The Apple iPhone is not officially available in China, but according to a report by communications research firm In-Stat, as many as 400,000 unlocked iPhones were running on China Mobile's cellular network at the end of last year.

If these claims are accurate, then roughly 10 percent of iPhones sold thus far are being used in China. It also helps explain part of the iPhone gap created by the difference between Apple's shipping totals for 2007 and the activations reported by its carrier partners in the U.S. and Europe.

In the short term, however, Apple seems unlikely to convert this semi-underground trade into legitimate business. China Mobile ended iPhone talks with Apple in January, citing the infamous revenue sharing component of the deal as the main cause for dispute. This is a bit of an opportunity lost for Apple, since the iPhone is clearly a hot item already among China's massive population.