Apple Inc.'s (AAPL) popular iPhone, a runaway hit in the U.S. and Europe, has encountered headwinds in emerging economies like China that are expected to provide the next leg of growth for the company's iconic smartphone.

In India, where cell phones are often the first device a family buys, only 50,000 iPhones have sold since the local unit of Vodafone Group Plc. (VOD) and Bharti Airtel Ltd. (532454.BY) began offering the smartphone in August 2008. In Russia, where the iPhone went on sale last year, Apple's three partners had each expected to sell millions of handsets; as of May, roughly 400,000 had been sold.

More importantly, the Cupertino, Calif.-based consumer electronics giant has had difficulty penetrating China, the biggest developing market. Apple's efforts to bring the iPhone to the world's most populous country have stalled amid lengthy discussions with China Mobile Ltd. (0941.HK) and China Unicom Ltd. (0762.HK), two of the country's top cell phone operators.

Holding the iPhone back: A combination of high prices and lengthy service contracts. In India, a basic iPhone cost about $340, roughly a third of annual per capita income, putting it out of reach for many people. Consumers in India and China, as well as other developing countries, often balk at signing lengthy contracts, preferring pre-paid plans that Apple and its partners have avoided.

Apple's difficulty grabbing a bigger piece of the cell phone market in developing economies comes as the company leans on the iPhone for an increasingly larger portion of annual revenue that's expected to reach $35 billion this year. In Apple's recently ended second quarter, about 18% of its $8.1 billion in revenue came from iPhone sales, more than from desktop computer sales or the iTunes store.

The iPhone has helped fuel a more than 60% jump in Apple's shares. On Thursday, Apple shares slipped 0.2% to $139.95.

Apple declined comment for this story.

Few countries hold as much potential for Apple as China, where a fast-growing urban middle class has propelled cell phone and computer sales. Apple Chief Operating Officer Tim Cook recently said the company hoped to enter the market next year.

Cracking China, however, will be tough.

Chinese consumers are unlikely to pay a premium for Apple products, where its brand doesn't hold the cachet it does in countries like the U.S. and Japan. Apple's iPod music player accounts for less than 8% of the Chinese market for media players; its Macintosh line of personal computers, less than 1% of the computer market.

A host of regulatory and cultural issues also bode poorly for the iPhone's China prospects. Chinese telephone regulators require the phone's Wi-Fi function - a key feature - to be turned off.

Of course, the iPhone will likely find an audience in China if it hits the market. Though it isn't sold via legitimate channels, an estimated one million iPhones already circulate on the Chinese black market, according to various estimates.

Still, reaching a mass market in China might be difficult. A key iPhone attribute, downloadable music and videos from iTunes, is unavailable in China. Apple doesn't have a Chinese version of its iTunes store, in part because music labels are concerned about the potential for intellectual property abuses.

And without a local partner, like China Mobile or China Unicom, Apple might find it difficult to reach the audience it needs. That effort is made all the more difficult because of Apple's resistance to compromising with its partners.

"If the Chinese were to force certain things on them, they would probably walk away," said Ken Dulaney, an analyst at Gartner Inc.

-By Ben Charny, Dow Jones Newswires; 415-765-8230; ben.charny@dowjones.com