1. CLUE Case Study
China Mobile Application Store
Connected Life Experiences on the Move
Challenge/Opportunity
EXECUTIVE SUMMARY
Competition among China’s three leading mobile carriers,
COMPANY PROFILE
China Mobile, headquartered in Hong Kong,
China Mobile, China Unicom, and China Telecom, is intensifying.
China, has established a comprehensive network The voice business segment, in particular, is nearly saturated.
with large coverage, and a rich variety of
businesses and first-class customer services.
The company ranks the first in the world in terms ● China Mobile’s mobile subscriber average revenue per
of the network scale and the customer base.
user (ARPU) is decreasing: from 84 RMB (2008) to 75 RMB
COMPANY HISTORY
(1H, 2009)
China Mobile was created from the mobile-phone
division of China Telecom after its 1999 break-up, ● China Mobile’s service subscription penetration is over
and incorporated in 2000. The company provides
GSM roaming services with over 271 operators in 50 percent, and much higher in urban areas
206 countries and regions and GPRS roaming
services with 93 operators in 101 countries and ● China Mobile’s 2008 subscriber growth of 19 percent was
regions in the world.
lower than its 2007 subscriber growth of 25 percent
To address the challenges created by the current business dynamics, China Mobile sought to develop growth
opportunities in the fledging 3G services market. China Mobile launched a fee-based mobile application download
service in August 2009. The goal was to create a foundation of value-added applications that would boost usage of
the company’s 3G network (Time Division-Synchronous Code Division Multiple Access [TD-SCDMA]). China Mobile
named the initiative the “Wealth-Creating Project” and plans to create an industry value chain with annual sales of
RMB 10 billion. The company wants to increase subscribership by differentiating its service portfolio and the unique
types of 3G services and experiences that mobile users can get through their network. Handset manufacturers and
application providers are key to this strategy.
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2. CLUE Case Study
Alliances/Partnerships
● China Mobile currently works with Symbian to expand the portfolio of 3G applications.
● China Mobile supports Symbian Horizon, a developer program that lets Symbian developers submit software
products to multiple application stores at once, which is designed to accelerate the number of applications
available to consumers in the China Mobile store (called Mobile Market). Mobile Market is China Mobile’s
competitive alternative to Apple’s iTunes App Store.
● The fees collected for application downloads will be distributed between China Mobile and the applications
developers according to Mobile Market’s cooperative agreement. The China Mobile Developer Network
announced a 70:30 revenue-sharing structure, under which developers receive 70 percent of revenue, while
China Mobile receives the remaining 30 percent.
Strategy
China Mobile expects to confront the following obstacles in its effort to compete in China’s mobile application market.
● Limited consumer acceptance: most cell phone usage is still based on voice and text messaging.
Downloading and using paid mobile applications is not a popular trend in China.
● Piracy issue: illegal downloads may be an obstacle to revenue growth.
● Limited developer incentive: developers need incentives for developing new apps. Initially a, small customer
base might make many developers reluctant to focus on the mobile app market.
● Lack of high–quality 3G handsets and a limited base of handsets are available to support the mobile app
environment.
China Mobile has developed and deployed the following strategy to overcome the above obstacles:
● To increase customer acceptance: free promotion. Allow subscribers to download some free applications
via mobile network and Internet
● To attract software developers: revenue sharing with developers. 70 for developer, 30 percent for China
Mobile
● To increase application pool: Symbian alliance makes it easy for developers to upload multiple apps
● To increase 3G handsets customer base with higher adoption of 3G applications: Ask handset manufacturers
makers (Nokia, Samsung, LG, Sony Ericsson, Dell, Motorola, and Lenovo) for built-in application to boost
sales
“New value-added services are our new growth drivers. We hope
to maintain sustainable growth in business with continued addition
in subscribers.”
—Wang Jianzhou, Chairman and Chief Executive, China Mobile
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3. CLUE Case Study
Success Factors/Metrics/Monetization
● As of November 2009, the Mobile Market includes 310 mobile applications, 669 games, and 1246 mobile
phone wallpaper themes. Within a month of the store’s launch, China Mobile reported 100,000 users for
its apps store.
● On November 1, 2009, China Mobile started selective charging for software and game programs.
● With the large customer base (China Mobile has over 500 million subscribers), this initiative can potentially
generate a large revenue stream and contribute to China Mobile’s top-line growth.
Additional Notes and Comments
Company Background: China Mobile provides mobile voice and multimedia services through its nationwide mobile
telecommunications network, the largest of its kind in the world. In addition to the world’s largest mobile network,
China Mobile has the greatest number of mobile subscribers, too. It has over 500 million subscribers now. China
Mobile has the world’s largest Global Systems for Mobile Communications (GSM) network, which encompasses all
31 provinces, autonomous regions, and directly administered municipalities in mainland China and includes Hong
Kong, too.
China Mobile’s 3G network is still under construction (utilizing the TD-SCDMA standard, which the company helped
to develop). In 2009, the company obtained the requisite licenses needed to pursue full deployment of this new
network; the prior year it had field-tested TD-SCDMA networks in eight cities.
“We are hungry for all types of quality handsets.”
—Wang Jianzhou, Chairman and Chief Executive, China Mobile
References
www.chinamobile.com/en
www.chinadaily.com.cn/bizchina/2009-08/18/content_8581532.htm
www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/6062950/Chinese-mobile-market-slows-
in-weak-economy.html
www.chinatechnews.com/2009/11/03/10964-china-mobiles-app-store-starts-to-charge
www.thestandard.com/news/2009/09/09/china-mobile-powers-app-store-symbian-deal
www.cnanalyst.com/2009/10/china-mobile-nysechl-to-start-mobile-market-monetization-on-november-1.html
www.mmarket.com
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4. CLUE Case Study
Printed in USA FLGD 08867 02/10
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