One of the biggest stories of 2009 has been China’s mobile market, and the frenzy for share that has accompanied the long-awaited arrival of 3G technology. Handset operators are falling over themselves to win a piece of the country’s burgeoning smartphone market.
In late October came the official launch of the iPhone - though early data shows just 5,000 units were shifted in the first few days. The roll-out was pretty muted by Apple’s standards. Nielsen reported no adspend by Apple for the iPhone until October, during which it spent just Rmb 388,000 (US$57,000), delegating the marketing chores to its network partner China Unicom, which allocated to the iPhone Rmb 4.7 million - or 2.6 per cent of the Rmb 179.4 million the company spent on advertising that month.
Compare that to the Rmb 400 million spent by handset makers overall and the Rmb 687.4 million from the country’s three mobile providers, China Unicom, China Mobile and China Telecom.
But China isn’t a typical smartphone market. For several years, 3G-capable handsets have flooded the country, despite the lack of 3G services, and among the deluge were upwards of two million iPhones carried home by travellers or sold by unauthorised dealers.
“People here rotate phones quickly, trading them on sites like Taobao, so the number of people who have used iPhones is closer to, say, 3.5 million,” says Ben Cavender, senior analyst, China Market Research Group.
Other smartphones come from hardware makers like Dopod (HTC), LG and Nokia. “The Nokia E71 has done extremely well. It is designed for business and can be used on all carriers, and is strongly valued for its high functionality versus price,” says Cavender.
That means early adopters were on their fourth or fifth smartphone - grey-market iPhones included - by the time Apple unveiled the device last autumn. And, complicating things for Apple, Chinese law required the legitimate iPhone to be dumbed down and sold without WiFi. That restriction, however, is expected to end this year.
There is certainly plenty of interest in 3G in China’s urban areas. “3G awareness is high in China, as is the intention to purchase,” says Shawn Wang, head of technology at TNS Research International China. “Unlike the early adopters, these mobile users are taking a wait-and-see approach. They look at three factors - handset, network and applications - and want to know what each can deliver.”
China Mobile had 2.3 million 3G subscribers by early November, putting it ahead of China Unicom on one million (though the latter’s 3G service only launched in October, meaning it has grown quickly).
Having failed to do a deal with Apple, China Mobile is subsidising the development of OPhones - handsets using open-source Android operating systems. Dozens of phone makers have jumped on the bandwagon. Lenovo, Dell and HTC have unveiled prototypes of OPhones, and others have announced plans to develop them.
There is no aggressive discounting of handsets via bundling with networks; China’s phone users are happy to pay full price. They certainly have plenty of choice. More than 1,000 models are launched each year, and 15 per cent of them are smartphones, according to Euromonitor. China is the world’s largest mobile phone market, with last year’s sales reaching 123.2 million handsets. Growth has averaged 12.3 per cent per annum over the past five years. Global giants such as Nokia and Motorola dominate the market. There is also a long tail of shanzhaiji - or ‘cottage’ manufacturers - producing phones using turnkey manufacturing from Taiwan’s Mediatek. Shanzhaiji phones come in all shapes, sizes and levels of functionality, including smartphones.
But smartphones are nothing without a data-rich network and plenty of downloadable apps. So far, Apple, which gains so much leverage with its iTunes and App Store in most markets, has found little traction in China. With China Mobile and China Unicom pushing hard to develop app portfolios, that might change next year.
Got a view?
Email [email protected]
This article was originally published in 17 December 2009 issue of Media.
In late October came the official launch of the iPhone - though early data shows just 5,000 units were shifted in the first few days. The roll-out was pretty muted by Apple’s standards. Nielsen reported no adspend by Apple for the iPhone until October, during which it spent just Rmb 388,000 (US$57,000), delegating the marketing chores to its network partner China Unicom, which allocated to the iPhone Rmb 4.7 million - or 2.6 per cent of the Rmb 179.4 million the company spent on advertising that month.
Compare that to the Rmb 400 million spent by handset makers overall and the Rmb 687.4 million from the country’s three mobile providers, China Unicom, China Mobile and China Telecom.
But China isn’t a typical smartphone market. For several years, 3G-capable handsets have flooded the country, despite the lack of 3G services, and among the deluge were upwards of two million iPhones carried home by travellers or sold by unauthorised dealers.
“People here rotate phones quickly, trading them on sites like Taobao, so the number of people who have used iPhones is closer to, say, 3.5 million,” says Ben Cavender, senior analyst, China Market Research Group.
Other smartphones come from hardware makers like Dopod (HTC), LG and Nokia. “The Nokia E71 has done extremely well. It is designed for business and can be used on all carriers, and is strongly valued for its high functionality versus price,” says Cavender.
That means early adopters were on their fourth or fifth smartphone - grey-market iPhones included - by the time Apple unveiled the device last autumn. And, complicating things for Apple, Chinese law required the legitimate iPhone to be dumbed down and sold without WiFi. That restriction, however, is expected to end this year.
There is certainly plenty of interest in 3G in China’s urban areas. “3G awareness is high in China, as is the intention to purchase,” says Shawn Wang, head of technology at TNS Research International China. “Unlike the early adopters, these mobile users are taking a wait-and-see approach. They look at three factors - handset, network and applications - and want to know what each can deliver.”
China Mobile had 2.3 million 3G subscribers by early November, putting it ahead of China Unicom on one million (though the latter’s 3G service only launched in October, meaning it has grown quickly).
Having failed to do a deal with Apple, China Mobile is subsidising the development of OPhones - handsets using open-source Android operating systems. Dozens of phone makers have jumped on the bandwagon. Lenovo, Dell and HTC have unveiled prototypes of OPhones, and others have announced plans to develop them.
There is no aggressive discounting of handsets via bundling with networks; China’s phone users are happy to pay full price. They certainly have plenty of choice. More than 1,000 models are launched each year, and 15 per cent of them are smartphones, according to Euromonitor. China is the world’s largest mobile phone market, with last year’s sales reaching 123.2 million handsets. Growth has averaged 12.3 per cent per annum over the past five years. Global giants such as Nokia and Motorola dominate the market. There is also a long tail of shanzhaiji - or ‘cottage’ manufacturers - producing phones using turnkey manufacturing from Taiwan’s Mediatek. Shanzhaiji phones come in all shapes, sizes and levels of functionality, including smartphones.
But smartphones are nothing without a data-rich network and plenty of downloadable apps. So far, Apple, which gains so much leverage with its iTunes and App Store in most markets, has found little traction in China. With China Mobile and China Unicom pushing hard to develop app portfolios, that might change next year.
Got a view?
Email [email protected]
This article was originally published in 17 December 2009 issue of Media.
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