Mobile internet development in China is rapidly evolving. [1] Mobile internet usage in China has grown significantly in recent years with over 500 million mobile internet users projected by 2012. [2] Younger users between ages 18-30 make up the largest demographic of mobile internet users in China. [3] Popular mobile internet activities include using mobile browsers to access news, social networking, search, and entertainment such as music and videos.

1. Mobile Internet Development
in China
Bob Chao
Chief Analyst & Research Academy Vice President
Internet Research, Insight Research
2009. 09.09
iResearch Consulting Group Shanghai·
Beijing·
Guangzhou

2. Overview
1. About iResearch Consulting Group
2. Evolution of Mobile Internet
3. Development of Mobile Internet Market
4. China Mobile Internet Usage & Demographics
5. Application of Mobile Internet

3. Who We Are?
• iResearch is established in Shanghai in 2002.
• With offices in both Shanghai and Beijing, iResearch has about 110
employees.
• iResearch is the first company that focused on Internet economy in China.
• iResearch focuses on online advertising, online service, search engine,
digital recreation, e-business, mobile internet and mobile value-added
service, etc.

4. What We Do?
Research and Consulting： Data and info： Media and Events
iResearch Inc. iResearch Data+ iResearch.cn & Conferences
Industry Customized Website Industry
Ad Research User Behavior
Consulting Research Advertising Events

5. iResearch Clients Define the Internet Ecosystem
iResearch has hundreds of clients from various fields
Internet
Enterprises
Traditional
Enterprises
Advertising
Agencies
Investment
related
IT Enterprises

6. Overview
1. About iResearch Consulting Group
2. Evolution of Mobile Internet
3. Development of Mobile Internet Market
4. China Mobile Internet Usage & Demographics
5. Application of Mobile Internet

7. Evolution of Cellular Standards
The Evolution of Cellular Standards in China
1G 2G 3G 4G
1987 1994 2008 2010s
GSM TD-SCDMA Systems
TACS GPRS WCDMA Beyond
EDGE CDMA2000 IMT-2000
Voice/Low Speed Voice/High Speed Voice/Ultra-High
Voice Service
Data (9.6~64Kbps) Data(384~2000Kbps) Speed Data
The Cellular Standards Supported by the Major Vendors in China
Vendor Cellular Voice Cellular Data High Speed Data
China Mobile GSM GPRS/EDGE TD-SCDMA
China Unicom GSM GPRS WCDMA
China Telecom CDMA CDMA2000 1X CDMA2000 EV-DO

8. Mobile Terminal Trend: Smartphone
The Evolution of Mobile Phone
2007
Mile Stone
3G
2006
2.5G
2005 2G
Mobile Phone: Java Touch screen
An Active Node of Internet 2004 Voice Music High Speed Data
Camera P2P
2003
WAP WLAN
2002 ... Navigation
Cellphone
2001 ...
Smartphone
1987-1996
Worldwide Mobile Terminal Market Share Worldwide Smartphone Market Share
Nokia Nokia
3.0% 13.9%
19.0% Samsung RIM
23.0% 6.0% 25.1%
36.8% 7.5% 39.5% 45.0% Apple
LG 47.4%
4.7%
13.3% 3.3% HTC
5.6% Motorola
4.1%
Fujitsu
19.3% 10.0% Sony Ericsson 18.7% 2.8% 17.3%
15.2%
10.7% Others
8.8% Others
2009Q2 2008Q2 2009Q2 2008Q2
Source: Gartner,2009/08

9. Rich Mobile Internet Service
Personal Service Personalization of Mobile Internet Services
Business and Life
Mobile Commerce / Payment / LBS / Security / Auction …
Service
Information and Internet Access / Search Engine / Navigation / Video / Music / Gaming / Comic / TV …
Content Service
Communication SMS / MMS / Push to Talk / E-Mail / IM / Videophone …
GSM / CDMA / GPRS/EDGE / TD-SCDMA / WCDMA / CDMA2000 EV-DO/ 3G LTE/ 4G
Evolution of Mobile Terminal and Network

10. Overview
1. About iResearch Consulting Group
2. Evolution of Mobile Internet
3. Development of Mobile Internet Market
4. China Mobile Internet Usage & Demographics
5. Application of Mobile Internet

11. The Mobile Internet Market Opportunity
2003-2012 China Mobile Telecommunications Market Trend and Forecast China Ministry of Industry and Information Technology(MIIT)
issued on January, 2009, 3G licenses for China Mobile, China
1000 Unicom and China Telecom.
24.6% 17.5% 17.2% 17.2%
18.7%
800
641 China Mobile Operator 3G Brand
600 547
461
393
400 335
269
200
0
2003 2004 2005 2006 2007 2008 China Mobile China Unicom China Telecom
Total Number of Subscriber(Million) Growth Rate(%)
Source: MIIT
2007-2012 China Mobile Internet Market Scale Trend and Forecast 2007-2012 China Mobile Internet User Market Trend and Forecast
80
40.5% 33.8% 47.5%
25.4% 41.4%
60
600 108.5%
41.3 51.3% 29.7% 26.9% 35.1%
500
40
28.0 400 331.9
19.8 300 245.6
14.8 193.5
20 11.8 200 149.2
8.4 98.6
100 47.3
0 0
2007 2008 2009e 2010e 2011e 2012e 2007 2008 2009e 2010e 2011e 2012e
Market Scale(Billion RMB) Growth Rate（%） Total Number of User（Million） Growth Rate（%）
Source:iResearch

12. The Mobile Internet Value-Chain
Network Equipment
IT Solution Provider
Vendor
Radio Access Network
Core Network Technology Solution
Transport Network
Semiconductor
Content Provider
Vendor Content Product
Processor and Chipsets Network Operator Content Product
Information Service
Custom-Made
Mobile Terminal Information
Software Vendor
Provider
Voice and Data Service
Software Service Information and
Content Service
Mobile Phone
Mobile Terminal Mobile Internet
Vendor User
Digital Content Product

13. The Mobile Internet Business Models
Network Operator
Value-Chain Control
Platform
+
Service
Portal
Terminal
+
+
Software
Application
Mobile Terminal Vendor Information Provider
Integrated Solutions for Best Product and Service
Full Service on-Demand

14. Network Operator Control Value-Chain
Network Operator: Platform + Service
Information/Content Provider Network Operator
Content Information Voice Network Access Content Information
...
Music Search Internet News SMS
Video Mail VPN Entertainment MMS
TV Blog ... Music Email
Game SNS ... IM
... ... ...
Customer
Billing System：Time、Traffic、Content
Mobile Terminal Vendor
Custom-Made Mobile Phone
Netbook Laptop Subscriber Database
Network Card
USB Data Card Mobile Internet Platform
Network Operator：Value-Chain Control
Domestic
International

15. Mobile Terminal Vendor Integrates Solutions
Mobile Terminal Vendor: Smartphone + Application
Information/Content Provider Mobile Terminal Vendor
Domestic
Content Info
Application Platform Terminal Product
Music News Ophone + Mobile Market
Entertainment Cellphone
Video Mail
Life Smartphone
TV Blog
Education Netbook
Game SNS
Business Laptop
... ...
.... MID
....
Search Business
Customer
Application Service Integration
Movie Ticket
Dinner Check
Manu Security Open Environment of Application Development
... ...
Product and Service Brand
Network Operator
Network Access
Mobile Terminal Vendor：Integrated Solutions for Full Service on-Demand
International International International
iPhone + App Store Smartphone + OVI Smartphone + Mobile Market

16. ISP/CP Provide Best Product and Service
ISP/CP: Portal + Software Application
Information/Content Provider Terminal
Vendor
Information Content Search Business
Mobile Phone Smartphone
Netbook
Portal
MID
News Music Map B2C Laptop
Email Video Restaurant C2C Internet Portal ...
SNS Game Real Estate Travel
Blog Novel Dictionary Credit Card
... ... ... ...
Software Customer
Network Operator
Network Access
Information/Content Provider：Best Product and Service
Domestic Domestic
Portal + IM Portal + Mobile Phone Brower

17. Network Operator Faces More Challenges
Network Operator
Mobile Terminal
Internet Vendor
Vendor
Mobile internet
Mobile Internet
Vendor

18. Overview
1. About iResearch Consulting Group
2. Evolution of Mobile Internet
3. Development of Mobile Internet Market
4. China Mobile Internet Usage & Demographics
5. Application of Mobile Internet

19. Age Distribution: Teenage Phenomenon
 Male users(88.2%) used mobile internet, compared to female users(17.8%).
 The largest user group of mobile internet is 18~30 years old.
2009China Mobile Internet User 2009 China Mobile Internet User
Gender Distribution Age Distribution
17.8% 1.8%
40 + 3.5%
36～40 2.6%
5.6%
31～35 5.2%
10.3%
25～30 16.9%
24.4%
18～24 65.5%
50.7%
88.2%
18 - 8.1%
5.5%
Male Female
0% 10% 20% 30% 40% 50% 60% 70%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009

20. Higher Education Users Growing
 61.3% mobile internet users are less than high school education.
 The number of undergraduate and below users increased 3.8% year-over-year.
 The number of high school users decreased by 6.1% year over year, from 37.7% to
31.6%.
2009 China Mobile Internet User
Education Distribution
Postgraduate and above 0.4%
1.5%
Undergraduate 16.6%
19.3%
Junior College 18.1%
17.9%
High School 37.7%
31.6%
High School and Below 27.2%
29.7%
0% 5% 10% 15% 20% 25% 30% 35% 40%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

21. Middle and High Income Groups Increase
 51.7% mobile internet users were 1000~3000 RMB income-group.
 3000 RMB and 1000~3000 RMB users increased by 5.7% and 9.4% year-over-year.
2009 China Moblie Internet User
Monthly Income
0.015
5000 Above
0.0315
3001～5000 0.033
0.0738
2001～3000 0.103
0.1736
1001～2000 0.32
0.343
0.529
1000 Below
0.378
RMB
0% 10% 20% 30% 40% 50% 60%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

22. Frequent Growing, but Slowing
 70.9% users surf on the mobile internet 5~7 days per week.
 83.9% Users choose “During work day, when I take a break ” as the time when they
get mobile internet service.
2009 China Mobile Internet User 2009 China Mobile Internet User
Frequent Distribution Time Distribution
5~7 Days 68.3%
70.9% During Work Day,
83.9%
when I take a break
3~4 Days 10.5%
11.1% During Holiday 45.2%
1~2 Days 3.8%
3.7% During Work Hours 31.4%
1 Day - 2.0%
1.9% 0% 50% 100%
2009
0% 20% 40% 60% 80%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

23. News, Chatting and Search are Popular
 71.8% of Mobile internet users choose news service.
 The most popular mobile internet services are News, Chatting and Search.
2009 China Mobile Internet User Purpose Distribution
68.3%
News 71.8%
59.4%
Chatting 55.2%
57.7%
Seach inf ormation 43.0%
Read Novel 42.4%
28.8%
Download Ringtone, Picture … 50.5%
28.1%
34.4%
SNS 27.1%
18.4%
Email 15.9%
16. 9%
Other 11.6%
11.7%
Media Program 7.4%
0% 10% 20% 30% 40% 50% 60% 70% 80%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

24. Mobile Browser Increased Especially
 Mobile browser, IM and document management grow.
 Mobile browser, video, IM, read and game are the killer applications.
2009 Mobile Software Service Distribution
Browser 45.0%
60.6%
Video 40.4%
40.4%
IM 31.2%
35.4%
Read 36.3%
34.7%
Game 55.6%
33.9%
Secruity 17.3%
16.6%
Document Management 14.6%
16.5%
Stock Information 15.1%
14.4%
Picture Edit 17.4%
12.5%
other 26.4%
15.9%
0% 10% 20% 30% 40% 50% 60% 70%
2008 2009
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

25. MVAS：Mobile Software Emerging
2009 China Mobile Value-Added Service Pattern
Mobile Software 47.3%
Mobile Read 20.3%
MMS 18.8%
Email 16.1%
Mobile Game 16.0%
Download Ringtone,… 15.3%
Nerw Based on SMS 14.6%
SNS/Blog 13.4%
Mobile Banking 10.9%
CRBT 8.3%
Mobile Map 7.9%
Mobile Payment 7.3%
Navigation 6.9%
M-Commerce 6.2%
Mobile Video 5.3%
Mobile Search 3.3%
TV Program 2.9%
Two-dimensional code 1.3%
IVR 0.9%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Methodology：36286 mobile internet users from 15 major China mobile phone portal websites in July, 2009.

26. Overview
1. About iResearch Consulting Group
2. Evolution of Mobile Internet
3. Development of Mobile Internet Market
4. China Mobile Internet Usage & Demographics
5. Application of Mobile Internet

27. Mobile Advertising Market Growing Rapidly
2006-2011 China Mobile Advertising Market
Trend and Forecast
LBS AD
5000
133.3% 125.0%
100.0%
Mobile
117.5% 101.5%
SNS AD 4000
Video AD
Advertising 3000 2760
2000 1370
Search AD
1000 630
Text Link AD 280
60 120
Banner AD 0
2006 2007 2008 2009e 2010e 2011e
Mobile Advertising Market Scale（Million RMB） Growth Rate（%）
Source:iResearch
Mobile Advertising is a sector of the overall advertising
industry that is reaching an important milestone.
Advertisers Customer
AD Networks Mobile Service
Agencies

28. Strong Growth in Mobile Game Market
2007-2012 China Mobile Game User Market 2007-2012 China Mobile Game Market
180 Trend and Forecast 12 Trend and Forecast
85.0%
57.6% 30.0% 38.5% 44.4% 53.8%
37.5% 25.6% 10
150 23.1% 21.9%
8 7.4
120
98
90 78 6
64 4.0
60 52 4
2.6
33 1.8
30
24 2 1 1.3
0 0
2007 2008 2009e 2010e 2011e 2012e 2007 2008 2009e 2010e 2011e 2012e
Mobile Game User(Million) Growth Rate(%) Mobile Game Market Scale(Billion RMB) Growth Rate(%)
Source:iResearch
Mobile game revenues from downloadable games and
mobile multi-player online games (MMO).
 Sequential strong performance in mobile MMO is
driven by an increase in mobile internet users and a
higher percentage of users purchasing in-game virtual
items.

29. Future of Mobile Search
2007-2012 China Mobile Search User Market 2007-2012 China Mobile Search Market
Trend and Forecast Trend and Forecast
4000
500 300.00%
122.50%
40.40% 37.60% 34.90% 38.80% 141.70% 96.60%
400 3000 84.20% 77.10%
322
300 1860
232 2000
200 172
1050
125
89
1000 570
100 290
40
30 120
0 0
2007 2008 2009e 2010e 2011e 2012e 2007 2008 2009e 2010e 2012e 2013e
Mobile Search User(Million) Growth Rate(%) Mobile Search Market Scale(Million RMB) Growth Rate(%)
Source:iResearch
Mobile Search in the Future
Location Search
Visual Search
Mobile Search Voice Search
Social Search
Vertical Search Mobile Search will organize the world’s information
and make it universally accessible.

30. iResearch Consulting Group
China’s Leading Internet Data Product Provider
China’s Leading Research Provider Focuses on
Internet Business
China’s Leading Research Provider Focuses on
Online Advertising
Thank You!
Bob Chao
Bob@iResearch.com.cn