Mobile you,Mobile me

Some friends in Tencent said,they will provide their own handsets based on Intel’s solution and Meego.

MTK is a successfull fabless firms in this film.It has higher profit margin than any other similiar companies all over the world.And It acchieved to hold the second market share,only less than Qualcom.
But now MTK encountered the great trouble in the second Q of 2010.
Since crisis erupted,semi market fell down to the bottom of the gap.But in fact,taking the advantages of china’s “gray handsets”,which means the handsets without IMEI,even no tax receipts,with its shipment,MTK kept their up trends.Specially in CHina,the biggest local competitor,Spreadtrum,faced the vital risks unless the government’s help.
So the trun-key became a culture idealism for MTK.”Trun key” means the chipsets group including RF,baseband,AP,bluetooth,wifi,prower….are all provided by MTK.And even MTK prepared the software platform based on their hardware for the manufactories.The producers of handsets only need to design the looking and the interface.
But associated with the fabless industriy has grown up,Their will have been more and more providers which will give out one of this chipset group with lower price than MTK’s expense.So some provider will go together to compete with MTK.The turn-key solution got some problems now.
And the MTK run into a gap between two chipsets solutions,the first with less orders to foundry,the second faced less productivity from foundry.That is another chance to MTK’s competitors.
How to pull away for MTK,let us see.

July 28,in the experience store of RIMM in Beijing,RIMM’s distribution partner,Digital China,said that RIMM will provide blackberry based on TD/GSM network.That means another “gold holidy flush” to RIMM in China,because the second hot season of comsuming electronic devices always appears in 1st,Oct in this country.
Lately,RIMM had set up the cooperation with the second telecom operator,China Telecom to provide blackberry based on CDMA-EVDO.As observors said,CHina telecom paid at least 300 USD as subsidy to blackberry handsets.
Till now there lived about half millions blackberry handsets were sold from China mobile’s store since the exclusive agreement between RIMM and China Mobile with a 5 years’ term of validity was signed in July,2005.
As anticipated,the shipments of blackberry in china will be up to 300 thousands per year.

As we know,the CAPEX of 3G fell down in the last half year.The total amount is only 12 billion CNY(less than 2 billion USD).That is 20% of 2009′s first half.That means operators truned their attention to the users and services.
When we look at users,the operators’ growth of 3G subscribers jumped up this half.Be different from last year,the voice users grew stronger.The operators controled the subsidy for the PCMCIA card and try their best upon handsets,that means voices users will grow quicker than before.
Some friends in operators told me that the radio band is not enough to support the errupt of using of wireless data service,which mainly came from PCMCIA card or NETBOOKS.The network faced most pressure,including RF equipments,accessing network,and core network.
The operators realized that PCMCIA or NETBOOK could not bring more income but expensed too much resources of network.The ROI is very bad now.We know the primary competing method of china telecom or china unicom were to promote PCMCIA cards based on very low prices package.
In the first half of this year,china mobile got a much better shipment of TD-SCDMA handsets.That means some things:the handsets of pursuing TD are overtaking other two;The figure is showing TD handsets acchieved 42% of shipment of 3G in the first half.And WCDMA and CDMA EVDO were keeping their situations.
After all ,this is a bad news for equipments firms such as ZTE or Ericcson.But I think the last quater of the year will appear some good demands for them.
A good news for APPLE fans,china unicom deduced the whole expense of price plan for IPHONE,that mean a little bit more quicker growth of IPHONE,but in handsets field,IPHONE faced strong competitors,such as NOKIA,SAMSUNG,SE and some domestic manufactures.

Actually,even people lived in EU or US did not knew why IPHONE suceed.No one could consider this problem from historical view and industry chain view.
First of all,we should thank for the patent protection laws.Few people can enjoy music with “free download” actions.Few websites provided free music if they have no right.
Meanwhile music industry can hardly use “sharing revenue” model with internet companies because of the income risks.
Fortunatly,APPLE’s leader is Jobs who had relations with entertainments leaders because of Pexiel.He acchieved approval from them.
We should say when IPOD released in 2001,it got a worst result before the itunes issued.It is similar to any other MP3 players.
But ITUNEs had the delegation from copy-rights holders.Then if you purchased an IPOD,it means you were approved to access the music storage.
That is the core advances taken by IPOD business model.That is one kind of monopoly because any other MP3 player providers can’t provide it.
We should realize that when APPLE released their IPHONE,IPOD had abount 100 million users all over the world.
So the basement of IPHONE is 100 million potential users,monopoly of musics contents.
Finanlly APPLE need a better handsets now.In fact APPLE prepared for mobile handsets for years—-that is IPOD TOUCH.
I should also say,APPLE came in telecom industry from entertainment devices industry.So the assistant from carriers is very important.
What is the trends at that time?There lived 5 main competitors in US.ATT is the biggest one.But the competiton is hard and AT&T could hardly suceeded during the growth field.Then APPLE iphone CAN help him very much.
Then the cooperation was build up based on demands of both sides.
But in China,the situation is so different.The competiton is not so hard because china’s telecom market is still a high speed growth aspects.THe annual growth of subscribers is still up to 15% that means more than 100 millions new users per year.
And we should concentrate on shipments of handsets.In 2008,based on official report,the shipments was up to 220 million.Even in 2009,it will be up to 210 million at least.
But how much will the shipment of iphone be if it entered this market?The anticipation is 1 million per year,which is less than 5% of the whole shipments,as the 5th player following the NOKIA,SAMSUNG,SE,TIANYU,LENOVO.THe shipment of LENOVO is abount 7 million per year.
Since 2002,china’s operators subsidized handsets.But the targets of different operators are not similar.China mobile wanted to hold their high end users and promote their penetration among low end.
China unicom wanted to get users from china mobile.
Based on their accountant situation,china mobile’s subsidy rate is about 30%,and china unicome’s is abount 50%.
In fact,subsidy is permited.But APPLE wants more:sharing the revenue.Subsidy means a stable payment to apple,and sharing revenue means stable rate of the revenue.China’s operators can hardly do it because they never did it before.
At last,in china,china mobile or any other operators held much more contents copy rights than APPLE did.So APPLE is not monoply in this field in China.Their ITUNE or APP STORE have few chinese contents.But china’s operators did.The music is up to 1 million belonging to china mobile.
Based on those,how could APPLE consider their contract with operator here?
And I should say,any foreigner who wanted to talked to china’s operators aboutn cooperation,it will take him at least 5 years,because of the differentation of culture,business methodolgy and other factors.

Operators increased their revenue based on growth of subscribers while they tempted to decrease the expense of equipments.That is the core business model of telecom operators.
In fact we measured the revenue growth by ARPU(average revenue per user) when we could anticipate the growth speed.
On the other side,the MOU(minutes of usage) will bring up the revenue increasing,but also could increase the expense that came from much more investment on the network.
That is a so complicated fomula to caculate.
We should say,after a mid-term high speed growth on revenue based on growth of subscribers,the revenue growth will slow down while the penetration grows quickly.
Then the operators will look around to find new resource of revenue.Then they will find that online contents distribution is a good business model.
The advances taken by operators are the mass subscribers with detailed personal informations,billing and rating system,and the path between individuals who are using their services.
OK,we should realize that actually any operators held a big SNS network since they are built up.
After GPRS or CDMA1X were deployed,not only voice flow can be transferred,but also the music,movie,pics,video samples,etc.
So china mobile will setup the biggest distribution system of contents at least in China. Now the target contents are music,movie,book and game software.
In fact,till now the china mobile is the biggest distributor of music contents in China.The revenue from music is 1.2 billion USD per year that is 30 times than CD industry.
Meanwhile,I can tell you ,in china,the volumn of handsets game is 65 millions USD per year,book online is 10 million USD per year.Those revenue are not from advertsing business,but selling.
As I know, china telecom will provide music download via their CDMA EVDO network in the next month.And also china unicom are trying to find better business model.
In the future,maybe in 10 years,china’s operators will become contents distributors.

China Mobile:
After the promotion of NETBOOK with TD inside starting on May,17,its shipment have been up to 210 thousands till now.
The PC cards with both GSM and TD got shipments up to 125 thousands.
The growth rate of total subscribers was slowing down for the sake of harder competiton,few marketing expenses,and adjustment on strategy.But the amount is also up to 55 million for the last 5 months.
China telecom:After the higher growth of 2.21 million in March,April’s growth is only 1.87million.We should realize that more than 38% of the new subscribers were PC cards users.The 680 thousands new subscribers consisted of 2.6 million PC cards users and ,4.2 million that is less than 10% comparing to china mobile.
Similarly,China unicom got higher growth rate in March,But felt down in April and May.The total amount is less than china telecom.
We should say,the crisis impressed on the operations of china’s carriers.
Based on this situation,the consumers will hesitate when they planed to purchase a new handset,even for the fresh users.
Some china mobile’s staff told me that after the TD releasing,the data flow targeted to websites as 10 times as before.Those data flow got 10% of the total ,the rest is accessing to the WAP pages.
In fact,china telecom got few growth on profit even they got more than 20% of subscribers.The growth rate of profit is less than 1%.
And we believed china unicom held their paces of progress.They are waiting for the harder competiton.
I am working on the anticipation of 3 operators’ revenue,profit,subscrubers,VAS,etc,for the 2009,2010 and 2011.
Another 5 years anticipation is ongoing now.

Now the report named”analsysis on china’s telecom” released.
The report concerned the situation of competition among 3 new players,and also the situation in handsets,equipments and VAS market.
Our method is to study the industry chain of those related aspects.
The logic is based on practices in those industry.
Some data came form inside data and statistics.

In fact,china’s telecom market felt the slowing down of growth.

Modeling the telecom industry based on more than 5 years of operational practices.