Summary
This analysis looks at some major challenges China Mobile faces and outline key success factors for Dell in their new partnership.
Analysis
Market situation for China Mobile:
Growth in China will come from 2 very distinct and different areas:
- 2nd tier cities
- value added services
China Mobile is losing its grip on the market, since the government has introduced more competition and given China Unicom and China Telecom a 3G license. While in the beginning of the year, 90% of new subscribers were joining China Mobile, now only 60% are choosing this network operator. China Mobile TD-SCDMA network is set to cover 95% of 2nd tier cities and all 1rst tier cities of course.
Looking at China Mobile and its work on devices, here are some the actions it is taking:
- more TD-SCDMA handsets: China Mobile is looking to offer up to 200 different handsets by the end of the year, from the 50 available now, running on TD-SCDMA, its 3G standard. Still this is a small number compared with the hundreds of 3G devices and thousands GSM devices from the global manufacturers. Nokia is working on TD-SCDMA devices, and China Mobile announced that it will partly fund HTC research and development, to help develop up to 6 TD-SCDMA models.
- new brands and platforms for added value services: China Mobile also stated that it will offer devices from Dell and Lenovo. Lenovo may be China's biggest PC maker, it is also a smartphone manufacturer. However, China Mobile plans to offer netbooks and electronic readers.
- developer network: for devices based on android; outside of google, meant to foster innovation and help support the creation of new services.
- 3+1 marketing solution: China Mobile started promoting TD-SCDMA mobile phones, TD-SCDMA network cards, TD-SCDMA notebook computers and even TD-SCDMA wireless landline telephones.
Key to Dell success:
- devices at the right price point: be it low or high end, but enabling China Mobile to offer a wide portfolio of 3G devices, at all price points.
- low price 2G device?: it sounds logical that the first dell phone, which is 2G, should hit a low price point, as it will be competing with many trusted brands, which cover the whole price spectrum and can command higher prices. Also, to move into the growth area of the 2nd tier cities, as all top tier cities near saturation, devices will have to be attractive to more price sensitive customers.
- deviceS: it is paramount to be seen, so the manufacturer will need several devices on the shelves on China Mobile shops and distributors, to be able to be noticed from the several hundreds of other devices (typically, a mobile phone retailer in China carries 700 to 800 models at any one time, while fewer are on show at operator shops).
- co-marketing with PC products
- support China Mobile service platform
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
