the Snowden disclosures and called U.S. technology firms' databases a "gold mine." It also quoted officials who said that China needs stronger data-protection laws and that Apple would assume "legal responsibilities" if any data leaks were to cause harm.

The cybersecurity debate between Beijing and Washington has heated up since May, after the U.S. charged five Chinese military officers with spying by hacking into U.S. computer systems.

Chinese state television raised security questions about Microsoft Corp.'sMSFT 0.00% Windows 8 operating system last month, after the government procurement center said in May that it wouldn't allow the purchase of new government computers if they ran Windows 8.

China, long Apple's manufacturing base, is an increasingly important consumer market. In the most recent quarter, 25% of Apple's global revenue came from greater China, which includes Hong Kong and Taiwan, and sales have grown 13% in the region during the past year.

China has long been uneasy about its heavy dependence on U.S. technology in crucial sectors and has poured billions of dollars into the development of its own technologies. Last year, the state-run China Economic Weekly magazine, with the English headline "He's Watching You," named eight U.S. companies—including Apple—that it said pose a danger to China's computing networks.

China's government has mentioned software, servers and high-end chips as areas where it is trying to develop home-grown alternatives. The China Academy of Sciences unveiled its own mobile operating system, the China Operating System, in January, but analysts say it stands little chance of becoming widely used in the competitive mobile market.

Meanwhile, Chinese tech firms themselves have bumped up against national-security concerns in foreign markets. In 2012, a U.S. congressional report recommended that U.S. telecom carriers avoid using equipment from Chinese suppliers Huawei Technologies Co. and ZTE, saying their gear could be used by Beijing to spy on Americans. Huawei fired back, saying that the report was a political exercise aimed at attacking China.

Also International Business Machines Corp.'s IBM 0.00% proposed $2.3 billion sale of its computer-servers business to Lenovo Group remains in limbo as the U.S. government investigates security issues surrounding the transfer of such technology, according to people familiar with the matter.