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Large potential profits form a growing market of smartphone users
China is expected to have moer than 850 million mobile phone subscribers by the end of 2010, according to eMarketer. This represents a penetration rate of 64.3%, leaving a 35.7% opening for new phone services and makers. So, it should be no surprise that Apple has announced that the iPhone finally has a release date for China: September 25th.
The potential for profits is enormous. China has a total of 755 million mobile subscribers, according to Penn Olsen, making China the largest mobile device market in the world. Even at the national average of only $10 a month in subscription fees, it makes the estimated monthly revenues from China $7.55 billion. If the nation hits the new user projections of 850 million, the revenue from phone fees could hit $850 billion a month.
How many of those sales will be from smartphones? Market researcher IDC has estimated that roughly 26 million smart phones will be sold in China alone this year. This will represent a 50% jump from 2009, according to The Wall Street Journal.
Of course, an iPhone in China has more potential than just sales. Like in any emerging market there is more to consider. More than half, or 54%, of the Chinese mobile users are classified as advanced data users. This means that they are accessing email, browsing the Web, and playing games on a daily basis, according to Penn Olsen. Though it is worth noting that 87% of those users are on a pre-paid plan. So, unless Apple plans on offering Chinese users a pre-paid option, they may have a hard time convincing users to switch to a contract.
Currently, mobile video and TV account for only $176.2 million and $47.8 million of the market, respectively, less than 1% of all mobile content revenues in China, in 2010, According to Netsize and Informa Telecoms & Media. Since the iPhone offers video capabilities, both through downloads and streaming sites like Hulu, this represents another large possible market. One that is only growing as China invests in its 3G and 4G technology.
China Mobile has been making serious investments in 4G technology. The platform, which will support both global 4G standards, Long-Term Evolution (LTE) and the Chinese derivative, Time Division LTE, will allow for international phone makers to bring the next generation of smart phones to China quickly and easily.
Apple is not the only smart phone maker to make moves into China. Early in September, Sony Ericsson announced that they would be launching their phones in China. This is interesting, when you consider that Sony Ericsson has only a 4% global share of unit shipments.
September 25th will also mark the opening of Apple Store® Hong Kong Plaza in Shanghai and Apple Store Xidan Joy City in Beijing.
(Image source: digitalworldtokyo.com)
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