Paul is one of the three founders of Dilato Media Technology & is the Chief Editor of MyStockVoice.com as well as heading up Business Development. Paul has a backround in international telecoms, prior he was an officer in the Royal Navy. He is regularly published on online portals such as Seeking Alpha & iStockAnalyst, where he concentrates on telecom, energy & commodities, mainly via ADR & ETF investment vehicles.
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CommentsPosted: Saturday 19/09/2009 10:26
Following the digital trend in the West & with internet connectivity set to become ubiquitous via 3G launches by all the three major mobile operators in the near term, a number of domestic companies are jumping on the e-reader bandwagon, that has been rocking this year with Amazon's Kindle. This could be an astute move, as the Chinese market has the potential to become the largest market for the devices globally.
China Mobile (NYSE:CHU) has inked deals with two companies on this, Jinke Electronics & Hanvon Corp, better known as Hanwang. Both devices are updates of existing models, with TD-SCMDA chips added to provide tha all important wireless connectivity, that has seen the Kindle gain so much traction in the US & Europe.
It wouls seem that Hanwang is making big bets on the China Mobile deal, as it is expected that the operator will subsidise the e-reader via a 1 or 2 year subscription, last year, the Beijing based company sold 200,000 units & has stated that this year it is on track to shift 500,000 devices at a retail price of $430. Expectations are that Hanwang will be able to sell 2 million devices in 2010 & are targetting 5 million devices sold in 2011, which would giove this company a market share larger than the current US e-book market.
Meanwhile Jinke is also looking further afield, having already reached a deal with France Telecom to distribute it's Hanlin reader in Europe via Orange MNC business units & is looking to target BRIC partner countries, Brazil, Russia & India in the near future.
It is expected that China Mobile will be the lead supply for domestic content, via its app store platform, Mobile Market, as neither company has a large selection of content to offer & the mobile operators can own the end-to-end process; device, subscription, content & billing. E-readers will add to a list of other products including mobile phones & laptops embedded with 3G chips as the carrier looks to expand its nascent 3G subscriber base.
Analysts are very bullish on the e-reader market in China, predicting that the country could account for up to 20% of globals sales in 2010. Last December, the governement announced that it was looking into distributing 165 million e-readers to students in place of text books (although a look around Google, can find no further evidence of this coming to fruition). Amazon (Nasdaq:AMZN) & Sony have not been able to succesfully penetrate China on this technology, so far, as neither Kindle or Sony Reader have supported Chinese text, although that looks to be changing.
This is a potentially huge market & it will be interesting to note how this will play out, obviously China Mobile will be a winner with these products & also with a new colour e-reader shceduled to be released next year by Datang. It has the jump on both of it's competitors, as China Telecom (NYSE:CHA) is new to the mobile market & is apparently struggling with the content side of it's business, while Unicom has recently signed the Apple deal. Expectation is that China Unicom (NYSE:CHU) will be the Chinese distribution of any such product that Apple brings to market, as the media giant presently lacks TD-SCDMA technology, which prevents it utilising the China Mobile network.
I can imagine that Amazon will be making stringent efforts to update the Kindle to support Chinese text & relaunch its product, however, the major challenge in China, as in almost anything that is software driven, will be piracy. Quick research finds a number of tech portals commenting on this, with copies of Western books widely available on the Chinese market before Western e-reader devotees can get their hands on them.
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