I’ve had some interesting follow-ups from my post yesterday on China’s smartphone OEMs.
A couple people e-mailed to confirm that there really are thousands of these companies competing. Also, my estimate on Mediatek seems to be pretty close to what the industry is expecting – 200+ million smartphones this year.
Someone else pointed out that a few of these companies – KTouch, Oppo, and Gionee among ohers already have very extensive sales networks, to say nothing of Huawei and ZTE. This is what I suspected, and I imagine this process will become more pronounced. If you look at some of the big industry conferences – MWC, CES, etc – there has been this steady growth of China handset companies on the exhibition floor. One indication of their expanding sales and marketing horizons.
But the most interesting pushback I got regarded some of the Android replicants, or re-skinned Android OS, that Baidu and others are promoting. Most people cautioned that these are not getting much traction from the hardware community. I tend to agree that the full-featured OSs like Alibaba’s Aliyun are going to have a hard time getting hardware partners. However, I think there is a more likely possibility. Instead of shipping entirely new versions of Android look-alikes, the China OEMs could very well start bundling alternative messaging and online service apps. This is directly analogous to what the PC makers did in the 90’s. Remember all those pre-installed AOL and Earthlink icons? For a period, the only profits that PC makers like Dell generated from PC sales came from these. Using a different OS is hard, but pre-installing apps is relatively easy. One of our readers noted that the alternative OS’s would fare poorly, but “If it was Tencent, that would be different.” The implication being that Tencent is already so hugely popular in China, they could shift the market. So far Tencent has shown no sign of building their own OS or Android variant, but they have shown some interest in bundling their apps onto phones. [Recall we own Tencent in our PA]. The same could be said of Sina and its Weibo messaging app.
Our best guess is that this is the direction the industry will move. The China OEMs will ship the version of Android that their chip vendors provide, and this will likely be Main Branch Android, But then the OEMs will sign partnerships with popular Internet services. And as we noted, this could prove a major vehicle for China’s Internet players to expand beyond China.