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  China's LBS To Exceed 3.8 Billion Yuan In 2012, Telecom Operators Challenged  
October 6, 2008

CCID Consulting forecasts LBS will achieve rapid growth, with revenues climbing to 3.824 billion Yuan in 2012. With the advent of 3G in China, LBS will be one of the most popular services. Mobile phone maps, navigation, together with mobile payment and search are tops among China's telecom operator value-added services list. The relatively low popularity of mobile phone maps and navigation indicates considerable growth potential.

In 1H 2008, final construction of 3G trial networks has brought opportunities to China's LBS industry. Despite the imperfect nature of those trials, China Mobile's continued improvements will help realize large LBS potential and fast growth.

CCID Consulting data shows that LBS revenues reached 485 million Yuan in 1H08. LBS refers to value-added services provided by telecom operators to provide location, navigation, and related services to mobile phone subscribers via methods such as SMS and WAP.

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source: ccid consulting, July 2008

LBS presents both opportunities and challenges for telecom operators.

Telecom operator LBS (more services oriented) can provide advantages in real-time map updates, software updates, user interaction, and communications. At the same time, the onus will be on operators to educate the Chinese subscriber and provide comprehensive, user-centric experiences that take advantage of real-time.

However, the telecom operators' market position is by no means assured. The popularization of GPS mobile phones in China brings great impact on LBS. The Chinese consumer can get free mobile location services for up to two years after a GPS mobile phone purchase. Mobile phone vendors can pre-install map and navigation software, pre-empting telecom operator LBS.

Moreover, mobile phone vendors and operating systems offer increasing convergence between mobile communications and the Internet. Nokia's Ovi, Apple's iPhone, and the Android operating system are examples. Internet service providers can also provide services independently to the mobile phone user, steering clear of telecom operators.

The value chain: Map providers, software vendors, and telecom operators.

LBS has been the focus of telecom operators for quite some time. In 2001, China Mobile launched location LBS based on Monternet, and in 1H08, has the largest market share at over 60%. In 2003, leveraging its CDMA network, China Unicom also planned its launch of LBS and has a 1H08 market share of 30%. LBS services over CDMA have done well. China Telecom plans to operate CDMA networks in October, overcoming limited CDMA subscribers and expensive terminals.

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1H08 Telecom Operator Market Share

source: ccid consulting, July 2008

The leading map providers in China are NavInfo, AutoNavi, EMapGo, Liingtu, and Ritu. Through technology innovation, map providers provide geographic, POI, and real-time traffic information. Cutting edge applications include use of cameras and velocimeters for traffic management.

For navigation software, Japanese vendors Aisin and Denso are widely used by Navinfo, Autonavi, Zdor, Yaxon Network. Other Chinese domestic vendors are late entrants, but are gaining market share.

SMS and WAP are the major LBD delivery methods, but 3G will usher newer technologies.

SMS and WAP are still the two major methods for delivering LBS services in China. However, with the advent of 3G, CCID Consulting expects that SMS will be replaced by MMS, WAP, Java, BREW, and other newer technologies that will more fully capitalize on 3G.

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1H08 LBS Delivery Method Share

source: ccid consulting, July 2008

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

 
         
         
     

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