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Saturday, August 02, 2008

Internet user base is growing faster than mobile in China

In recent days, I've seen a couple more stories along the lines of "The Internet will be dominated by mobile, especially in emerging markets". MobHappy wrote a post on how this might spell doom for Microsoft if the PC loses influence, and Tomi Ahonen has focused more on mobile as a media channel.

Regular readers will know that I'm rather skeptical of the supposed shift from PC to mobile devices, or from "The Internet" to more general mobile platforms for delivery of content or communications.

I've just come across something rather fascinating, which I'd argue backs up my point of view. China's Ministry of the Information Industry and Internet Network Information Centre both release copious quantities of statistics and reports on the uptake of different technologies. In particular, they publish regular stats on mobile subscribers and Internet users.

At the last count (a month ago, at end-June 2008), there were 253m Internet users, and 601m mobile subscriptions.

But there's an interesting twist. According to the CNNIC's last full report published at the end of 2007, "According to the survey findings of CNNIC, each mobile phone subscriber has 1.33
mobile phone cards [SIMs / subscriptions] in average
". (It's on page 35 of the report, or page 36 of the PDF). In other words, there are about 450m unique individuals using mobile phones in China - considerably less than the 600m suggests.

I haven't got data on how that 1.33 number is trending, but it seems like multiple phone/SIM ownership in China is nothing new over the past year or two.

So I put together a quick spreadsheet on the growth in Internet users and Mobile users in China over the past few years, assuming that 1.33 number as constant. It makes interesting reading:

For those of you reading on RSS without images, it shows that over the last year, the number of Internet users as grown at a faster rate than Mobile users - 43m vs 41m in the last 6 months, and 48m vs 34m during the 6 months before that. By contrast, in the second half of 2005, it was 8m vs 23m.

What appears to be happening is that Internet use in China is being catalysed by wider availability of broadband, and more affordable PCs. 214m out of the 253m users are broadband-based. At the same time, there is some mobile use of the Internet - 73m users of the total access on phones - but virtually all of these are PC-Internet users as well. (There's no double-counting of mobile broadband as China doesn't have 3G yet). Looking at some of the charts on the CNNIC website, it looks like China's Internet use has hit a sudden point of inflection in the past 12 months, and is now on a steepening S-curve trajectory. Mobile is still growing extremely fast, but it doesn't seem to be accelerating at the same level.

This does not necessarily mean the same trends will be seen elsewhere in the developing world. It's worth noting that China is heavily pushing the rollout of fixed broadband - something which is much slower in markets like India and most of Africa. But it does suggest that China is extremely unlikely to have a future population of mobile-only Internet users.

One other interesting snippet from the CNNIC report - the average home Internet-connected PC has 2.7 users. This is worth remembering when considering all the stats on PC vs mobile handset shipments.


Anonymous said...


There's a whole library of studies on why the mobile Internet took off in Japan, rather than fixed access. That said, Japan has the fastest fixed broadband access in the world.

I'd be curious if anyone could point out the apparent contradiction in that, especially if fixed access was an "infrastructure play" underwritten (partly) by the Japanese Government. Also, has this fixed infrastructure helped in the roll-out of mobile networks?

I'd also be curious to better understand the demographics of these so-called mobile Internet users. We all hear of Google searches, Google Map access, Facebook updates, etc from Apple iPhone, but what about user-generated content? Are kids creating content on mobile devices, and also viewing YouTube on mobile? Do the mobiles have the webcams and battery life to be a significant factor in UCG for kids?

And as Apple's MobileMe and other "synchronise-in-the-cloud" approaches seem to promise, the real possibilities and opportunities may well lie in a hybrid "quick-snack-mobile-access" with "longer-form-fixed-desktop/laptop-content-creation-and-manipulation".

Throw in real stuff like P2P content distribution (especially for HD content) and it'll be patently obvious that fixed wireline (and fixed wireless?) access is not going away anytime soon.

And why is that Amsterdam, Paris, Singapore and other major cities in Europe and Asia rushing for fiber-to-the-home/curb/node? Are these investors so blind to the "dimishing prospects for fixed Internet access"?

Or is the mobile Internet "group-think" a new-age condemnation of poorer folks to smaller screens?

Poseidon said...

i am from hong kong and often work in china, i would like to share why the internet user from china is more than the China mobile phone internet user.
1. cheap, around USD6.5 monthly charger for unlimited ADSL
2. many free file and contents to attract more internet board band user (just like many cheap copy DVD and VCD to attract more people to buy the DVD and VCD machine)
3. without IM or email, it would get shame, since most of the young generation are having at least 1 local IM account called QQ.
4. not enough public entertainment facilities, people can go to the internet cafe for cheap online, 1 hour cost USD0.25

the only concern is that there are near 50% of the online users who do not own the private pc, but online in internet cafe or company's pc. coz china is anyway still a developing countries, pc is not yet as affordable as the developed countries making it like a home appliance.

in few years later, most f the internet user will also be the mobile internet user, since the gprs is really cheap in china costing at less than usd0.15 unlimited online for 1 time. and the local made multimedia phone is also very cheap, most of the factory worker can also afford it. plus the local mobile phone operators start to promote the updated concept where the modernized people need "always online", so, any online mobile phone is highly accepted from the young generation any commerical users.

Dean Bubley said...

Anonymous - Thanks for your comments. I tend to think of Japan being an exception rather than an example in many areas of technology. There's some fairly unique characteristics - high GDP, social issues around using mobile devices, concentrated mobile market, device architecture tightly controlled by operators, lack of prepay, relative lack of home PCs, original iMode revenue-share policy etc.

I think the whole UGC thing on mobile is overstated in importance. Actually, I think the whole "content" thing is overstated - communication, context & community are all more important than content.

In most markets round the world, kids just use SMS, camera & music. A few use voice, plus some Internet apps, although most prepay accounts are still not data-friendly. Photos are generally not "uploaded" to the cloud, or at least not over-the-air. It makes much more sense to sideload via a PC using USB, Bluetooth or memory cards.

Also, you wouldn't use a phone to set up a FaceBook page, or conduct 15 simultaneous IM sessions.

Poseidon - many thanks, that clarifies quite a bit.