Smartphones surge in Asia

14 March 2011

HONG KONG: Competition is intensifying in Asia Pacific's smartphone market, as big players like Apple, China Mobile and Google all seek to exploit rising demand.

IDC has forecast that regional smartphone shipments, excluding Japan, will reach 137m in 2011 and 359m units by 2015, making up 60% of the market.

In 2010, smartphones accounted for just 20%.

"Smartphones were a hot item in 2010, with more than double the shipments of 2009," said Melissa Chau, research manager for client devices, domain research group, at IDC Asia Pacific.

"In 2011, IDC expects this fire to keep burning as mobile phone vendors race to get consumers on higher-margin devices, operators look to pull up revenues on mobile data, and mobile platform stakeholders battle to woo app developers."

Accenture, a consultancy, recently revealed 53% of Chinese citizens in key urban centres own a smartphone, well ahead of countries like the US, where penetration stands at around 30%, and Japan, on 10%.

"Smartphones are predicted to be the most purchased device in China next year, with 38% of those surveyed planning to buy one," said Mitch Cline, a managing partner at the company.

"China is a mecca for smartphones … No matter how you examine the data, China keeps coming up very high on the list of smartphone enthusiasts and will during the next year."

China Unicom is Apple's exclusive carrier in the world's most populous nation, and the only one of the country's three major mobile groups using the internationally-recognised W-CDMA network for 3G devices.

"We are working with a number of smartphone brands and hope that we can help grow the entire market together," Chang Xiaobing, China Unicom's ceo, said.

"Of course, Apple's phones tend to be more well received by the market."

However, Wang Jianzhou, chairman of China Mobile, has reported Steve Jobs, chief executive of Apple, is willing to explore new alternatives leveraging the indigenous TDS-CDMA format.

"Jobs has said he's very interested in developing an iPhone that will run on TD," he said.

There are an estimated 7.2m smartphone users in South Korea, with SK Telecom holding a 50.6% share of the market, followed by Korea Telecom, the sole domestic reseller of the iPhone, on 31.6%.

Korea Telecom has just rolled out a 4G wireless broadband platform covering 85% of the country's residents, and which is almost three times the speed of its 3G predecessor.

"Now customers can use high-speed wireless Internet service at a far better speed... without interruption even when they are travelling on the road," the company said.

Apple believes the advantage of achieving success in the Asian smartphone sector can yield wider benefits, as Tim Cook, its chief operating officer, argued earlier this year.

"I think there is a halo effect from Apple product to Apple product. And of course, we have introduced millions of people in Asia to Apple through the iPhone," he said.

"And we're now introducing many more through the iPad."

Japan, excluded from IDC's figures, has a more complex mobile marketplace than most of its Asian neighbours.

In particular, NTT DoCoMo, KDDI and Softbank, which have long dominated the category, are facing increased business challenges.

NTT DoCoMo boasts branded tools for email and web browsing, but sales of the Android handsets in its portfolio have hit 2m in the current financial year, doubling projections, and could overtake its own imode-powered lines by 2012.

"Our future depends on how fast we can shift," said Ryuji Yamada, DoCoMo's chief executive.

"We carriers want to do whatever we can to avoid becoming simply dumb pipes."

Data sourced from AFP, Financial Times, Fortune, IDC, Reuters, Seeking Alpha; additional content by Warc staff