Nick Brown, DIGITIMES, Taipei [Friday 8 June 2012]
Digitimes Research estimates that China handset shipments will grow to 430 million units in 2012, with smartphones likely to take 32% of the market, equivalent to 143 million handsets. Given that China already accounted for 22% of global handset shipments in 2011 and the country's mobile user base is projected to hit 1.13 billion people in 2012, the potential of the country's smartphone market is staggering.
The boom in China's smartphone market that began in 2011 was sparked by the expansion of 3G service coverage and falling budget smartphone prices. Carriers have driven this change in an attempt to bolster flagging ARPUs, which stood at just CNY37 (US$6) per month for 2G users of China Unicom in 2011; the ARPU for the carrier's 3G subscribers was a much more respectable CNY110, according to an upcoming Digitimes Research Special Report on China's smartphone market.
Carriers have been able to entice China's price-conscious consumers to make the 3G switch chiefly by offering extremely cheap smartphones priced at around CNY1,000, a figure which could yet fall as low as CNY599 in 2012. This concentration in the low end of the market is a major contributing factor to the dominance of Android in China.
However, consumers in this sector are not willing to spend heavily on profitable 3G services and ARPU for 3G users is already falling steeply. At the current rate of decline, the 3G ARPU will fall to an estimated CNY82 during 2013. China's smartphone switchover may therefore not prove to be quite as lucrative as the country's carriers had hoped.