China, the world’s most populous nation, has also become the world’s largest smartphone market by volume in Q3 2011, overtaking the US for the first time. With over 1.3 billion in population, China’s mobile market has a penetration rate of over 70 percent, which translates to over 950 million mobile phone users (updated October 2011). Something no phone manufacturer can afford to ignore. For Tier 1 cities in China, smartphone penetration is over 50 percent, which is higher than most Western markets. Nationwide, smartphones account for about a third of all mobile phones in terms of market share. Apple‘s iOS and Google Android devices are the best sellers in China, rapidly chipping market share away from the perennial market leader Nokia.

A wave of low-cost Android models from local Chinese brands like ZTE Corp have boosted the growth of smartphones in China, which rose to a record 24M in Q3, compared to 23M for the US. This signals the first time China has overtaken the US in the smartphone market, and this trend is likely to continue. Shipments to China grew close to 60% while those to the US fell 7%.

Android is expected to take a substantial share, attributed to its widespread adoption. Mobile operators like China Mobile even have their own Android-based OS to power low cost devices. Not to be outdone, Apple has jumped in with a more affordable, ‘entry level’ 8GB iPhone 4 to capture market share in emerging and growing markets like China, India and Middle East. Ultimately, it’s a huge win for the Chinese consumer with smartphone prices dropping to below 1,000RMB (US$150).

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One things for sure, China is experiencing a mobile boom and this is expected to grow in the near to mid term. What’s clear is that smartphone adoption is on the rise and most of all new phones sold in the market in this two to three years will be some flavour of a smartphone.


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