China Mobile launches own-brand smartphones

China Mobile Ltd officially entered the booming mobile terminal market on Friday as it unveiled its own-brand smartphone models.

The China Mobile M701, a 5-inch screen Android-based smartphone equipped with MediaTek Inc's 1.2-gigahertz quad-core processor, is priced at 1,299 yuan ($212). The China Mobile M601 is a 4-inch screen, dual-core Android smartphone that targets lower-end users with a price of 499 yuan.

The two smartphones are produced by original equipment manufacturers, Hisense Group and Shenzhen-based BYD Co Ltd, respectively. They will hit the Chinese market through China Mobile's online and offline outlets this month.

Li Yue, chief executive officer of China Mobile, the world's biggest telecom operator by subscribers, said the company has about 740 million customers.

Li said those customers usually change their mobile phones every 23 months, so at least 300 million new mobile devices are needed every year.

"China's mobile terminal industry has a very bright future," Li said, during a Beijing news briefing on Friday.

Analysts pointed out some additional implications for China Mobile's smartphone launch.

James Yan, an analyst with research firm IDC China, said China Mobile's move aims to create a platform that seamlessly integrates its current mobile services, such as the instant messaging tool Fetion, and other mobile applications.

"Chinese mobile carriers hope to decrease the risks of being a 'dumb pipe' and to relieve the pressure from Internet companies' challenges," Yan said.

Lingxi, the Chinese version of Apple Inc's Siri service, will be installed on the new China Mobile smartphones. A year ago, China Mobile struck a $214 million deal to acquire a 15 percent stake in Anhui USTC iFlytek Co Ltd, a Chinese company that develops software and apps related to voice input services.

"Lingxi is a highlight of China Mobile smartphones," said Li Lin, a marketing manager with iFlytek. Compared with Siri, Lingxi is more localized and has partnered with third-party service providers such as Dianping.com and douban.com to offer helpful daily living information for customers, Li said.

"You can ask Lingxi to make a phone call, send a text message or find a nearby restaurant," Li explained.

The other benefit for China Mobile in its launch of own-brand smartphones is that it helps the carrier to expand and strengthen coverage in county-level markets.

"In tier five, tier six cities, which most mobile phone companies fail to reach, China Mobile can successfully sell smartphones through its powerful distribution channels," Yan from IDC said. Those areas are usually remote from bustling cities and have less intense market competition, he said.

Kevin Wang, an analyst with the research firm IHS iSuppli, said China Mobile's move will help reinforce its branding, but he said that he doubted the smartphone business will be a major revenue driver for the company.

"Foreign telecom operators such as AT&T and Vodafone have offered own-brand products for many years, but the own-brand smartphone proportion they sell is still small," Wang said.