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Wednesday, February 15, 2006

Sweet Music for China Mobile

Wang Jianzhou, the chairman and CEO of China Mobile, the largest mobile carrier in China, announced at 3GSM that his company is already generating 20% of its total revenue from data services. On average, the company’s subscribers send 0.7 billion short messages a day, which translate into close to 9 million dollars. If part of the messages are multimedia messages, the revenue figure will be even higher. Mr. Wang also mentioned that in China, total revenue generated by mobile music download has surpassed the total sales of the traditional music industry. Although China’s traditional music industry is beleaguered by piracy issues and is still much smaller than the US market, people are still buying records. On average, an authentic CD would cost $1-2. In contrast, a single mobile track will cost about $0.25. So, the cost for 10 mobile tracks is quite comparable to a CD with ten songs. Mr. Wang mentioned an interesting anecdote-one song was downloaded 15 million times in less than half a year, beating a typical best-selling CD by 15 times. By my calculation, that song alone generated close to $4 million in revenue for the company.

Too bad I was not there to see the surprising faces in the audience. Mobile data services are very popular among users, helping the carriers generate better ARPU. Chinese TV stations are covered by advertisements about mobile music download, SMS, and MMS from the major carriers. In addition, the growth of subscribers maintains good momentum. China Mobile now has more than 250 million subscribers, the largest in the world. In 2005, the company added 42 million subscribers and it’s been adding about 4 million subscribers a month for the last three months of 2005. China’s mobile penetration rate stands at around 30%. Even considering the gap between urban and rural areas, there is still strong growth potential.


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