Nov. 16, 2009 (Chinavestor) There is a very important article is the Wall Street Journal Weekend Edition in Section Corporate News B5, November 14 - 15, 2009. The article has a negative spin to it saying "By relying on Android, he said, Dell (NASDAQ:DELL) is "almost ensuring that it's going to be an also-ran product". The article fails to realize that the phone has a potential to radically change subscriber dynamics among Chinese telecoms including China Mobile (NYSE:CHL), China Telecom (NYSE:CHL) and China Unicom (NYSE:CHU)..
The article features Dell's smartphone for the first time, a 3G phone designed for markets such as China and Brazil. It will not have a dramatic effect in the U.S. - but it is not intended to either. It is designed as a low cost full featured 3G phone for China and later for Brazil.
The news is very important for China Mobile (NYSE:CHL) because China's largest mobile carrier has been vying for a sexy smart phone for 11 months by now. This phone from Dell Inc. (NASDAQ:DELL), using Google's open source and low cost Android platform, has the potential to penetrate China's mass market. Considering that China Mobile (NYSE:CHL) has a subscriber base of over 500 million, the potential for Dell Inc. (NASDAQ:DELL) and China Mobile (NYSE:CHL) to line up tens of millions of subscribers is very real.
Chinese authorities awarded 3G licences at the end of 2008 for the three largest carriers in China; China Mobile (NYSE:CHL), China Unicom (NYSE:CHL) and China Telecom (NYSE:CHL). Interestingly, all three carriers got different network protocols to use. China Telecom (NYSE:CHA) got the European GSM 3G standard, China Unicom got US's advanced CDMA for 3G while the largest carrier, China mobile (NYSE:CHL) got stuck with a home grown TD-SCDMA protocol, unknown for the rest of the world. When China Mobile (NYSE:CHL) got through the technical challenges of the network of its own, it found itself in Pandora's box with no smart phone to cater for existing customers. The problem for phone makers was to develop a full featured, appealing 3G phone that is not only inexpensive but is able to handle 2G GSM, CHL's current network, AND TD-SCDMA simultaneously. With no TD-SCDMA protocol in existence anywhere but China, no major phone company had an "off-the-shelf" product. But Dell Inc. looks to be on the right track with the Mini3 phone, featured in the WSJ this weekend.
Besides Dell Inc. (NASDAQ:DELL) to make a killing on the product, China Mobile (NYSE:CHL) is expected to profit handsomely as well. All Chinese carriers, China Mobile (NYSE:CHL), China TelecomUnicom (NYSE:CHU) have been under performing all major benchmarks in 2009 due to lack of 3G subscriber growth. The iPhone is sexy but way too expensive for China's masses - and only runs on China Unicom's network. Nokia has great 3G phones but those have only limited coverage via China Telecom's European standard based network. The stage is set for China Mobile (NYSE:CHL) who has the best coverage, by far the largest subscriber base, and now a low cost 3G phone. (NYSE:CHA) and China
Watch out for China Mobile (NYSE:CHL), a stock that is trading at $48.44 right now. Come back and see stock prices in three months. Bottom fishing time is here!
Note: While Chinavestor believes that sources are reliable, we don't guarantee their accuracy. Invest at your own risk and consult with an investment adviser!
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