芬兰分析中国移动市场.pdf

1 A value chain study of China s mobile industry Finpro China ICT Michelle Lam 9 December 2003 DM xxxxx 01 2004 Copyright Tekes 2 Table of contents 1 Executive overview 2 Market overview 1 Industry background 2 Value chain analysis 3 Drivers and inhibitors Regulation and culture 4 Opportunities and threats analysis 3 Service providers 1 Mobile operators 2 Mobile networks 3 3G and licensing 4 Mobile handsets manufacturers 1 Foreign JV domestic 2 Market share analysis 3 Supply chain analysis 5 Platforms applications and contents 6 Future 7 Strategies 8 Conclusion DM xxxxx 01 2004 Copyright Tekes 3 Executive summary This report presents An overview of China s telecom industry Focus on mobile industry Current and future development Networks handset manufacturers operators and service providers of mobile data services Inhibiting and driving forces for future development Value chains Structure clusters and players in the industry Industry value chains Mobile data value chain analysis Opportunities and threats brought by the changes and challenges to different industry clusters Strategies of different key players Conclusions DM xxxxx 01 2004 Copyright Tekes This goal of this study is to present a market overview and structure of China s mobile industry the main drivers and obstacles and the opportunities and threats arise From the above mentioned goal we derive the main objectives for this study of analyzing the structure of the industry and construct a value chain model The industry value chain model provides us information of the inter relationship amongst different industry clusters 4 Telecom industry Market size and penetration Industry s average annual growth rate 20 since 1995 Mobile subscribers surpassed fixed lines in October 2003 20 penetration in fixed and mobile Only 5 penetration in Internet DM xxxxx 01 2004 Copyright Tekes Fixed Mobile Internet subscribers 0 200 400 Subscribers millions 0 0 5 0 10 0 15 0 20 0 25 0 Penetration FixedMobileInternet Penetration Fixed108 8 144 8 180 4 214 4 255 1 Mobile43 284 5 144 8 206 6 256 9 Internet 8 922 533 7 59 168 1 1999 2000 20012002 Oct 03 China has the world s largest telecom service market since Sept 03 with 397 m combined subscribers in fixed and mobile telephony It is a huge potential market compared to other country but growth has been slowing down since 2001 Penetration and growth of mobile service will be higher and faster than fixed line Internet penetration will even be higher and lots of room for growth 5 Telecom industry Market size in revenue Telecom revenue reached USD 26 56 billion in 1H 2003 Mobile communications revenue USD 13 8 billion 52 of total telecom revenue CAGR of 25 in 3 years from 2000 2002 China Telecom 31 DM xxxxx 01 2004 Copyright Tekes China Mobile replaced China Telecom as the nation s largest telecom operator in terms of operating revenue China Mobile replaced China Telecom as the nation s largest telecom operator in terms of operating revenue Market share by revenue China Mobile 37 China Unicom 13 China Netcom 17 Railcom and Sat 2 According to the MII China Mobile has replaced China Telecom as China s largest telecommunications operator In terms of total income China Mobile held 37 4 of the market in China followed by China Telecom with 31 and China Netcom Group with 16 6 China Unicom ranked fourth with a market share of 13 4 while China Railcom and China Satellite together held the remaining share 6 Telecom operators and services DM xxxxx 01 2004 Copyright Tekes OperatorService offering Mobile servicePotential China Telecom former CT South 70 nationwide trunk lines Fixed line network in 21 provinces in south west and east China Largest Internet network Data communications Trunk line leasing Fixed wireless access Little Smart Little Smart to 3G China Netcom Group former CT North Netcom Jitong 30 nationwide trunk line Fixed line network in 10 provinces in North China Data communications Trunk line leasing 12 000 km DWDM backbone Hi speed broadband network 2nd largest satellite based data network 2nd largest Internet network VSAT business VoIP Little Smart to 3G Fixed wireless access Fixed wireless access Broadband access Satellite data China Unicom Fixed line network service licence Mobile cellular licence CDMA GSM Uni Info 2 5G and 3G CDMA U Max China Mobile Mobile cellular licence GSM GPRS Monternet GPRS and W CDMA Monternet China Railcom Fixed line network service licence Data communications Line leasing China Satellite Satellite services licence Largest satellite network providing data Internet ISP services Satellite mobile Satellite data Internet service Little Smart The telecom services are operated by 6 national operators providing fixed line mobile and satellite communications China Telecom China Netcom Group China Unicom and China Railcom provide fixed line services while China Mobile and China Unicom are licensed to provide wireless services China Satellite Communications Corporation or China Satcom the sixth licensed telecommunications operator in China has smaller operations and specializes in satellite communications All six operators are Internet service providers China Telecom is No 1 in fixed line It also captures subscribers by providing fixed wireless service China Mobile is No 1 in mobile 7 Market overview Fixed line operators expanded their business territory with wireless local loop service Little Smart operates under personal handyphone systems PHS or PAS Mobile users surpassed fixed line s Traditional long distance market is losing market share to mobile and IP telephone services because of its cheap billing rate WLAN is offered by CT CN and CM mostly public service and corporate users CN deploys hotspots in hotels and office buildings for business users CT targets families by bundling NIC gateways and service Satellite communications operated by state operator ChinaSat with 70 000 open duplex telephone circuits DM xxxxx 01 2004 Copyright Tekes Little Smart operates under personal handyphone systems PHS or personal access systems PAS has been operating in a grey area without a formal license or government endorsement PHS handset manufacturing are dominated by UTStarcom ZTE and Lucent WLAN s main target is public service business users universities government households and individuals As the market matures the focus will shift from public service to business applications and households The two approaches can be seen clearly in China Netcom is deploying hotspots in hotels and office building for business users but China Telecom is targeting families by bundling NIC gateways and service 8 Industry background mobile industry Market Overview Two operators operating 3 networks China Mobile CM GSM China Unicom CU GSM and CDMA CM is dominant but CU rapidly gaining market share 70 30 Mobile revenue reached USD 13 8 billion in 1H 2003 up 13 6 over previous year Mobile data revenue raised to 5 4 in 1H 03 growth rate 35 3 over previous year Low ARPU overall due to low disposable income of mass population DM xxxxx 01 2004 Copyright Tekes CM is dominant but CU rapidly gaining market share 70 30 with introduction of cdma2000 1x network 9 1999 MII handed Great Wall operated CDMA trial networks over to CU 2000 CU inherited CDMA network from Great Wall with 550 000 subscribers 2001 First TD SCDMA test networks launched CU conducted trails of CDMA 1x trial 2002 CM launched GPRS services include WAP email picture and ringtone AMPS TACS GSM900GSM1800 GPRS C CDMA TD SCDMA Trial 3G 198719951998200120022004 51999 2000 1G 2G 2 5G 3G cdma2000 2 75G Mobile networks chronology DM xxxxx 01 2004 Copyright Tekes China s first analog network was launched in 1987 TACS network had been phased out by 2001 GSM was launched in 1995 In 1998 CM upgraded GSM networks to 1800 frequency Currently Chinese mobile communications consists of a number of different standards the most prevalent of which are GSM900 1800 and CDMA By 2004 CM plans to migrate from GSM to WCDMA as 3G standard when licenses are awarded 10 Mobile subscribers Mobile surpassed fixed line in October 2003 20 penetration 50 9 million new users from January to October 2003 94 GSM 6 CDMA users Growth slowing down because of Little Smart service 535 million users and 42 penetration forecast by 2010 DM xxxxx 01 2004 Copyright Tekes 43 2 84 5 144 8 206 6 256 9 3 4 6 7 11 3 16 1 19 8 0 50 100 150 200 250 300 19992000200120022003 0 5 10 15 20 25 Mobile subscribers and penetration Subscribers millionPenetration Source MII Mobile communications growth is slowing down partly because of the development of the wireless local loop WLL service which is regarded as an extensional fixed line telephone service 11 Mobile penetration Penetration varies widely across China BJ SH and SZ mobile density has reached 60 Nationwide penetration much lower at 20 East coastal regions 400 million population Matured market and high GDP contribution Central and west emerging infrastructure and demand DM xxxxx 01 2004 Copyright Tekes Distribution of mobile users Q3 2003 Source Interfax East 53 West 20 Central 27 Mobile communications growth is slowing down partly because of the development of the wireless local loop WLL service which is regarded as an extensional fixed line telephone service 12 Mobile competition Continuing liberalization triggers fierce competition New players China Telecom and China Netcom offer fixed wireless service Little Smart Low price competitive advantage of Little Smart capturing market share and pressure on mobile pricing Competition extends to value added mobile service CM s GPRS based mobile internet service Monternet CU s CDMA mobile data service U Max CT s MiMi mobile Internet and WiWi wireless Internet Impact on revenue by growing use of prepaid and discounting plans and Internet calling cards DM xxxxx 01 2004 Copyright Tekes Little Smart operates under personal handyphone systems PHS or personal access systems PAS has been operating in a grey area without a formal license or government endorsement PHS handset manufacturing are dominated by UTStarcom ZTE and Lucent WLAN s main target is public service business users universities government households and individuals As the market matures the focus will shift from public service to business applications and households The two approaches can be seen clearly in China Netcom is deploying hotspots in hotels and office building for business users but China Telecom is targeting families by bundling NIC gateways and service 13 Mobile characteristics Prepaid market Additions of prepaid s share of market increased annually 48 00 65 01 and 92 02 11 5 million prepaid users at end of 2002 56 of 207 million mobile users and 1 3 of total mobile revenues Prepaid ARPU US 7 65 million in 2002 By 2010 of total user base use prepaid and generate of mobile revenues Negative impact on revenue growth DM xxxxx 01 2004 Copyright Tekes Source Baskerville Strategic Research and SCMP 14 Portals Baidu 80 of Internet users Online profit making portals Sina and Sohu mainly SMS ringtone and logo downloads NetEase focused on online advertising and gaming Triple digit revenue growth in 3Q 2002 mainly from advertising sales and mobile SMS Strong growth downloadable contents games gambling girls Other strong growth portals Wireless data service Linktone Internet mobile data service Tom Online Internet search engine Baidu Business travel portal eLong ISP fee based Net263 E commerce Alibaba Online gaming Shanda DM xxxxx 01 2004 Copyright Tekes Source SCMP Leading Internet portal Sina s revenue up 203 year on year for the quarter to USD31 m Also rival Shohu announced triple digital gains from healthy advertising sales and increasing demand for mobile related service applications linked to SMS Overall market for SMS products in China to grow about 60 in 2004 15 Online games Revenue surged by 224 USD 120 million in 2002 up from USD 37 million in 2001 38 4 of Internet market share 8 million online game subscribers 74 game titles Korean developed games dominated market Shanghai Shanda Networking No 1 game operator DM xxxxx 01 2004 Copyright Tekes Online games market share 2002 Source Interfax Others 14 Local 22 Korean 48 Taiwanese 16 Mobile communications growth is slowing down partly because of the development of the wireless local loop WLL service which is regarded as an extensional fixed line telephone service 16 Mobile data Mobile data portals Monternet cooperation and revenue sharing between CM and SP s Uni Info WAP based portal between CU and CP s to provide content via SMS using similar revenue sharing model to CM Dominated by SMS and ringtone download Only top SP s have national focus NetEase Sohu Sina Tom Tencent Linktone Data revenue growth is 35 3 forecast to 100 brought by 2 5G handsets reaching USD 1 8 billion in 2003 Revenue accounted 3 5 total mobile revenue in 2002 Datacom infrastructure investment rising with the rapid growth of Internet users more than double to USD 265 7 million in 2003 Gateways and network management systems for SMS Java MMS and WAP DM xxxxx 01 2004 Copyright Tekes Monternet is a transparent mechanism for cooperation and revenue sharing between the operator and most content application provider partners which in the Monternet are called service providers SP s by China Mobile SMS provides the operators and their partners with encouragement to make real money from mobile Internet or mobile data services Revenue gained from mobile data accounted for just 3 5 of total mobile revenue in 2002 the percentage was significantly lower than that of global operators Growth rates over the coming few years will likely top 100 as consumers upgrade to GPRS and CDMA1x handsets Percentage of mobile data infrastructure accounting for 6 of China Mobile s equipment spending and 3 of China Unicom s 17 Mobile data CM emphasizes development of Java applications M Zone SMS MMS WAP and Java based services CU works with 3 platforms BREW Java NET MS Focus on BREW CU BREW has Qualcomm technology as support but aids from CP s and terminals still very few VAS key to remain competitive Games ringtones icons account for 53 GPRS services of CM Key source and growth of ARPU SMS MMS video services Mobile content download Java Mobile Internet content and access WAP XHTML Interactive online mobile games DM xxxxx 01 2004 Copyright Tekes China Mobile is heavily promoting Java download applications by subsidizing handsets and require handset manufacturers to embed Monternet GPRS content in their handsets M Zone brand is the GPRS service of Monternet Qualcomm has formed a 50 50 joint venture with China Unicom to foster the adoption of CDMA wireless technology and in particular BREW software platform The joint venture is called Unicom BREW Wireless Technologies Ltd Also Forum Nokia and HP Mobile e services Bazaar Camp established for content developers working on both J2ME and MMS applications 18 05 2000200108 200103 200310 2002 Mobile data chronology DM xxxxx 01 2004 Copyright Tekes WAP MonternetUni Info M ZoneU Max MMS on CDMA 1x MMS on GPRS China s first analog network was launched in 1987 TACS network had been phased out by 2001 GSM was launched in 1995 In 1998 CM upgraded GSM networks to 1800 frequency Currently Chinese mobile communications consists of a number of different standards the most prevalent of which are GSM900 1800 and CDMA By 2004 CM plans to migrate from GSM to WCDMA as 3G standard when licenses are awarded 19 Mobile industry structure DM xxxxx 01 2004 Copyright Tekes Industry clusters Upstream activities Focus area Focus area S o f t w a r e D e v e l o p e r S o f t w a r e D e v e l o p e r Equipment manufacturing Network services access Mobile data services content Downstream activities The customer of mobile services gets three different services mobile handsets mobile access and mobile content which is the value added services other than voice and are collectively referred as mobile data services The three services combined into a single package of service experienced by a customer but they are produced separately We classify the delivery of mobile services into upstream activities which consists of equipment and handset manufacturing and downstream which consists of network access and content services Our focus of this study is on the mobile services carried out downstream 20 Equipment manufacturing DM xxxxx 01 2004 Copyright Tekes Industries Key players Added value Network equipment manufacturers Handset manufacturers Lucent Nortel Alcatel Nokia Motorola Ericsson Bell Huawei Datang ZTE Great Dragon Nokia Motorola Siemens SonyEricsson Philips Samsung LG Bird TCL Konka Panda DBTel Lenovo MSC VLR HLR AuC BTS BSC PCU GGSN SGSN IN Signalling network Mobile phones Smartphones PDA s PHS PAS Mobile industry clusterMobile industry cluster We identify different clusters key players and their service offering added value in the mobile industry Then we classify the clusters into 4 core industries 1 Equipment Manufacturers network and handsets 2 Operators network and services 3 Service providers of mobile data content content owners and content providers 4 Software developers application developers platform developers and portals 21 Network services DM xxxxx 01 2004 Copyright Tekes Industries Key players Added value Network operators Service operators MVNO China Mobile China Unicom Motion 95Info Legend Tencent Voice and data services self services and devices Whole and resale airtime package VAS Mobile industry clusterMobile industry cluster We identify different clusters key players and their service offering added value in the mobile industry Then we classify the clusters into 4 core industries 1 Equipment Manufacturers network and handsets 2 Operators network and services 3 Service providers of mobile data content content owners and content providers 4 Software developers application developers platform developers and portals 22 Mobile data services DM xxxxx 01 2004 Copyright Tekes Industries Key players Adde