China's smartphone market will experience the largest growth worldwide, quadrupling to reach a compound annual growth rate of 29 percent by end 2015, states a new report.
In a Friday statement, Coda Research Consultancy revealed figures from its report on China's mobile handset market. The firm predicted that sales of smartphones in the country will reach 97.6 million units by 2015.
This growth will be driven by the rollout of 3G networks as well as faster mobile Internet access, said Coda. Investments in 3G networks in 2009 were at US$23 billion and the country spent another US$880 million in the first quarter of 2010.
In a report by Economic Daily, China's Ministry of Industry and Information Technology (MIIT) said that 3G users in China have exceeded 20 million since last May. The government body expects the number to grow and reach 150 million by the end of 2011.
Currently, China has three different 3G networks. China Mobile operates the homegrown TD-SCDMA, China Unicom offers WCDMA (Wideband Code Division Multiple Access), which is popular in Europe, while China Telecom is on CDMA2000, which is widespread in the U.S.
Lack of smartphones for homegrown 3G
According to Coda, the growth of smartphones has been hampered by the shortage of affordable TD-SCDMA-compatible handsets. A previous report from ZDNet Asia noted that compared with international standards such as WCDMA and CDMA2000, the homegrown 3G standard faces a lack of compatible equipment.
China Mobile's CEO was reported to have asked Apple to adapt its next-generation iPhones to be compatible with TD-SCDMA. The third most popular smartphone worldwide is currently distributed by China Unicom.
However, the research firm noted that locally made, inexpensive 3G smartphones will solve the problem. It pointed out that China Mobile has persuaded manufacturers to bring 266 different designs of TD handsets to market, with some phones priced at or below 1,000 RMB (US$146.40).
Despite TD-SCDMA's limited reach worldwide, its smartphone growth in China will exceed the other two standards to reach 44.8 million units sold come 2015, said Coda.
The firm attributed the growth to aggressive marketing and subsidizing of new phones, as well as careful service pricing by the telco.