Umeng China Mobile Internet Market Insight Report Q3 2012

China Mobile Internet Market Insight Report Q3 2012 November 2012

 Oct 2012, A total of 200 million Android and iOS devices in use in China. In Q3 2012, monthly sessions of apps increased by 223% compared to that in Q2. China’s mobile internet industry has reached a new peak. iPad sales in China perform better than the global average. In particular, the New iPad has helped Apple to increase its already dominant market share within China’s tablet market. China iOS devices exceeded 60 million units, yet iPhone overall market share dropped slightly. 42.4% of mainland iOS devices are jailbroken, down from last year. Samsung market share continues to grow, with HTC and Lenovo 2nd and 3rd. High sales of the latest Android devices means that Android 4.0 has become the second most used Android version. Mobile gaming remains a growth sector with China’s game developers branching out with not only titles for mainland China but also international markets. One thing to note is, Chinese players spend more time in their games compared to international users. *Devices refer to active devices covered by UMENG platform that has activated at least one app session within the stipulated time frame.

1 Device Trends

 In Q3 2012, the number of iOS and Android devices topped the 200 million mark. This represents an increase of 125% from 6 months ago. The 200 million devices breaks down to 140 million Android and 60 million iOS devices. In Q3 2012, China’s month sessions of mobile apps increased by 223% compared to that in Q2. China’s mobile internet industry has reached a new peak. Growth in smart devices in Upward trend in average monthly mainland China sessions of mobile apps iOS Android 3.2X 125% 200 million 223% 87 million X Mar 2012 Oct 2012 2012 Q2 2012 Q3 Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 iPad currently holds 79% of China’s tablet market, which is higher than the global iPad share of 68%. This shows that iPad still stands strong in the China market.* 2012 Q3, iPad accounts for 16% of iOS devices, dropping 3% from last quarter. This is due to the lack of new iPad models in this quarter. In addition, users are thought to be waiting for iPad Mini and iPad 4. In addition, the newly released iPhone 5, coupled with a drop in price of iPhone 4 has increased the number of iPhones in the market. Distribution of tablets in iPad VS iPhone Proportion mainland China 16% 21% iPad iPad Other Tablets iPhone 79% 84% Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform *Global iPad statistics source: Apple official figures

 With so many previous generations of devices in the market Apple faces a challenge to convince users to upgrade. The New iPad seems to be achieving this as it already accounts for over 28% of all iPad models. The new iPhone5 is yet to see an official release in China it will be interesting to see if the lack of a 4G network in China will reduce sales when it is released. iPad Model Distribution iPhone Model Distribution (Sep 2012) (Sep 2012) 4.8% 0.1% 9.4% 28.1% iPad 1 iPhone 4 iPad2 WiFi iPhone 4S iPad2 3G 45.0% 51.1% iPhone 5 47.3% 15.2% The New iPad Others Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 2012 Q3, China’s iOS devices exceeded 60 million units. However with the growing popularity of the Android platform, iOS’s overall market share dropped 5% compared by Q2 2012. Apple’s loss of market share is mainly due to mainland brands such as Lenovo and Xiaomi producing popular mass market smartphones. Smartphone brand distribution in Smartphone brand distribution in China (2012 Q2) China (2012 Q3) Apple Apple 22% Samsung Samsung 26% 33% 38% HTC HTC 4% Motorola Lenovo 5% ZTE 4% Huawei 5% 5% Huawei ZTE 5% 11% Others 18% 15% 9% Others Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 The iPhone5 is yet to receive an official launch in mainland China, however some users have already got their hands on one. As of end September, iPhone 5 stands at 0.1% market share within China. This is similar to the first month when iPhone 4S was released in China. As with other iOS devices the early adaptors come from the relatively wealthy and well connected provinces of Guangdong, Zhejiang, Beijing and Jiangsu. Top 10 Cities using iPhone 5 Guangdong 12.3% Zhejiang 8.7% Beijing 8.6% Jiangsu 7.9% Shanghai 6.3% Fujian 4.5% Liaoning 2.5% Yunnan 2.1% Henan 2.1% Hubei 2.1% Data Source: Umeng Analytics Platform

 72 hours after the launch of iOS 6.0, using daily session counts to track, iOS6 version already had 11.3% market share. As of end September, this figure rose to 23%.  Individually comparing against the iOS devices, iPhone 4S has 31.1% of its users upgrading to iOS 6.0, ranking first among the iOS devices. Second and third in place are the New iPad (29.6%) and iPad 2 WiFi (24.2%). Trend of upgrade to iOS 6 Comparison of iOS devices that25% 23.1% upgraded to iOS 620% iPhone 4S 31.1%15% iPhone 4 16.3% 11.3% iPhone 3GS 8.4%10% The New iPad 29.6%5% iPad 2 WiFi 24.2%0% 2012/9/20 2012/9/21 2012/9/22 2012/9/23 2012/9/24 2012/9/25 2012/9/26 2012/9/27 2012/9/28 2012/9/29 2012/9/30 iPad 2 3G 22.4% iPod touch 4th Gen 20.1% Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 By September 2012, 42.4% of iOS devices in China are jailbroken devices. This number is high but is a drop from the figure of 51.0% 2011 Q2. Comparing against all iOS devices, iPad jailbroken devices stand at 39.8%, while jailbroken iPhones stand at 43.8%. There are many possible reasons for the drop in Jailbroken phones, one reason is that Apple allowed Mainland credit cards to be used at the Appstore. iOS Jailbroken devices proportion Jailbreak Comparison amongst main iOS in China (Sep 2012) devices (Sep 2012) 42.4% iPhone 3GS 69.2% iPhone 4 48.6% iPhone 4S 36.1% 42.4% Jailbroken Devices iPad 1 48.3% Non-jailbroken 57.6% devices iPad 2 3G 32.4% iPad 2 WiFi 31.9% The New iPad 37.0% Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 Android 4.0 has reached a share of 23.4% in China, overtaking Android 2.2, becoming Android’s second most used version. App developers should put more attention into Android 4.0 version. Android Version Change Trend 2012 Q3 Android OS Version 2.3 4.0 2.2 Others Distribution 5.3%80%70%60% 10.8% 2.350%40% 4.030% 23.4% 60.5% 2.220%10% Others0% Jan Feb Mar Apr May Jun Jul Aug Sep Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 iOS upgrade delivery system is slicker than Android. As a result the majority of Android users don’t upgrade. The majority of Android 4.X users have the new OS pre-installed on the phone. Among the Top 10 devices for Android 4.0 and above, 8 of them already come pre installed with Android 4.0 or above. In particular, Samsung Galaxy SIII and Xiaomi 1S have had spectacular performances. Top 10 Devices for Android 4.0 and above (Sep 2012) Huawei C8812 7.19% Samsung Galaxy SIII 6.17% HTC Desire V(T328w) 3.16% HTC Desire VT(T328t) 2.88% Xiaomi 1S 2.63% Xiaomi M1 2.41% Sony LT26i(Xperia S) 2.05% HTC Sensation XE(G18) 1.97% Android 4.0 Pre- installed Lenovo lePhone P700 1.88% Android 2.3 Pre- HTC Desire VC(T328d) installed 1.82% Data Source: Umeng Analytics Platform

 As expected, Samsung is still the leading Android brand. In addition, Lenovo has shot up to third place, holding 8% share, contributed by the various promotions of its devices such as A60, A65, LePhone P700. This quarter, the Top 10 Android Devices list welcomes new entrant Samsung Galaxy Note into its ranks. In addition, it is also note-worthy that Samsung Galaxy SIII was ranked fourth in the list in September 2012. Android brand distribution(2012 Q3 ) Top 10 Android Devices (2012 Q3) Samsung Galaxy SII 3.98% Samsung Galaxy Ace 3.35% 27% Samsung Xiaomi M1 3.04% 38% HTC Samsung Galaxy Note 2.05% Motorola Defy 1.97% Lenovo HTC incredible S(G11) 1.95% Huawei 14% HTC Desire S(G12) 1.80% ZTE Samsung Galaxy S 1.74% 6% 7% 8% Huawei C8650 1.67% Others ZTE Blade U880 1.65% Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

2 App and App Developers

 Since end of year 2011, the number of mobile applications using Umeng’s analytics services has almost doubled. The Chinese mobile internet industry is developing at an extraordinary pace. Apps covered by Umeng steadily increasing 65000 52000 40000 22000 Dec 2011 May 2012 Jul 2012 Sep 2012 Data Source: Umeng Analytics Platform

 While Chinese app developers tend to focus only on their own market, they are increasingly willing to explore the potential of the international market too. In 2012, there was an increase of 43.2% in the number of game developers on Umeng Analytics who ventured into the international market, maintaining an upward trend of game apps going global. 2012 Q3 New game developers New game developers who venture into the international market 43.2% Data Source: Umeng Analytics Platform

 The top 5 game categories for new games added in the recent half year are action, casual, puzzle, board/card and strategy games. Top 5 Newly developed games in 2012 (by category) Action 22.1% Casual 17.3% Puzzle 14.9% Board/Card 14.1% Strategy 9.6% Others 22.0% Data Source: Umeng Analytics Platform

 In half a year, the app developer team sizes have changed dramatically, with individual app developers decreasing from 28% to 10%. However, team sizes of 2 to 50 people and those with more than 50 people have increased in general. Apps in development are becoming more ambitious. App Developer Team Size App Developer Team Size Distribution (Mar 2012) Distribution (Sep 2012) 2% 13% 10% 28% Individual Individual 2-50 ppl 2-50 ppl >50 ppl >50 ppl 70% 77% Data Source: Umeng Analytics Service Feedback Survey Data Source: Umeng Analytics Service Feedback Survey

 Largest App developer communities are within Beijing, Guangdong and Shanghai, although there are smaller vibrant communities in other cities such as Chengdu. Geographical Distribution of App Developers Beijing 33.8% Guangdong 16.2% Shanghai 13.3% Fujian 5.2% Jiangsu 4.7% Zhejiang 3.8% Sichuan 3.0% Hubei 2.2% non-China 2.2% Shaanxi 1.8% Data Source: Umeng Analytics Service Feedback Survey

3 User Behavior

 Non-China gamers are more loyal than China gamers with higher retention rates Non-China vs China player second day retention rates are 27% and 24% respectively Non-China vs China player retention rates on the second week are 45% and 38% respectively Data Source: Umeng Analytics Platform

 China gamers spend more time in their games compared to non-China gamers, clocking higher daily app sessions and app usage lengths. China gamers spend 1.2 times more time in each app session compared to non-China gamers. China gamers activate 1.4 times more daily app sessions compared to non-China gamers. Data Source: Umeng Analytics Platform

 In a 24-hour period, the number of gamers will reach a small peak around 12 noon before dropping. It will rise again from around 4pm and peak at 9pm before dropping slowly again. After 6pm, more and more users start to use music and video apps, peaking at around 10pm. Between 12 to 2am, night owls prefer to watch videos and listen to music more than play games. In addition, there is also a peak in video app usage during 12pm, perhaps due to users’ habit of watching videos for relaxation purposes during their lunch break. Music, Video, Game app usage over a 24-hour period 10% Music Video Game 8% 6% 4% 2% 0% 0 2 4 6 8 10 12 14 16 18 20 22 Data Source: Umeng Analytics Platform

 83% of the times when entertainment apps are used, each app session lasts for less than 10 minutes, out of which, 59.1% lasts for less than 3 minutes. This shows that entertainment apps are used by users while they are on-the-go. After understanding this user behavior, app developers should take note to design products that can capture users’ attention in a short time in order to retain more users and improve app value. Single app session length distribution for entertainment and game apps < 3 mins 59.1% 3-10 mins 23.9% > 10 mins 17.0% Data Source: Umeng Analytics Platform

 Looking at the spread of WiFi, Shanghai, cities such as Beijing, Shandong, Jiangsu, Zhejiang have higher WiFi penetration rate. In particular, Shanghai has the highest WiFi penetration rate with 56.0% of the Shanghai users connecting via WiFi everyday.  Even in the day, the use of WiFi is comparable to 2G/3G. After 6pm, users connecting via WiFi steadily increases till 2am. At 7pm, the use of WiFi exceeds that of 2G/3G. This trend shows the prevalent use of WiFi in offices and homes. Top 10 Chinese cities that uses the most Method of Internet Connection over a WIFI 24-hour period60% wifi 2G/3G50% App session40%30%20%10%0% 0 2 4 6 8 10 12 14 16 18 20 22 Data Source: Umeng Analytics Platform Data Source: Umeng Analytics Platform

 Definition of terms: Devices: All devices in this report refer to active devices covered by Umeng platform that has activated at least one app session within the stipulated time frame. Release Date: November 2012 Data Source: Analysis data based on over 60,000 Mainland Android and iOS apps from Umeng platform. Data is taken between the period of July to September 2012. Statement: Above data belong to Umeng platform. Any use of data can be used for free provided that Umeng is quoted as the original source. Contact us : report@umeng.com

 Umeng Analytics Platform Umeng App Analytics Platform is the leading and largest provider of mobile app analytics and developer services in China. Umeng offers enterprise-class analytics to thousands of mobile app developers in over 65,000 apps across iOS, Android and Windows Phone platforms. UMtrack The lack of an official iOS apps channel analytics tool that is easy to use and provide accurate data is a constant challenge for iOS app developers. Umeng’s Umtrack provides developers with accurate analysis of users, helping app developers track their users whom have come from different channels. App network App network is a total solution for app developers that integrates in-house ads, cross- promotion and advertising. It delivers efficient distribution for apps and helps apps to maximise inventory value, growing the size and value of app users.

Umeng, a Beijing-based startup founded in April 2010, is the leading andlargest provider of mobile app analytics and developer services platform inChina. Umeng offers enterprise-class analytics to over 65,000 apps acrossiOS, Android and Windows Phone platforms. Umeng has since raised morethan USD10 million from Matrix Partners and Innovation Works. The team is working around the clock to build better solutions for mobileapp developers. www.umeng.com report@umeng.com

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Umeng China Mobile Internet Market Insight Report Q3 2012

by Umeng on Nov 13, 2012

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