Optical/IP Networks

China's Battle of the Vowels

8:50 AM -- China Mobile Ltd. (NYSE: CHL) has announced the launch of its home-grown OPhone mobile handset platform just days after China Unicom Ltd. (NYSE: CHU) finally confirmed it is to distribute Apple Inc. (Nasdaq: AAPL)'s iPhone in China. (See iPhone Heads to China.)

The OPhone is not a single device but an Android-based software platform optimized for Internet services that will work with the carrier's apps store, Mobile Market.

Check out this report from ChinaTechNews for more details.

The first OPhone-based device from High Tech Computer Corp. (HTC) (Taiwan: 2498) is already on sale, and devices from Lenovo Group Ltd. (Hong Kong: 992), Dell Technologies (Nasdaq: DELL), Dopod Communication Corp. , LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , Hisense Optoelectronics Technology Co. Ltd. , and Royal Philips Electronics N.V. (NYSE: PHG; Amsterdam: PHI) are expected soon. China Mobile says there are more than 20 vendors developing OPhone devices.

This puts China Mobile slightly ahead of China Unicom's schedule, as the iPhone will not hit the streets until the fourth quarter. It also sets up a fascinating market battle with the proven iPhone taking on China Mobile's scale and local market focus.

Apple doesn't have the same brand appeal in China as it does in the U.S. or Western Europe, as the price premium has kept its market share for the company's computer products in single figures. However, the incredible developer community and thousands of existing applications will give the iPhone a great impetus.

China Mobile, meanwhile, is developing the whole end-to-end proposition from scratch. It has no iPhone-style global pool of successful apps to draw upon, but it does have a huge user base and is totally focused on developing its apps store and handset proposition for the local market. It also has a highly successful music download business, which undermines the iPhone's ability to leverage its iPod functionality.

The battle is likely to come down to a few vital elements. China Mobile must create a user experience and device as compelling and cool as that of the iPhone, while China Unicom and the iPhone will need to establish an effective localized proposition. Both camps will need to do this with the right handset price, as the Chinese device market is particularly price sensitive.

— Catherine Haslam, Asia Editor, Light Reading

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