The amazing China smart phone market
China will be 2x the US smart phone market in a year! Only two years ago, China was a laggard with a tiny portion of the US. What happened?
Originally, China's market developed more slowly because of two reasons. First, usable 3G networks took much longer to develop than other countries. Second, there are few subsidies in China, so users had to pay one or two month's salary for an iPhone or Android. These inhibited the growth.
But both issues have changed. Broadband wireless is now over 58%, and smart phone prices have dropped to about $100 for an acceptable Android phone, and about $200 for a full-featured Android phone. Smart phones are now spreading like wildfire. About a year ago, there were less than 50M users, basically affluent or tech saavy users who were willing to pay $500 for a phone and $30 a month for 3G. But now, students, young white collar, and even blue collar workers are swarming into the smart phone market!
The figures above shows all numbers are off the charts -- Android activations, real usage of applications, broadband usage, and penetration into less developed areas. This year, there will be an installed base of 250M smart phones. Next year, there will be an installed base of 500M smart phones!
So who will gain from it? Apple will take a healthy and lucrative minority share, just as it does in the US. Microsoft just launched its products in China, though their success remains TBD. Google would have been the big winner, but unfortunately due to the Google-China issues, most Android phones are installed with non-Google services. But app developers, entrepreneurs, some phone and chipset manufacturers (and investors like us) will have a field day!
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