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China Mobile faces severe competition in the consumer mobile market

Anuradha Shukla | April 12, 2011
Findings from a new Ovum report.

SHENZHEN, CHINA, 12 APRIL 2011- China Mobile may face immense challenges in 2011, according to a new report by the analyst and consulting company, Ovum.

China mobile is facing several challenges such as limited infrastructure and a lack of experience in the enterprise compared to its major competitors.

It is also struggling with severe competition, declining ARPU (average revenue per user), and high churn rates in the consumer mobile market.

All these challenges have driven the company to search for new opportunities in the enterprise segment.

Ovum advises China Mobile to approach enterprises with a large proportion of mobile users and a high demand for mobile services. It also suggests the company focus on fixed network investment to support enterprise clients.

These findings are evident from the report ‘China Mobile's Enterprise Mobility Strategy’, which covers China Mobile's enterprise mobility market position and evaluates its strategy.

The report also includes information about how China Mobile segments the market, its strategic objectives, performance, and Ovum's recommendations for next steps for the player.

Comprehensive strategy

The research firm notes China Mobile to be a relatively new player in the enterprise market because it contributes only about 10 per cent of China Mobile’s total revenues through its enterprise business.

Also, most of these revenues come from voice services. China Mobile is now aiming to enter the enterprise segment and according to Jane Wang, Ovum senior analyst, the company has already developed a more comprehensive strategy that includes integrated fixed and mobile services.

Wang says the company will face significant challenges due to its limited infrastructure and a lack of experience in the enterprise market compared to its major competitors.

“It would be challenging for China Mobile to attract enterprises without providing fixed services,” said Wang. “Enterprises in China, especially large companies, prefer buying telecoms services from a one-stop shop and are relatively loyal to their main service providers. As long as China Mobile is unable to offer integrated services, it will struggle to attract enterprise customers from competitors”.

“The company is under threat from stronger competitors in the enterprise segment. Having obtained its mobile licence, China Telecom is expected to grow quickly in mobile services. This places pressure on China Mobile to improve the competitiveness of its technology and services, particularly in the enterprise segment. What China Mobile needs to do to secure more enterprise business is to counteract this threat by contracting systems integration partnerships. Partnerships with systems integrators and ICT companies are a possible fast track to entering the large enterprise market,” she concludes.

 

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