In China, 3G is like a duck
A senior executive in the Chinese comms industry compared the prospects of 3G in China to one of the country’s favorite delicacies. “3G is like a duck,” he said. “It can fly, but not that high. It can run, but not that fast. It can swim underwater, but not so deep.” … Well, I chuckled, at least it’s not Beijing Duck, which means it would be dead.
This guy is one of China’s tech elites, so hearing him say this in a small, private setting was surprising if not necessarily illuminating. Most insiders know, believe or suspect that 3G is in trouble in China. According to an online survey by Sina, the largest portal in China, a mere 1.9% of 363,000 respondents said they "have an idea of what 3G really is".
So far, 3G in China has only been great for telecom equipment makers, especially ZTE and Huawei. It’s helped them increase revenue and profits during a time when the global telecom equipment market is pulling back. Moreover, in China they have snatched market share away from international rivals, such as Ericsson and Nokia-Siemens.
But the operators (and minority shareholders) are suffering under a high capex burden. Spending is expected to increase at least 25% this year. The government needs stimulus flowing through the system, and the telcos are one way to get it out there. China loves building things – big things, like expansive telecom networks.
However, now it has to sell these networks to consumers, who don't seem ready to buy. The guy with the duck joke noted that his son chewed through RMB200 in 3G fees in two days, so he had to cut him off. RMB0.01 per kilobyte is still too expensive, he noted. Others seem to agree. According to a survey by www.3g.cn, an industry website, 60% of its 15,155 respondents said current 3G pricing "was too high".
A killer application to the rescue? Not likely. At this same gathering I attended, there were quite a few chip executives. No one was pinning their hopes on a killer app to help 3G appeal to users in China, just like that hasn’t happened globally. According to the 3g.cn survey, in addition to the high price and no need to get a new handset, 17.5% of respondents said limited 3G applications was the third biggest reason why they wouldn't rush to 3G.
One of the main suppliers of TD-SCDMA chips told me he didn’t see enough activity among his clients that sell directly to the retail market in China, where most phones are bought. Instead, all the sales were going to China Mobile, not a good sign because the margins were lower and because it indicated low interest among retailers.
I believe it will take 3-5 years before 3G is widely used in China. Most of the handset users will come along by default, when the price delta between 2.5G/2.75G phones and 3G phones drops below 10-20%. At that point, it’s an easy hardware upgrade, but selling services will still be a challenge. By then, however, we may see that magical killer app, or at least enough smaller apps that in aggregate make 3G a sustainable business model.
During this transition period, the main beneficiaries are likely to be ZTE and Mediatek. ZTE gains on both the infrastructure side, and on the slow ramp in phone and data card sales. If 3G is to be successful, (especially TD-SCDMA) it will need cheaper feature phones -- the sweet spot for Mediatek.
mc
PS: Have a great weekend!
This guy is one of China’s tech elites, so hearing him say this in a small, private setting was surprising if not necessarily illuminating. Most insiders know, believe or suspect that 3G is in trouble in China. According to an online survey by Sina, the largest portal in China, a mere 1.9% of 363,000 respondents said they "have an idea of what 3G really is".
So far, 3G in China has only been great for telecom equipment makers, especially ZTE and Huawei. It’s helped them increase revenue and profits during a time when the global telecom equipment market is pulling back. Moreover, in China they have snatched market share away from international rivals, such as Ericsson and Nokia-Siemens.
But the operators (and minority shareholders) are suffering under a high capex burden. Spending is expected to increase at least 25% this year. The government needs stimulus flowing through the system, and the telcos are one way to get it out there. China loves building things – big things, like expansive telecom networks.
However, now it has to sell these networks to consumers, who don't seem ready to buy. The guy with the duck joke noted that his son chewed through RMB200 in 3G fees in two days, so he had to cut him off. RMB0.01 per kilobyte is still too expensive, he noted. Others seem to agree. According to a survey by www.3g.cn, an industry website, 60% of its 15,155 respondents said current 3G pricing "was too high".
A killer application to the rescue? Not likely. At this same gathering I attended, there were quite a few chip executives. No one was pinning their hopes on a killer app to help 3G appeal to users in China, just like that hasn’t happened globally. According to the 3g.cn survey, in addition to the high price and no need to get a new handset, 17.5% of respondents said limited 3G applications was the third biggest reason why they wouldn't rush to 3G.
One of the main suppliers of TD-SCDMA chips told me he didn’t see enough activity among his clients that sell directly to the retail market in China, where most phones are bought. Instead, all the sales were going to China Mobile, not a good sign because the margins were lower and because it indicated low interest among retailers.
I believe it will take 3-5 years before 3G is widely used in China. Most of the handset users will come along by default, when the price delta between 2.5G/2.75G phones and 3G phones drops below 10-20%. At that point, it’s an easy hardware upgrade, but selling services will still be a challenge. By then, however, we may see that magical killer app, or at least enough smaller apps that in aggregate make 3G a sustainable business model.
During this transition period, the main beneficiaries are likely to be ZTE and Mediatek. ZTE gains on both the infrastructure side, and on the slow ramp in phone and data card sales. If 3G is to be successful, (especially TD-SCDMA) it will need cheaper feature phones -- the sweet spot for Mediatek.
mc
PS: Have a great weekend!
Posted by Michael Clendenin at 5/22/2009 11:05 AM 
Categories: W-CDMA, 3G, TD-SCDMA, China Mobile, China Unicom, China Telecom, Consumption
Tags: 3G Nokia-Siemens ZTE Ericsson
Categories: W-CDMA, 3G, TD-SCDMA, China Mobile, China Unicom, China Telecom, Consumption
Tags: 3G Nokia-Siemens ZTE Ericsson
Thanks for sharing this information :)
Reply to this
Hi
Your post is really informative for me. I liked it very much.
Keep sharing such important posts.
Thanks!
Reply to this
Great article ...Thanks for your great information.I will be waiting for your next post.
Reply to this
good work…unique site and interesting too… keep it up…looking forward for more updates
Reply to this
Hi,
You explained the topic very well.All the things are dependent on the content of the website.
Thanks!!!
Reply to this
First You got a great blog .I will be interested in more similar topics. i see you got really very useful topics , i will be always checking your blog thanks.
Reply to this
Very easy to read and most enjoyable. Thanks for your hard work.
Reply to this
Very easy to read and most enjoyable. Thanks for your hard work.
Reply to this
Thank you for sharing these important topic with us . It has great information. Just what I was looking for
Reply to this
great to read this and i really like this blog,thanks for sharing this information.
Reply to this
thanks for this informative post learned lot about 3G.Keep up with good work.
Reply to this
Simple and easily digestible. Nice. carry on.
Reply to this
China is really a advanced country that's why 3G phones are common in china. This thing shows that they are really working hard.
Reply to this
Love the way you’ve designed the site, how did you make these images larger it looks brill, keep up the good work.
Reply to this
Hi,
This is really an interesting topic to discuss and i like it very much. I am truly speaking that i really surprised to know about that.
Anyways keep it up and keep continue with your valuable thoughts.
Reply to this
HI,
I Think china is one of the most advanced country for their technology. SO it is really a great thing to know about the 3G. I am really impressed to know about the topic. Anyways keep it up and keep continue with your valuable thoughts.
Reply to this
Hi,
I think china is really working hard for their technology improvement. SO i like this thing and those efforts makes the country best among all the other countries.
Anyways keep sharing your thoughts.
Reply to this
Great post, i really found it very knowledgeable and interesting. i really don't really aware of that so far. thanks for sharing. keep it up and keep sharing
Reply to this
How to Buy NFL Throwback Jerseys.Travel to sports clothing stores in your local mall or shopping center to find throwback jerseys.Examine the different jerseys available through the National Football League's online shop before you buy.Locate autograph sessions and team reunions for your favorite franchise to increase the value of your throwback jersey. Contact sports collectors in your community who may possess rare throwback jerseys from the past.Customize your throwback jersey with your own last name and favorite number.Purchase a throwback jersey one size larger than normal if you plan on attending games or wearing the jersey around town. Coordinate an entire throwback uniform for your favorite team by purchasing matching hats and shirts.nfl football jerseys nfl jerseys
Reply to this
How to Buy NFL Throwback Jerseys.Travel to sports clothing stores in your local mall or shopping center to find throwback jerseys.Examine the different jerseys available through the National Football League's online shop before you buy.Locate autograph sessions and team reunions for your favorite franchise to increase the value of your throwback jersey. Contact sports collectors in your community who may possess rare throwback jerseys from the past.Customize your throwback jersey with your own last name and favorite number.Purchase a throwback jersey one size larger than normal if you plan on attending games or wearing the jersey around town. Coordinate an entire throwback uniform for your favorite team by purchasing matching hats and shirts.
http://www.nflfansjersey.com nfl football jerseys
Reply to this
This article has great reference value, thank you very much for sharing, I would like to reproduced your article, so that more people would see it.
http://www.kicksf.com 英雄合击
Reply to this
This is my first time i have visited here. I found many interesting stuffs
Reply to this
Some interesting and well researched information on cameras. I'll put a link to this site on my blog. Thank you!
Reply to this
Good post....thanks for sharing.. very useful for me i will bookmark this for my future needs. Thanks.
Reply to this
Wow, story share looks like a cool application,I got some additional information on it from software development India.
Reply to this
Your work is really looking good,I suggest that you take the help of Software development India to develop a software, helping you with the designing work.
Reply to this
You have got some great posts in your blog. Keep up with the good work.
Reply to this
Really appreciate this post. It’s hard to sort the good from the bad sometimes, but I think you’ve nailed it!
Reply to this
I read your post and I found it amazing .Your thought process is wonderful. The way you express yourself is awesome.
Reply to this
Hi,
You explained the topic very well.All the things are dependent on the content of the website.
thanks for sharing info.
http://wwwthetechmagnet.net/
Reply to this
In a crisis, don't hide behind anything or anybody. They're going to find you anyway.
Reply to this
It’s always good to have tips on good blog posting. As I just started postingcomments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me.
Reply to this