It has not been a good year for China Mobile. In the second quarter, the world’s biggest mobile phone company saw its profits fall for the first time in a decade (to USD4.4 billion).
It did manage to add almost 16m users, but it looks like barely any of them were interested in its 3G service. In fact, they’ve even had to massage the numbers on this front.
China Mobile says it has more than a million 3G subscribers. However, it’s only managed to sell "under 100,000" 3G phones. Since China Mobile uses the new homegrown TD-SCDMA technology, each new subscriber would need a new handset – so where are the missing 900,000 or so?
Well, some of them bought data cards for their netbooks, but a lot of the others were freebie giveaways during the Olympics (I’ll wager quite a few were sent to government officials too).
Anyway, TD-SCDMA is a heavy burden to shoulder. Not only is the technology patchy, but TD-SCDMA handsets are much bigger than those using the 3G standards which have been handed out to China Unicom and China Telecom respectively.
You couldn’t fit TD-SCDMA into an Apple iPhone, for example, which is why China Mobile is out of the race on that one. There are, in fact, only 50 TD-SCDMA-equipped handset models, all of them the size of bricks and unloved by China’s fashion-sensitive youth.
Wang Jianzhou, the chairman, is putting on a brave face. HTC, the Taiwanese firm, has been brought on board to develop new phones, and Dell and Lenovo will design smartphones. He also says there is "a lot of room to develop" games and music downloads for his 3G service.
Chinese users, however, don’t seem that interested in data services. Mobile internet is mostly used for QQ, rather than video or music content, or multi-media messaging, and 3G isn’t necessary for the chat service.
On the netbook front, a Spring Festival promotion for China Mobile-embedded netbooks flopped, according to Duncan Clark at BDA, a research house.
Meanwhile, Mr Wang’s rivals are grabbing a march on him. China Telecom has been the savviest so far, signing up half-a-million 3G datacard subscribers in the second month of the year alone. Unicom may also do well as soon as it finally signs that deal with Apple.
And now China Telecom has said it will start selling the Blackberry on its network. This could be a key moment in the challenge for China Mobile’s hegemony. It’s very lucky that it remains impossible to port mobile phone numbers from one network to another, or there could be some serious erosion to China Mobile’s enormous customer base.
With the TD-SCDMA albatross around its neck, the company is trying to move towards "LTE" a 4G solution, as soon as possible.