China to launch trial of 3G mobile phones

China Mobile (CHL) is going to start the TD-SCDMA commercial trial on 4/1/2008. The following is the news in English and in Chinese.

http://www.usatoday.com/tech/wireless/phones/2008-03-28-china-3g_N.htm?csp=34

http://tech.sina.com.cn/t/2008-03-28/11182106926.shtml

My last post on WVAS is here:

http://chinese-net-gaming-stock.blogspot.com/2007/04/rumored-china-mobiles-chl-wap-policy.html

The Chinese news from sina has a lot more information in them.

TD-SCDMA is a 3G cellular phone standard. The world only have three 3G standards, the WCDMA, the CDMA2000 and TD-SCDMA. WCDMA is the standard developed by Europe (its 2G equivalent is GSM). CDMA2000 is developed by American (its 2G equivalent is CDMA95). TD-SCDMA is developed by China.

It was a tremendous technical break through for China.

Chinese mobile operators don’t like TD-SCDMA. They have good reasons. A cellular phone standard is so complicated, it will be impossible for TD-SCDMA to be even close to the two existing standards in terms of performance and robustness.

Even if Albert Einstein and Thomas Edison are the one invented TD-SCDMA, it will be at least 10 years behind both the WCDMA and CDMA2000.

The only way TD-SCDMA can survive is for the Chinese government to dictate China’s mobile operator to use it.

But to conform to WTO charter, China has to give WCDMA and CDMA2000 level playing field. But if China follows the intend of WTO charter, TD-SCDMA won’t have any chance to survive.

But I guess lawyers have to have some use in them. I think China will do anything and everything to ensure TD-SCDMA will not just survive, but to thrive.

Expert had been predicting this date since 2005. It had been delayed so many times. The date is finally here. So this is a pretty big news.

I think there are several type of companies that will benefit from the wide-spread usage of TD-SCDMA.

First, equipment maker like SPRD will benefit for obvious reason. Second, I think WVAS companies such as KONG and SINA will benefit greatly. The WVAS companies that specialize in WAP will be the winner. KONG is betting it future survival on this date. SINA has been gearing all its web site to be compatible with WAP. For SINA, every story SINA generated have WAP counterparts. Both KONG and SINA had been throwing money into the drain for the past few years just to gear up for the arrival of 3G.

Of course, for the WVAS companies, the mobile operators such as CHL or CHU can throw monkey wrenches into this. But, unlike for SMS where KONG and SINA are just distributor and middlemen, now KONG and SINA will be content generators for the WAP. KONG and SINA will be in a stronger position. In addition, there is talks about China shaking up the mobile operators. That may prove positives to the WVAS companies since the mobile operators will be busying in re-structuring. Also, China will have a new ministry that will handle this function. The charter of the new super ministry can change also. That adds some uncertainties. The power of this industry is so lopsided tilt toward mobile operators such as CHL and CHU, any change to the existing structure can only help the WVAS companies such as KONG and SINA.

But according to sina link above, only 20,000 users will take part in the trial. There is no news of how long the trial will last. Therefore, it will not have any material contribution to all the companies that are discussed here. But in a year time, this could be an exciting growth driver for all the company mentioned here.

China Mobile and Sohu are top two Olympics brand in China

My last Olympics related post can be found here:

http://chinese-net-gaming-stock.blogspot.com/2007/09/battle-of-olympics-part4-conclusion.html

Just came across this news today.

http://article.pchome.net/content-533746.html

According to a Baidu's report, China Mobile is number 1, Sohu 2nd, Lenovo 3rd, and Samsung is the 4th most respected Olympics brand.

Others like Mcdonalds is 15th, Adidas 18th and Microsoft can't even crack the top 20.

Baidu compiled the report based on four categories, press coverage, government help, individual users’ respectability, and composite score. The final composite score is a composite of the first three scores.

China Mobile is number 1 in both press coverage and government help. It is the 2^nd most respected brand by average individual Chinese.

For Sohu, it has a composite score that gives it the number 2 ranked company regarding Olympics. It is only number 5 in both press coverage and government help. But its strength comes from the average Chinese users. Overwhelming individual Chinese users regard Sohu as the number 1 most respected brand with respect to Olympics. That catapults Sohu into the number 2 ranked company in China (regards to Olympics).

For Lenovo, it is number 3 in all three categories. Thus it gets a composite score of the 3^rd ranked most respected Olympics related company in China.

According to the Baidu report (can be found in http://2008.baidu.com), among all internet sites and portals, Sohu did a much better job in brand awareness for Olympics-related activities.

Sometimes, research reports from China can be deceiving or can be paid for by individual company. But I think this is different. Baidu is a direct competitor to Sohu (through Sogou), there is no reason for Baidu to pump Sohu's success. Thus, I believe the authenticity of this report.

As we get closer to Olympics, average Chinese users will gravitate toward the brand they respect and trust the most and that is Sohu (in Internet) and China Mobile (in Wireless). I think we are going to see acceleration in ad revenue from Sohu as the Olympics gets closer. Sohu is going to grab market shares from the likes of Sina, Netease, QQ, and Baidu. In the wireless area, we are probably going to see the same thing. That is China Mobile is probably going to gain more market shares from its competitors.

For the first three quarters in 2008, we are probably going to see some shift in favor of Sohu and China Mobile.