Following on from the 3G licence distribution that we reported on MyStockVoice late last year, China looks to 3G market to stimulate economy, market leader China Mobile has unveiled a number of new partnerships and device releases that show the direction it is taking in the medium term. After the on-off discussions with Apple regarding the iPhone, the wireless carrier seems to be pitching heavily into the PC hardware vendors, as well as choosing suppliers to expand its TD-SCDMA network to cover rural mainland China.
China Tech News reports this morning that China Mobile (NYSE:CHL) has selected six PC makers, including Lenovo Group (OTCPK:LNVGY), Founder Technology, Tongfang, Haier, HP (NYSE:HPQ) and Dell (DELL), as its 3G netbook partners. What is more interesting is the strategy behind this, following Western mobile operators who have been pushing mobile broadband dongles since 2007, China Mobile will offer subsidies to users who buy its 3G netbooks. Consumers will be able to enter the serial numbers of the device and the numbers of the built-in TD-SCDMA module of the netbook, with their mobile phones to activate the 3G services.
Dell has already announced its first joint hardware offering with CHL, the Inspiron Mini 10. Dell is obviously keen to tap into the huge potential of the Chinese mobile internet market, IDC has forecasted that the market will explode by 276% in 2009 alone. This carries on from existing deals Dell has struck with Vodafone (NASDAQ:VOD), AT&T (NYSE:T), Starhub and Maxis.
“Dell actively listens to its customers to provide highly stylized, personalized products with unparalleled connectivity. China Mobile’s fast mobile broadband 3G service perfectly complements the wireless and entertainment capabilities of the sleek, portable Inspiron Mini 10.” -- Michael Yang, vice president & general manager of Greater China Consumer
“China Mobile is China’s only operator solely focusing on mobile communications with the world’s no. 1 network and the largest customer base. We are happy to add Dell’s Inspiron Mini 10 to our growing number of 3G mobile broadband devices, providing travelers and social networkers with easy and convenient wireless Internet access.” -– He Zhili, Marketing Director of CMCC
Now with the Chinese propensity to build homegrown standards, TD-SCDMA being a prime example, China Mobile looks as though it is ready to turn its back upon the traditional handset vendors. Rumours abound that it is looking into releasing its own mobile operating system, Open Mobile System (OMS), which is based on Google's Android, however utilising operator specific variations at all layers. In a final snub to Apple, CHL is also rumoured to be building its own app store to support OMS. As Dell has not made any significant inroads, to date, into the Western mobile markets, China Mobile could provide a much needed distribution channel. There are positives for both parties, Dell is new to the handset game & so would be expected to be flexible in how it develops handsets, China Mobile has a distribution base of more than 470 million subscribers, a very juicy number.
"We will collaborate with China Mobile to launch an Android phone, and we will cooperate closely over research and development relating to the open source platform," Wang Yan, a brand manager at Lenovo Mobile, said.
Meanwhile, China Mobile is forging ahead with its network rollouts, AsiaInfo Holdings, Inc. (NASDAQ:ASIA) has announced that it has been selected to provide networking equipment with 11 China Mobile subsidiaries, to support China Mobile's Phase II TD-SCDMA rollout. The new system will support wireless broadband service, data card service, mobile video and other 3G-related services. In 2007, AsiaInfo provided BOSS software for Phase I of China Mobile's TD-SCDMA network construction, thus becoming the first vendor to develop billing and customer relationship management software to accommodate China's 3G rollout.
"Pushing forward the construction and operation of the TD-SCDMA network is one of China Mobile's key goals for 2009, and our longstanding relationship with the carrier brings us a number of opportunities in the 3G realm," said Steve Zhang, AsiaInfo's president and chief executive officer.
Spending on wireless infrastructure equipment in China is expected to rise to $6.2Bn in 2009, up 13.2% from $5.5Bn in 2008. In contrast, global carrier spending on wireless infrastructure gear in 2009 is expected to decline by 3.5% to $39.7Bn, down from $41.1Bn in 2008. It is clear that a lot of companies are banking on 3G in China & China Mobile's dominance of the sector to see them through to 2010, when the wireless markets will look to expand in response to consumer demand. Dell's courting of China Mobile could be a big pay day for the computer manufacturer, as traditional routes to market dry up on declining retail spending in Western markets, China could provide a much needed fillip. Personally I am not ready to move on Dell just yet, however, it will be interesting to see what falls out of this relationship and I will be monitoring closely.
Disclosure: Author is long CHL