Next gen of phones will be key driver in China

Updated: 2014-01-08 07:06

By Bryan Wang (China Daily)

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Forrester Research Inc estimates that China's IT purchases will grow by 6 percent in 2013 and 8 percent in 2014. Amid stronger public sector spending, a recovering computer equipment market and an accelerating outsourcing services market, one of the key factors for growth will be fourth generation projects.

In telecommunications, three major operators started to roll out 4G networks in 2013, with further significant investment expected in 2014. The country's broadband China strategy is also driving investment. In turn, Forrester expects IT purchases from the telecoms and utilities sectors to grow by 10.7 percent in 2014 to a combined $24 billion.

4G will widen the competitive gap between China Mobile and its rivals, China Unicom and China Telecom. Forrester also estimates that licenses for FDD LTE (a fast telecoms spectrum) will not be awarded to China Unicom and China Telecom in the next couple of months. Therefore, China Mobile may be the only 4G operator in China for the next six months.

While the 4G licensing represents a significant opportunity for Chinese operators, smartphone manufacturers, supply chain manufacturers and content providers also stand to benefit.

Smartphone content purchasing in China is among the highest worldwide. The development of smoother 4G networks will bring increased bandwidth, video and other content services, innovative new services that will eventually lead to greater market opportunities.

China Mobile at its ecosystem summit in mid December also projected more than 100 million 4G smartphones to be sold in 2014, covering both high-end and lower-range devices. If China Mobile is able to meet its ambitious target, it will be a significant achievement compared with the uptake of 3G services five years ago.

With 4G driving content use, we expect to witness a rising trend in China that Forrester terms as a mobile mind-shift, in which customers and employees will expect any information or services they desire will be available to them on any device, in any context, at their moment of need.

Forrester predicts that smartphones will become life hubs for most Chinese customers in 2014. We used to call a smartphone a "third screen" - something that people use for connection and content use.

Increasingly, for many in China, the smartphone will begin to resemble a "life hub" - a connected hub for people's lives. Smartphones will begin to connect with fitness devices, smart watches and smart TVs. They will also become a tool for people to make a lot more of their purchases and payments. Forrester estimates that 48 percent of all Chinese mobile phone subscribers will own smartphones in 2014 - and this number will grow to 64 percent in 2017.

In the enterprise space, many Chinese chief information officers, a job title commonly given to the person in an enterprise responsible for the information technology and computer systems that support enterprise goals, have been investing more cautiously in infrastructure, slowing growth in China in 2013. To better support business in the long term, Chinese CIOs need to consider new areas for investment in addition to traditional hardware purchases. Forrester believes that Chinese CIOs should consider focusing on consumption-based models, especially leveraging the mobile arena, to support business growth.

The author is vice-president and country manager for China, Forrester Research Inc.