Forget Microsoft-Apple or Microsoft-Google. A new rivalry is developing in the tech world. Google and Apple are increasingly squaring off over lucrative markets like the mobile computing field.
The rivalry between the two companies is occurring on a worldwide battlefield. And now this budding Apple-Google rivalry has spread to perhaps the most important mobile phone market in the world – China. China is the world’s largest mobile phone market with 700 million subscribers.
However, China has only recently launched third generation services, which offer broadband-speed data connections. Smart phone penetration in China is running at 10 percent of all handsets sold. But the smart phones are expected to generate higher revenues as subscribers access features such as music, multimedia and games downloads.
China Mobile will fire the opening shot in the battle for high-value subscribers over the next couple of months with the launch of the 3G OPhone, which runs on Google’s Android operating system. China Mobile had held discussions with Apple about potential iPhone distribution, but these discussions broke down as the two firms could not agree on how to share the revenues. China Mobile will make a very aggressive push to sell the OPhone. China Mobile plans to subsidize these high-end handsets for customers with up to 50 percent off the retail price.
The launch of the OPhone by China Mobile comes as China Unicom is nearing an exclusive agreement with Apple to sell the iPhone in China for three years. The company is expected to offer the iPhone when it launches its country-wide 3G services this autumn. China Unicom is hoping to use the iPhone as a powerful tool to lure some of the lucrative young mobile users from China Mobile.
The potential smart phone subscribers will most likely be young professionals, relatively wealthy, well-educated, and English speaking. In China, this can only mean Chuppies. Chuppies are China’s young well-off generation. They have money in their pocket, are brand conscious and are savvy about technology. The impending launch of competing subsidized smart phones means that the battle for these Chuppies has started.
In summary, the four companies that are the main combatants for the smart phone market in China are: Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), China Mobile (NYSE: CHL) & China Unicom (NYSE: CHU).
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