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  China's Mobile Phone Shipments Slow In 1H08, But Vendors Remain Confident
September 18, 2008

CCID Consulting projects mobile phone shipments for 2008 to be 165 million, as the Chinese consumer is holding back and waiting for more revolutionary new features enabled by China's upcoming 3G networks. While CCID Consulting projects shipments to exceed 2007, growth rate will continue to slow.

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Source: CCID Consulting, July 2008

In 1H 2008, sales have not peaked as in previous years. From a quarter-by-quarter perspective in 1H2008, 1Q was stronger, as 2Q was plagued by the May Sichuan earthquake and cancellation of the national May holiday. Usual promotional activities around such holidays have been muted.

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Source: CCID Consulting, July 2008

Competition intense, but mobile phone vendors remain confident.

In 1H08, Nokia had the largest mobile phone shipment share in China, followed by Samsung and Motorola. The remaining top ten vendors included Tianyu, Lenovo, Sony Ericsson, Amoi, LG, Bird, and Gionee.

All vendors struggled somewhat given the decline in overall mobile phone growth rate. Nokia reported its 2Q08 Greater China mobile phone shipments declined by 16.2% over 1Q. While Sony Ericsson reported increases in shipments, net profits declined dramatically.

However, there were a few 1H08 highlights by Chinese domestic vendors. TIANYU K-Touch, Gionee, Guohong, BBK, EY, and other emerging domestic vendors performed satisfactorily. TIANYU K-Touch and Gionee have stayed in the top ten with good product positioning, channel development, and market promotions. Chinese domestic vendors have done well in general with good channel management, addressing channel partner and retailer profit concerns.

Despite severe competition in China's mobile phone market, Chinese vendors remained confident in light of the upcoming 3G development. Lenovo, Amoi, and others have cross-over strategies from their PC business to mobile phones. TCL, Haier, ZTE, and Huawei have strengthened their overseas market development. Tianyu K-Touch, Gionee, Guohong, BBK, and other emerging vendors have begun focused on building their brands. China's mobile phone market will be even more competitive with the advent of 3G.

More functionality and more applications are the focus; Open operating platforms the enabler.

So far in 2008, more and more mobile phones in China have features such as electronic wallet, WiFi, Push-mail, digital TV, PTT, GPS navigation, information security, and NFC/RFID.

What used to be high-end features are increasingly moving down the consumer product line. Integrated camera, music playback, and Bluetooth have become standard features. CCID Consulting expects more advanced functionalities in the future, such as digital TV, mobile payment, GPS navigation, PTT, and wireless Internet to be more prevalent in China.

The Chinese consumer is getting smarter, and demanding more. As a result, mobile phone vendors are increasingly focused on more open platforms and applications. Apple's iPhone led the way with a platform encouraging new and innovative applications, further intensifying customer loyalty, and connecting the customer with content. This will be further fueled by increasing popularity of the mobile network and Internet.

Other vendors are following suit with open operating systems, such as Google, HP, Dell, and Microsoft. In June 2008, Nokia announced its intention of integrating Symbian, S60, UIQ, and MOAP into an open mobile phone operating system. CCID Consulting believes that Nokia's action will unlock the closed smart phone operating systems ecosystem.

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Unless otherwise specified, all information provided is sourced from CCID Consulting.

 
         
         
     

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