Unicom’s Sputtering 3G: Blame It On the Handsets 联通幡然醒悟借低价手机扩张3G市场

By newsdoug on September 23, 2011

Unicom's sluggish 3G: blame it on handsets Despite receiving numerous advantages from Beijing in China’s fledgling 3G market, China Unicom (HKEx: 762; HKEx: CHU) has shown disappointingly slow progress in boosting its share in the space and now we may know why: a shortage of low-cost handsets. That’s what domestic media are reporting, with Unicom preparing to buy up to 8 million smartphones costing under 1,000 yuan, or about $150 each, in a bid to boost its share in the market. (Chinese article) A quick look at the numbers shows that Unicom has made little or no progress in terms of boosting its 3G market share in the last 4 months. It owned 30 percent of the market in April, compared to 45 percent for the nation’s dominant carrier China Mobile (HKEx: 941; NYSE: CHL) and 25 percent for China Telecom (HKEx: 728; NYSE: CHA). (previous post) Fast forward to August, when Unicom’s share remained stuck at 30 percent, while China Mobile’s dropped 2 percentage points to 43 percent, all of which was picked up by China Telecom, whose share rose to 27 percent. (English article) In my view, blaming its lack of progress on lack of low-cost handsets is a lame excuse. Unicom’s 3G network is technically superior to both of its rivals’, supported by a much wider array of handsets than those available to 3G subscribers of China Mobile or China Telecom. The fact that Unicom chose to focus on high-end customers in its 3G campaign, relying especially heavily on Apple’s (Nasdaq: AAPL) trendy but costly iPhone, shows a clear lack of foresight by the company, which should have realized that the vast majority of Chinese living outside the wealthiest cities like Beijing and Shanghai may not want to spend 3,000 yuan or more for 3G handsets. I applaud Unicom for finally realizing its mistake and moving to rectify it with a mass purchase of lower-cost phones. But such a fundamental miscalculation looks a bit worrisome, especially as Unicom’s technological advantage could end as soon as next year as China Mobile trials and prepares for the commercial launch of a solid 4G product and China Telecom continues its aggressive 3G promotion.

Bottom line: Unicom’s failure to anticipate demand for low-cost 3G handsets reflects a lack of vision, which will undermine the company’s longer term prospects.

在中国刚刚起步的3G市场，中国联通(0762.HK; CHU.N)从政府那儿得到数不清的好处，但它在提高市场份额方面却显出令人失望的迟缓，现在，我们或许已经知道其中缘由了：缺乏低成本手机。根据国内媒体报导，为扩大市场份额，联通准备采购800万部千元以下的智能手机。光看这一数字就知道，联通在过去四个月中几乎未能在抢占3G市场份额方面取得任何进展。今年4月，联通占有30%的3G市场份额，中国移动(0941.HK; CHL.N)和中国电信(CHA.N)分别为45%和25%。到了8月份，联通的市场份额未变，中国移动则下滑两个百分点，至43%，中国电信则升至27%。在我看来，将进展迟缓归咎于缺乏低成本手机是个非常蹩脚的借口。联通的3G网络在技术上要优于竞争对手，相比中国移动或中国电信的3G用户，联通提供了更多样化的手机选择。但联通选择把高端客户，特别是依赖苹果iPhone手机的人，作为其扩张3G市场的重点，这个事实只能说明联通缺乏远见。联通本应意识到，那些不在北京、上海等一线城市生活的广大中国民众或许不愿花3,000多块钱买个3G手机。联通总算能意识到错误，并通过大量采购低成本手机的亡羊补牢之举，令我感到庆幸。但这麽低级的一个判断失误着实令人担心，尤其考虑到联通的技术优势可能会最早在明年终结，届时中国移动或在明年尝试并准备推出商业化的4G产品，中国电信也会继续其3G网络的推广。

一句话：中国联通未能预见到低成本3G手机的巨大需求，说明缺乏远见，而这一缺陷将有损联通的长远前景。

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