четверг, 1 сентября 2011 г.

Smartphone key strategy for China mobile market

One morning this month on his way to work, Jessie Fang was delighted to see that China Mobile was advertising the iPhone 4. But when the director of tourism sales was one of the mobile operator's stores, found that has not yet begun to distribute the popular device.

What the ad on the subway in Beijing promotes a number of new monthly packages where subscribers are promised cash rebates if they commit a certain amount of voice and data charges every month in a newly purchased phone smart.

The scheme comes as China's telecom operators are about to adjust their strategies smart phone subsidies – a move that could eventually lead to their profit margins down closer to the levels observed in the operators in mature markets.

As Chinese operators have penetrated almost all mobile urban markets, new subscribers are adding users are mostly rural, which generate much lower incomes. Carriers are therefore under pressure to get as many subscribers moderately rich to begin using smart phones as devices to encourage heavier data applications, which in turn generate more revenue.

Both China Mobile, the largest mobile operator with more than 600 million subscribers, China Telecom, the third largest mobile operator in China, are in talks with Apple to begin shipping its iPhone subscribers. Such a move could mean his taking heavy subsidies for the device, as seen in China Unicom, the only Chinese operator, which currently distributes the iPhone.

"Definitely see a restructuring strategies subsidies to Chinese operators in the future," said Charice Wang, an analyst at Ovum, the telecommunications research firm in London.

Smartphone market in China is growing faster than worldwide. IHS iSuppli forecasts that shipments will rise to over 54 million units this year from 35 million last year. By 2015, China's market of smartphones have soared to 112 million units, representing a compound annual growth rate of 26 percent, compared with 20 percent worldwide, says firm research.

But consumers in China only be maintained if the purchase prices continue to fall, in part, supported by subsidies, analysts warn.

"Some consumers midrange and high end tended to happen on smartphones or principles of finance," said Gao Yuan, an analyst at IDC in China, adding that the market growth slowed in the second quarter, as of the demand was soon passed.

Mobile operators in China have been subsidizing the phones since 2005, but greatly increased the practice, which launched the third generation mobile services in 2009.

"Until now, Chinese operators have largely subsidized low smartphones and mid-range," says Anand Ramachandran, an analyst at Barclays Capital. "I think in the future will gradually change to high-end devices.

This change is an attempt to bring the top end of mobile subscribers, who have taken up the use of smartphones in recent years to spend more.

The upper segment is a minority of the vast Chinese market. As in many other developing countries, most consumers use prepaid cards because they are cheaper than long-term contracts. "Operators are not willing to offer smartphone subsidies to these people because there is no guarantee that a consumer would get the operator and generate revenue," says Ms. Wang

Mr. Ramachandran estimated 200 million 250 million 900 million mobile phone subscribers in China are on long-term.

However, traders remain cautious on the way to reach this group – promotion system of new China Mobile is an example because it does not offer any benefits in advance, but only monthly repayments.

The company has been in talks with Apple on iPhone a distribution agreement potential for more than two years. China Mobile unpopular use of technology, homegrown 3G wireless TD-SCDMA is a robbery. Apple would have to offer a customized version to work on the network.

"Given that China Mobile is very focused on 4G is starting, I think this step is very unlikely now," says Ramachandran.

Things are easier to China Telecom, because it relies on a wireless technology called CDMA 3G widely used, which is suitable for the iPhone.

If China Telecom signs an agreement, scheduled for early next year, this could be the starting gun for a smartphone subsidies race in China. Analysts believe that China Mobile may try to counter by distributing grant an earlier version of the iPhone for use on its 2G network as an interim measure, and China Unicom could be taken to increase subsidies to keep their subscribers to more recent models.

"The risk of a period of handset subsidies can not be ruled unreasonable," says Ramachandran.

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