It seems the real reason for the break down in talks between Apple and China Mobile to introduce the iPhone into China may have been revealed.

According to China Mobile, there were already 400,000 unlocked iPhones using its network by the end of 2007.

Shares in Apple shot up more than 10% when it was announced back in November last year that it was in discussions with China Mobile, which is the world's largest mobile phone operator with 350 million subscribers.

When the talks broke down in January, China Mobile cited the apparently high revenue sharing model that Apple demands for the iPhone as the reason.

But, now figures have been revealed from Chinese source In-Stat suggesting that there are already 400,000 iPhones using the China Mobile network.

That number, described by industry insiders as "astonishing", if true, means more unauthorised iPhones in China than there are authorised iPhones in Europe and represents a tenth of all iPhones shipped so far.

This means that the operator is already getting significant revenue from Apple's mobile with the company's official blessing, and is almost certainly unwilling to block those 400,000 users.