China's Mobile Internet: Shakeup In
The Value Chain
May 6, 2008
In Japan and South Korea, over
one-third of their Internet users are mobile Internet users. China's highly
mobile and Internet user habits are much more likely to mirror Japan and
South Korea, rather than America and Europe.
According to CCID
Consulting, as of 2007 China had over 547 million mobile phone subscribers
and over 180 million Internet users. CCID Consulting believes this is only
just the beginning of this incredible potential.
Not surprisingly, there is
talk of China Mobile (SEHK: 0941, NYSE: CHL) planning to set up an
independent affiliate that will run the Company's Internet services,
including the newly launched IM service Fetion, wireless advertisement and
China Mobile is China's
largest mobile phone operator in China. If ranked by number of subscribers,
numbering at over 380 million, China mobile would be the world's largest
mobile phone operator.
Currently in China, there
are mobile phone operators, like China Mobile, and what is known as service
providers (SP), like Tencent. SPs partner with operators to provide
value-added offerings such as IM and ring-tone downloads to customers under
a revenue-sharing agreement.
China Mobile will have
taken a huge stride to unlocking China's mobile Internet opportunity. At the
same time, China Mobile will also cause a shake-up in China's existing
mobile phone value chain.
- China Mobile will be
taking a step towards competing more, and cooperating less, with existing
- New partnerships will
arise with Internet content providers and search engines, such as Shanda
(NASDAQ: SNDA) and Sina (NASDAQ: SINA). They will offer services the
mobile phone operators simply cannot. At the same time, these providers
will extend their reach enormously.
- Larger players will
dominate. SP like Tencent (HKSE: 0700.HK) will remain competitive with
both its scale and move towards the Internet. Smaller SPs will be at risk.
- Other mobile phone
operators will follow.
As with unlocking any
opportunity as large as China's mobile Internet, some players will thrive
and grow, while others will go by the wayside.
For more information
contact us for these and
other China-related data, information and products.
Unless otherwise specified,
all information provided is sourced from CCID Consulting.