China: Mobile Handset Market, with

Forecasts to 2015
Coda Research Consultancy

Coda. Coda Research Consultancy

 Coda. Coda Research Consultancy

China: Mobile Handset Market, with

Forecasts to 2015
Released: May 18, 2010

Steve Smith PhD

Research Director

Coda Research Consultancy

For more information about this product, please email steve.smith@codarc.co.uk, or call
+44 (0)7779 610004

European office:
Coda Research Consultancy Ltd
95 Wodeland Avenue
Guildford
Surrey
GU2 4LD
England

© Coda Research Consultancy Ltd, 2010

All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, or stored in any retrieval system of any
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This report draws upon research and analysis conducted by Coda Research Consultancy. Use of this report by any third party for whatever
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should be interpreted as an opinion by Coda Research Consultancy either on market forecasts or on the prospects of specific companies.
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Introduction

Document at a glance:
Type – Market forecast report, covering 2010 to 2015
Geography covered – China
Printed page length – 22
Number of figures – 11

In this report we provide an overview of the current Chinese mobile handset market, together with
our quantitative forecasts year by year to 2015 for the following:

 Mobile subscriptions
 Mobile subscribers
 Mobile handset sales
 Smartphone handset sales
 3G handset sales
 Mobile internet users
 Mobile carrier profits

Extensive discussion appears alongside each of our forecasts, and we especially look at drivers to
smartphone and 3G handset sales.

3G roll out together with corresponding faster mobile internet access will be core drivers to China
experiencing the largest growth in smartphone sales worldwide. We forecast that 3G sales will grow at
+72% CAGR, to reach 109m in 2014. This is on the back of a combined investment of US$23bn in 3G
networks in 2009. In the first quarter of 2010, China spent another $880m on these. Just under one
third was spent on China Mobile’s home-grown TD-SCDMA network.

The shortage of affordable handsets compatible with the TD-SCDMA standard has been a significant
hindrance to growth in advanced handset subscriber numbers. However, inexpensive, locally made 3G
handsets and smartphones will help resolve this. For example, China Mobile has helped to successfully
persuade manufacturers to bring 266 different designs of TD handsets to market, some priced at or
below CNY1,000. TD-SCDMA phones will see greatest 3G growth in 2010, enabled by aggressive
marketing and subsidizing of new phones, and careful service pricing.

Although they remain relatively expensive, the Android operating system will help OEMs and operators
to offer lower smartphone prices. China Mobile’s own Open Mobile System based on Android, and its
OPhone device portfolio will be further catalysts to smartphone growth. Already, more than 20 OEMs
have joined the supply chain of OPhones, including Acer, Lenovo, Motorola, Samsung, LG, Dell and
Sony Ericsson. All of this will help smartphone sales to grow at +29% CAGR, to reach 98m in 2015

Subsidies will also be important for growth in 3G handset and smartphone sales. Yet because
subsidies impact profits, and because of increased competition between the three operators, we
foresee that subsidies and their availability on lower end handsets will decline. Impacts upon profits
by 3G roll out, competition and subsidies mean we anticipate that carrier profits will fall in 2010 and
then rise steadily to reach $23.3bn in 2015.

Together, the forecasts we provide in this report will be crucial for mobile carriers; vendors;
consultants; financial analysts; application, content and service providers, and anyone else with an
interest in the future of mobile devices, content, and the mobile internet. These forecasts will help
then to understand opportunities for monetization and investment, future device roll out and behavior,
content consumption/creation, and mobile internet access.

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Contents, and tables of figures and forecasts

Contents Figures
Methodology...........................................................5 Figure 1. Global smartphone sales, 2009-2015 ............... 7
Figure 2. Handset penetrations across Asia Pacific
China in Context .....................................................6 countries ............................................................. 8
Why smartphone shipments will rise ......................... 6 Figure 3. 3G subscriptions - Asia Pacific, 2009-2014 ....... 9
Global smartphone sales, 2009-2015 ........................ 6 Figure 4. Smartphone sales – Asia Pacific, 2009-2015... 10
Asia Pacific .............................................................. 8 Figure 5. Mobile carrier profits - China, 2009-2015 ...... 12
Mobile handset penetration – Top Asia Pacific
Figure 6. Mobile subscriptions - China, 2009-2015 ........ 13
nations....................................................... 8
Figure 7. Mobile subscribers - China, 2009-2015........... 15
3G subscribers, 2009-2014................................ 9
Smartphone sales, 2009-2015 ........................... 9 Figure 8. Mobile handset sales - China, 2009-2015 ....... 15
Figure 9. Smartphone sales – China, 2009-2015 ........... 17
Focus on China .....................................................11 Figure 10. 3G handset sales – China, 2009-2014 .......... 19
Carrier revenues and profits ....................................11 Figure 11. Mobile internet users– China, 2009-2015...... 21
2009 carrier revenues and profits .....................11
First quarter 2010 carrier revenues ...................11
Service revenues to 2015 .................................12
Carrier profits, 2009 to 2015 ...................................12
Handset subscriptions, 2009-2015 ...........................13
Handset subscribers, 2009-2015..............................13
2009 handset subscriber growth.......................13
1 Quarter 2010 subscribers ..............................14
2010 to 2015 subscriber forecast......................14
Handset sales, 2009-2015 .......................................15
Drivers to smartphone sales ....................................15
Smartphone sales, 2009-2015 .................................16
3G Roll out, 2009 to 2010 .......................................17
2009 roll out ...................................................17
2010 roll out ...................................................18
3G connections, 2009-2010 .....................................18
3G sales 2009-2015 ................................................19
Mobile internet usage..............................................20
Mobile internet users, 2009-2015.............................21

About Coda Research Consultancy .......................22

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About Coda Research Consultancy

Coda Research Consultancy specializes in providing critical insight into market developments and
behavior around new media, technologies and services in order to help IT and media professionals,
business executives, and investors make fact-based decisions around strategy, service provision and
product development.

Coda employs a variety of rigorous quantitative and qualitative research procedures. It draws upon a
range of disciplines, and collaborates with top commercial and academic organizations.

Coda Research Consultancy is led by Dr Steve Smith, an internationally acknowledged research

specialist with extensive experience consulting for media and technology companies globally.

To find out more, visit www.codarc.co.uk, or contact us below:

European office
95 Wodeland Avenue
Guildford
Surrey
GU2 4LD
England
Tel: +44(0)7779 610004
Email: steve.smith@codarc.co.uk

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