China Mobile Wireless Focus
Below is an nterview with Lu Xiangdong, Vice-General Manager of China Mobile Communications Corporation, the largest GSM Network in the world, conducted by journalist Hua Zhi.
>> Lu Xiangdong's New Plan in New Year 2003
Hua Zhi
China MobileComm
cicmedia.com
Monternet of China Mobile has been two years old since its launch on Nov. 10th 2000. In only two years time, it has increased the data service of China Mobile from 1 percent to 5 percent. Among all data services, it's SMS (Short Messaging Service) profits the most. The total short messages reached 15.9 billion in 2001 and exceeded 60 billion pieces by November 2002. By the end of the last year, SMS has been earned 800 million per month for China Mobile. Nevertheless, China Unicom and China Netcom with newly granted mobile license follow it closely. Hence, the management of China Mobile dares not take it easy, then what plan will Lu Xiangdong take in this year?
To Strongly Promote Special Dishes: Subscribers' Brands Come Out
CMC: At present, are those major services of Monternet still targeted on youngsters?
Lu Xiangdong: Now most of Monternet's services are targeted on the young and fashionable people aged 18 to 25. Presently, most of the SP (Service Providers) contents are tailor-made for these subscribers.
CMC: Is the ring tone service the most profitable one? It is the most profitable one in Korea and Japan. What new services will be launched this year?
Lu Xiangdong: Firstly, I'd like to make clear the concept of Monternet. It is the general name of mobile data and mobile Internet services of China Mobile, just like to name a restaurant. Monternet provides various services. From an operator's point of view, they are called them services. While for a consumer, they are the products and services that are what we called service platform. The services such as MMS, WAP, ring tone downloading, QQ chatting are the raw material in the restaurant. When our customers come to have dinner, a certain project will be a combination of these services.
Our next step is to launch subscribers' brands, which are already available in Korea and Japan. Subscribers' brands are not divided by operators or product features, but by the consumption habits of subscribers. Taking youngster as an example, they are young, and trendy but with small amount of money. They have no difficulties in keyboard operating. They love cool phones and are fond of chatting, sending interesting cartoons and popular ring tones to each other. According to their characteristics, we will pick up some special dishes from Monternet to fit their needs. For different users, we will form different dinner combinations. Thus, we will clearly cut the name of our original general services from the name of our products and subscribers' brands, otherwise people will be confused.
To Develop Data Services; To expect only those fit our national situations
CMC: How much proportion do you expect Montern's data service to take up in the total revenue of China Mobile?
Lu Xiangdong: Regarding revenue, mobile data and mobile Internet service rise from original 1 percent odd to today's 5 percent, making a quite good achievement. I think the increase in Mainland China cannot compare with that in Japan and Korea, because two parties are in different development phases. For instance, the penetration rate of mobile phones in Taiwan has exceeded 100 percent, the total revenue of mobile phone companies (total revenue of voice service) have been increasing slowly. Their increase rate keeps below two percent and their development curve inclines smoothly. The rate of new mobile data and mobile Internet service out of the total revenue will rise quickly. It is similar to the situation that any change on a numerator will be very obvious over a fixed denominator.
It's not entirely identical with the situation of China mobile market. The increase rate of our market was pretty high in 2002, which had 50 million new subscribers. Its service has increased more than 10 percent that is higher than national economy growth. The revenue from voice service is still the major one and keeps rising speedily. In this situation, the rapid increase of data service won't be very easy. For instance, the Monternet center obtains an increase of 5 billion yuan per year in revenue with their hard work, but it still took up a rather low proportion in the total revenue. Changes will not be obvious when the numerator and denominator are both increasing. It is just like the disadvantage China faces in comparison of "per capita" with other countries in any aspect. China is so populous. However, the sum in China is quite tremendous.
CMC: Monternet of China Mobile is more like a simulation of Japanese NTT I-Mode. After two years' development, what do you think Monternet is different from NTT I-Mode? Or what's the difference in technological advantages?
Lu Xiangdong: I-Mode is different from us in the architecture of mobile phone system. Traditionally, there are two major economic bodies, namely, the American standards led by the US and the European standards led by EEC. The standards in our daily life are all involved in the two systems. Most of Chinese use European standards. While Japanese launch their new standards frequently. Hence, the mobile phones of these two countries cannot be compared. Japan's phones have some strong points, but also have many shortcomings. Obviously, there's not any country can realize international roaming with them. But they some good technological details, otherwise, the system won't survive. Strictly speaking, the technological standards of I-Mode can't compare with those of China. Therefore, technology is not the main problem of the systems of Monternet and I-Mode. At the beginning of our development, I-Mode gave us some hints. It indicates that the operator alone can't success. To build up the services, it must have a large group of people to help the operator to develop its contents and applications. When we started establishing Monternet, we learned from I-Mode's success, for example, act as a collector of contents and applications. However, we must firstly consider our distinct national situations and then launch our plan. It is the latter mode we mentioned that includes operation and win-win and one node connected to the whole network. We abstract all these from our practice.
To Lower The Price Of MMS; To Expand Industrial Applications
CMC: As to MMS, do you have any detailed expectations in 2003?
Lu Xiangdong: I still can't mention the exact data. The key problem is that we haven't got the exact number of MMS cell phones that are delivered by the terminal manufacturers to the market. This also indicates a problem that our power of control and influence on terminals are still limited. Now the supply of MMS cell phones falls short of demands. MMS phone manufacturers can't tell how much they will invest in those phones because components such as LCDs and camcorders are badly needed in global markets. The exact investment relies on the amount of components the terminal manufacturers can order, only that can we tell how many cell phone will be produced in 2003. If we don't know how many terminals will be provided, we won't guess the number of new MMS subscribers. I think it won't be difficult to get a million new MMS subscribers, but it's rather hard to exceed 10 million. Now I can only tell an approximate figure because we don't have exact data.
CMC: There are two kinds of MMS phones in the present market, camera-equipped and non camera-equipped. Which one will have better prospect?
Lu Xiangdong: At the beginning, camera-equipped cell phones will be more favored in the market. With the development of the subscriber scale, non camera-equipped MMS cell phones will also find great appeal. At the beginning phase, camera-equipped cell phones have strong attractions for consumers. It should take quite long time to develop the contents of MMS. If the contents of MMS website lag behind, subscribers will not have much enthusiasm. Therefore, I think in the early stage, camera-equipped phones will start up and promote the market, which make subscribers independent from websites. When the subscribers amount to a certain number, non camera-equipped MMS phones will develop well soon.
CMC: The price of MMS was 0.9 yuan per piece when it was originally launched. With the expansion of subscriber scale, will its price be modified? Moreover, with the increasing bandwidth, what plans do you have in industrial applications?
Lu Xiangdong: As subscribers increase, we will surely have some preferential policies. That's deadly sure. At present, I can't tell what kind of preferential we can afford. Regarding industrial applications, the 16th Party Congress proposed policies of promoting industrialization by informatization and driving the national economic development by industrialization, which created circumstances for us. The so-called informatization refers to industrial and corporate informatization, such as e-government, e-company and e-commerce. We will surely do. Now we should do better according to industrial characteristics. We have started work in customers, public securities and more fields. In fact, we should not only offer charge preferential, but also assist them in their work. Nevertheless, there still exist some problems in operation. MMS cell phones' industrial applications should be promising.
Killer Applications: Still In Testing Phase
CMC: At present, people pay more attention to data services in mobile communication, such as MMS, GPS. Some enterprises have also become to concern the applications of mobile data services in enterprise. Then, what time will Monternet launch its killer applications? From the aspects of application, market and technologies, what relation do you think 3G and today's 2.5G have?
Lu Xiangdong: I'd like to make clear two concepts before I answer your questions. Firstly. MMS cannot be called an application. MMS is a product or a service. The so-called applications refer to those services that are modified, on the base of a service, to be more fit for the use of specific customer group. In the future, if we launch some MMS-based album or animation, that would be called "killer applications". We may also call those industry based services applications. Only MMS itself is not an application. The GPS you mentioned just now cannot be called a mobile application. GPS is Global Positioning System and it has to introduce before the launch of mobile phone. There are two ways to realize mobile positioning services. One is to store satellite positioning signal into cell phones. Then, cell phone will be not only a communication tool, but also a satellite positioning tool. It can transmit your position information to your relatives, your friends and the control center by using the communication theory. This service, a combination of GPS, GPRS and terminals, is some application especially for some aspects.
Concerned the "killer applications" you mentioned above, we cannot say China Mobile has found its "killer applications" because the world is waiting for the "killer applications". Only when 60 -70 percent of all customers will choose an application without hesitation, this application can be called a "killer application". Strictly speaking, there hasn't been any killer application coming out in today's mobile data and mobile Internet. People are still seeking. The present way is to divide customers into different groups according to their consuming habit, then work out a dish suitable to the entire world. Under the present technological development level, it's impossible to start up a "killer application" relying on technologies. That's the key reason why 3G mobile communications can't develop swiftly in Europe. People don't really need it. There is no revolutionary change between 3G and 2.5G technologies. Technologies can drive productive forces, but it relies under some premise. Not all "killer applications" is realized via technologies.
CMC: For consumers, mobile phone number has become a personal symbol. At present, Chinese subscribers can buy lottery tickets via mobile phones. In the future, how will personal communications develop?
Lu Xiangdong: The largest feature of mobile phone is that it is the most typical personal communications tool. With this feature, mobile phones will be more promising. Personal phone number, as a manifest feature, is favored greatly in banking field. Refer to our tests, it solves such problems as small charge payment, which facilitates people in many situations. What's more, personal communication can be realized anytime, any place and by any person.
To Analyze Thoroughly; To Avoid Risks
CMC: Today, we all observe the rapid growth of China Mobile's services. Many fashionable words also come from China Mobile. Are there some exaggerated phenomena in this? Does it show there are some bubbles in China's mobile communication industry?
Lu Xiangdong:I'd like to say that, as the Internet bubble popped, it's not in recent years that such phenomena as fake accounts, blind investment of some American communication carriers, and the high-price bid of 3G licenses emerged. All listed or non-listed companies are searching themselves and trying to get rid of their bubbles. We should say till now, at least in China's communications sector, there exist few bubbles. Each department of our country pays quite much attention to this. But what you mentioned just now seems to be another thing. You don't mean those accounting or other problems in a company's operation. You seem to think that people use so many new words and have so many wishes for the future. Then there will emerge many bubbles.
CMC: The whole industry includes more than carriers. There're many other channels. Do you think there is any bubble like Internet bubbles when the whole industry develops rapidly?
Lu Xiangdong: I can only speak on the behalf of myself. The develop of China Mobile and China Unicom in these years really made people, including those in the communication industry, commerce, service, and operation fields, think mobile communications is a big goal mine. Thus, many of them want to make money in this field. However, there are really some risks that are what you called "bubbles". Many people think the mobile phone penetration in China is still very low. There are only 200 million subscribers so far which take up only 15 percent of the whole China population. Compared with the penetration of 70 percent, even 80 percent in Japan, Taiwan, Korea, the US, and European countries, we lag far behind from them. Therefore, people think this is a rich mine. In fact, mobile carriers developed rather slowly in these two years. This was not because we didn't work hard, but the natural laws were working. No country can escape from that natural law. As the subscriber group expands, low end users keep entering and price wars continue, the mobile communications industry becomes less and less profitable. Here's a valuable question. Although the mobile phone penetration in China is really low. From 2003 through 2005, how big the market that has value? There are 800 million farmers in China. Will most of them use mobile phone in two years? I'm not sure. China is now far from an industrialized country. We should not treat the penetration rate simply. Farmers surely will use mobile phones, but it will be in 5 to 10 years time when they become well-off gradually. They gradually move to cities, join the industrialized society and enter the circulation field. They meet with informatization. Then, they get to need a personal communications tool, the mobile phones. It will be a long journey. If people invest too much to mobile communications blindly, what you called bubbles will emerge. <<
- Eric - |
