It is reported that the number of internet users in China is 420 million as of June 2010, of which 277 million are mobile internet users at the same time. 11.7% of the mobile internet users only use a mobile phone to access to the internet. (Source: China Internet Network Information Center) This number has grown very fast in the past 3 years, from 44 million in June 2007 to 277 million in 2010. Mobile phones and new kinds of smart mobile devices are becoming the primary internet devices in China. The chart below shows how quickly the market changes. Mobile IM and Mobile search are the top 2 applications for handset so far. There are two classic mobile internet users in China both dominated by the youth generation in tier 1 and tier 2 cities. The youth are internet users already, needing access to the internet all the time for social networking or getting information. However, blue collar workers from lower tier cities and rural areas move from one area to another to make money, so mobile devices are the only way to entertain themselves after work.
What does this mean for China? Chinese companies are shifting their business model to generate revenues from these changes. For example, the Chinese IDHs' (Independent Design House) original business model was to sell hardware design or ODM, but they are now relying more on the revenue sharing from the wireless service companies. They have to lower the margin to compete in the market, so to increase revenue they are pre-installing many mobile internet applications and services into the design of devices they are selling. Then the mobile internet service company will share the revenue with those IDHs. This is a very mature business model in China that is motivating the industry to move to application and service business focus.
WAP is still alive in China and has remained China's dominant mobile internet website so far. A lot of traffic comes from the free WAP websites, most of the Chinese internet companies have their own WAP portal. This is changing with wide adoption of smartphones, as full web is now supported in many middle and high end smartphones with the good performance from ARM11 or Cortex A8 based chips. With the development of entry level (low-cost) smartphones and mobile computing devices, I believe the full web will move to all mobile devices quicker than people expected.
An increase in available content has come to mobile phones now in China: music, online gaming, books, and magazines. Consumers can get all the content they want through the mobile devices, but it seems everyone thinks Chinese users are not willing to pay for the content. But the reality is they are spending money on mobile content, seeing as China Mobile’s revenue besides voice and SMS was RMB 53 billion in 2009. With more high quality content, better user experience from applications and services deployed, the consumers will be willing to spend more money on these applications and services allwoing China to keep the leading position in mobile internet globally.
Rock Yang, Mobile Computing APAC Business Manager, ARM, He focuses on the business development and Marketing activities of ARM Mobile Computing market across APAC area especially China. Aiming to push the convergence of mobile and PC industry with the latest technology and business model from ARM. Rock has more than 7 years of experience in Telecom and wireless industry.
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