Gartner Says 3G Sales to Climb Slowly in China
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Source: EBA Communications Ltd
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Date: Tuesday, 9 March 2010
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Contact Person: EBA Communications Ltd
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Email: info@ebacomms.com
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3G device sales will grow steadily to reach almost 40 per cent of total sales in 2013
Hong Kong, 9 March 2010 ¡X Sales of 3G mobile devices are to total almost 155 million units by 2013, according to Gartner, Inc. As Chinese consumers become more familiar and aware of what a 3G service has to offer, Gartner expects a steady and healthy growth in sales through 2013.
In 2009, all three Chinese Communications Services Providers (CSPs) launched low-cost 3G devices to attract 3G subscribers and increase their 3G revenue; however 3G sales fell far short of expectations, accounting for only 8.36 per cent of total sales. All three Chinese CSPs, China Mobile, China Telecom and China Unicom, set very high targets for 3G user acquisition and failed to meet them.
"The launch of 3G in China in 2009 was hotly anticipated, with many people expecting sales of 3G devices to boom in the first two years, but they were too optimistic," said CK Lu, senior research analyst at Gartner. "If we look at other Asian countries such as Japan and South Korea, 3G sales took three to five years to reach 80 per cent of total sales ¡V we're going to see a similar pattern in China."
In 2009, all three Chinese CSPs launched low-cost 3G devices to attract 3G subscribers and increase their 3G revenue. However, they have discovered that users who bought low-cost 3G phones do not contribute to better average revenue per user (ARPU) any more than existing 2G users.
In the second half of 2010 Gartner expects to see CSPs shift their focus to 3G smartphones. Their sophisticated operating systems offer a way to increase ARPU through data subscriptions, application sales, varied ecosystems of content developers and value-added services such as navigation and music subscriptions. Gartner forecasts that sales of 3G mobile devices will account for 12.65 per cent of total sales to reach nearly 35 million units in 2010.
According to Gartner, Chinese consumers do have a general awareness of 3G, but are not sure exactly what it can do for them other than offer video calls. In Western markets the mistake of promoting speed, which is both misleading and unhelpful, was made repeatedly. CSPs should now be trying to define a compelling 3G experience, according to Lu.
"Chinese CSPs had the opportunity to learn from previous 3G launches in other markets, but didn't. In 2009 CSPs were so busy promoting 3G products that they failed to explain the 3G services, as a result, the 3G experience remains unclear to Chinese consumers. Without a clear understanding and compelling 3G applications, people will continue to use their phones mostly for voice calls and SMS texting," said Lu.
In 2010 Gartner expects WCDMA to remain the mainstream technology in the Chinese 3G market. This will allow foreign vendors to easily bring their existing 3G portfolios to China without having to extensively customize them. TD-SCDMA sales will take advantage of China Mobile's heavy subsidies ¡X both for manufacturers and end users. However, vendors may be slow to offer "China-only" TD-SCDMA models, which are not compatible in other markets.
With a limited model selection for TC-SCDMA, Gartner expects dual-mode/dual-SIM devices to be popular in 2010. China Unicom and China Telecom will aggressively promote these to attract 2G users from China Mobile.
Gartner says manufacturers should examine their current WCDMA/CDMA portfolios and consider launching dual-mode/dual-SIM models. At the same time, they should keep an eye on the plans of the Chinese government and China Mobile regarding TD-SCDMA, even though sales based on the technology are still low compared with WCDMA. In addition, mobile number portability (MNP) may also change the rules for CSPs; manufacturers should watch closely for a policy change.
Additional information is in the Gartner report "Dataquest Insight: 3G Mobile Devices in China" The report is available on Gartner's website at http://www.gartner.com/resId=1295513.
About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.
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