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Smartphone wars heat up

By Wang Xing (China Daily)
Updated: 2009-10-30 08:10

Mobile operators are competing with each other in the 3G segment by offering new smartphones. [China Daily]

In China's 3G-market arena, China Mobile has always been the front-runner. It was the first carrier to launch 3G services, the first to run an online application store, and the first to release its own mobile operating system.

But the world's largest cellphone operator now seems likely to lose the numero uno status for launching the first 3G handsets.

Even as the second largest carrier China Unicom plans to launch the much talked about iPhone today, China Mobile has delayed the launch of its first 3G Ophone, the Lenovo Mobile O1.

Wang Yan, general manager of Lenovo Mobile, confirmed to China Daily yesterday that the carrier has deferred the online purchase of the 3G Ophone, which was originally sold at 4,999 yuan, the same as China Unicom's iPhone.

Wang said since China Mobile had not yet finalized the final subsidy plan for the handset, it put on hold last week's plan to launch 3G Ophones.

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The company will now start rolling out the handsets as early as next week, he said.

"As it is an important product for both companies, we want to make the product as appealing as possible to consumers," he said. Wang said the Lenovo Mobile O1 would be sold through China Mobile's own distribution channels in the first three months after the product is launched and the price could be as low as free, on condition that consumers choose specific subscription packages.

China Mobile yesterday declined to confirm Wang's remarks.

As the first handset to support China Mobile's 3G network, Lenovo Mobile O1, dubbed the iPhone killer, is expected to be one of the most important products that would help China Mobile fend off competition from China Unicom.

Although China Mobile has a dominant position in China's 2G market, its advantage has been challenged in the 3G segment. China Mobile's TD-SCDMA standard has got less support from handset vendors than the WCDMA standard that China Unicom has adopted.

During the past few months, China Unicom has aggressively pushed its 3G service and introduced Apple's popular iPhone, which has a huge fan base in the world's largest mobile population. Industry experts estimated that there are 700,000 to 1 million unauthorized iPhone users in the country.

Pang Jun, an analyst from research firm GfK China, said iPhone and Ophone actually do not have direct competition. "China Unicom regarded iPhone as a perfect marketing logo to promote its 3G services and does not want to make it affordable to ordinary users," he said.

"But the success of Ophone is critical to China Mobile, which means it has to be affordable," Pang said.

China Unicom, the country's second-largest mobile operator by subscribers, said earlier this month that it would offer eight iPhone subscription packages costing between 126 and 886 yuan a month. The company also provides stand-alone handsets, with the cheapest at 4,999 yuan, about 25 percent higher than the same handset sold in Hong Kong.

Wang Yuquan, a senior consultant at research firm Frost & Sullivan, said compared with the competition between iPhone and Ophone, the biggest challenge actually comes from the smuggled handsets.

"For starters, China Mobile cannot make the Ophone as cheap as its current 2G handsets while China Unicom is not willing to reduce the iPhone pricing," he said. "In addition, considering both China Mobile and China Unicom made compromises on the Ophone and iPhone such as WiFi functions and the App store, I think the winner is likely to be the 'smuggled phone'."