Top smartphone makers release devices for China Mobile

China Mobile is building up a stronger offering of smartphones as more handset manufacturers angle to sell devices to the provider's 564 million customer base.

Next week, Samsung plans on releasing the Galaxy SPhone I9008 for China Mobile. The device uses the Android-based OPhone 2.0 operating system developed by China Mobile. No official price has been given, but a company spokeswoman said the cost could be similar to the Galaxy SPhone for China Telecom, which goes for 5680 yuan ($852).

Motorola also released a new handset last month that was custom-built for China Mobile. The MT716 is similar to a Droid phone in that it features a QWERTY slide-out keyboard, but the device runs the OPhone 2.0 operating system. Motorola has priced the device at 5980 yuan ($897). The company has no plans to sell it outside of China.

The release of the smartphones come as China Mobile competes to bring more users into its 3G network. Although China Mobile has the country's biggest subscriber base, the company uses a 3G standard called TD-SCDMA (Time-Division Synchronous Code Division Multiple Access), which was created in China as a way to reduce the nation's dependence on foreign technologies.

Yet for some big name handset manufacturers, this has led to a slowdown in releasing smartphones to China Mobile. Instead, many of the most popular smartphones have been first launched through its rival, China Unicom, which adopted the WCDMA (Wideband Code Division Multiple Access) 3G standard used in the rest of the world. One such example is Apple's iPhone. So far, Apple has only decided to use China Unicom as the official carrier for the phone in the country.

The lack of smartphones designed for the TD-SCDMA standard has forced China Mobile to reach out to these handset manufacturers, said Flora Wu, an analyst with Beijing-based consulting firm BDA. "I think they have been making efforts since the first day their TD network was launched," she said. "This year's efforts have gradually paid off."

While there has been no official word of an iPhone being one day sold through China Mobile, PC maker Lenovo is going to make its newest smartphone available through the carrier.

A model of the company's LePhone is being built for use with China Mobile's TD-SCDMA standard. The device will be released in the first half of 2011, said Lenovo Mobile Vice President Fei Hongxing in taped interviews with the Chinese media.

Lenovo already offers the LePhone through the country's two other mobile providers, China Unicom and China Telecom. The company has sold 200,000 devices in the first four months its been on the market, Fei said. Lenovo has said in the past it plans to possibly sell the device abroad if the smartphone is successful in China. The LePhone has been priced at 2899 yuan ($435).

Smartphones are growing in popularity, in China although they have yet to dominate the cell phone market. More than 13 million smartphone units were sold in the second quarter of 2010, accounting for 22% of all handset sales, according to data provided by Beijing-based research firm Analysys International. This is 7% higher than at the end of 2009.

Analysts have said pricehas been a stumbling block preventing average Chinese consumers from buying smartphones. But in the case of China Mobile, the company is using subsidies and discounts to entice consumers to buy their smartphones, Wu said. Customers who sign up for a contract, can sometimes receive a smartphone device for free or receive a major price cut, she said.

"They don't buy it for the TD handset. Rather they are attracted to the subsidy, the free device, or some free service," she said.

At the same time, China Mobile is working to offer a selection of smartphones with a wider price range, said Mark Natkin, managing director of Beijing-based Marbridge Consulting. One of China Mobile's challenges has been the company has largely only offered smartphones at the mid-range price of 2000 to 3000 yuan ($300 to 450), he said.

"They have been working with a number of their handset manufacturing partners to produce low-end 1,000 yuan ($150) or less phones," Natkin noted. "We should be seeing more and more of those hitting the market."

Copyright © 2010 IDG Communications, Inc.

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