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CCID Consulting: Open Source OS Assists the Development of the Smart Phone Market

-- Review of China's Smart Phone Market in 2008H1

BEIJING, Sept. 5 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: 8235.HK), recently released its article on China's open source OS assisting the development of the smart phone market.

CCID Consulting's data shows that the sales volume of smart phones in China's market in 2008H1 reached 15.671 million sets, up 32.1% over 2007 H1. And the sales revenue reached 37.74 billion Yuan, up 25.7% over 2007 H1.

'Open Source' Operating Systems Have Been the Mainstream

Open source operating systems have been an inevitable tendency, especially with the release of the Symbian platform. On June 24th, 2008, Nokia acquired 52% of the shares with 264 million euros and Symbian became a wholly-owned subsidiary of Nokia. Nokia also announced that the S60 platform of Symbian, as well as UIQ of Motorola, and MOAP of NTT DOCOMO, will be integrated into an open mobile software development platform, which means Symbian will be an open source operating system in the future. At present, Symbian, Windows Mobile, and Linux are the three main operating systems in China's smart phone market. CCID Consulting statistics show that these three operating systems have occupied a market share of more than 90%. On the other hand, Google, the tycoons of the Internet industry, together with 34 enterprises including IC providers, mobile phone manufacturers, and operators, will release the open source system Android by the end of 2008, which indicates the inevitable openness of mobile phone operating systems.

    Figure 1 Market Structure of China's Smart Phone Operating System in 2008
H1
    http://www.ccidconsulting.com/upload/13775.jpg
    Source: CCID Consulting, July 2008

Open source operating systems will promote the development of smart phones. First of all, IC providers will benefit from an open operating system, by which IC providers can take software features into account when designing hardware. Secondly, third party software providers can provide more applications over an open operating system. Thirdly, an open operating system will help to reduce the production costs of mobile phone manufacturers. Hence, terminal manufacturers, IC providers, as well as operators all focus on open source operating systems, from which the development of the smart phone industry will benefit.

Nokia Takes a Leading Position in the Smart Phone Market

After the Symbian acquisition, Nokia strengthened its leading position in the smart phone market. Firstly, Nokia has occupied a market share of 68.5% in China's smart phone market. The sales volume of Nokia smart phone reached 10,712 thousand, up 43.8% over 2006. Secondly, Nokia announced its strategy to be an Internet company in 2007, owning a clear development direction. The Symbian acquisition is just the first step of a business transformation. If Symbian succeeds in becoming a major software framework in the future mobile Internet, Nokia will control the future mobile Internet market, improving bargaining power on profit allocation with operators.

    Figure 2 Brand Structure of China's Smart Phone Market in 2008 H1
    http://www.ccidconsulting.com/upload/13776.jpg
    Source: CCID Consulting, July 2008

Nokia and Motorola still occupy a market share of 85% in China's smart phone market. Amoi, Dopod, Samsung, and Sony Ericsson are the other four top six brands. Coolpad, MIO, Lenovo, and other domestic brands have entered the top ten brands based on their technological advantages such as dual mode and GPS navigation.

TD-SCDMA will be the Chance for Domestic Smart Phone Brands

CCID Consulting statistic shows that domestic brands only occupy a share of 10.5% in China's smart phone market although six of them have been top ten brands. Smart phones must have powerful audio-visual entertainment as well as mobile commerce functions, which sets higher requirements on effective function development and differential design capabilities for mobile phone manufacturers based on base band chips and operating systems. However, lack of R&D spending limits the development of domestic brands.

The coming TD-SCDMA commercial operating provides new opportunities for domestic mobile phone brands. Supported by the Chinese government, domestic enterprises have taken advantage in patenting and supporting R&D in TD-SCDMA fields. In the bidding on TD-SCDMA terminals of China Mobile, ZTE and other domestic brands have won a share of more than a half. Driven by China Mobile, TD-SCDMA will enter the market in the near future. Improving product quality and lifting brand effects, domestic brands have the possibility of occupying an advantageous position in new competition.

Growth of China's Smart Phone Market May Slow Down in the Next Half

The slowdown growth of sales volume has appeared since January due to inflation and consumers' decreasing purchasing ability, although China's smart phone market has grown in the first half of 2008. CCID Consulting forecasts that the current situation will continue into the next half of 2008. The main reasons lie in the influence of the macro economy and the lack of 3G data services.

About CCID Consulting

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China.

Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting's customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.

    For more information, please contact:

     Cynthia Liu
     Coordinating Manager
     CCID Consulting Co., Ltd.
     Tel:   +86-10-8855-9080
     Email: [email protected]

SOURCE CCID Consulting Co., Ltd.

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