TD-SCDMA netbook sales off to slow start
By Hua Jinglei
Shanghai. July 21. INTERFAX-CHINA - China Mobile's highly anticipated release of 3G TD-SCDMA netbooks have yet to yield satisfactory sales due to high prices and poor network coverage, industry analysts and retailers said recently.
"Many shoppers were interested in TD-SCDMA netbooks, but very few actually made purchases," Zhang Mingqiang, a sales representative in a downtown Shanghai location of electronics retail giant, Suning, told Interfax on July 18. Zhang only sold three netbooks that Saturday, generally the busiest day of the week, while sales were even poorer during the week.
China Mobile's Shanghai subsidiary began selling TD-SCDMA netbooks on April 20 this year by making them available for purchase in 19 Shanghai Mobile customer service centers as well as in Gome, Suning, Yulong and Dixintong electronic retail stores.
According to the official Web site of Shanghai Mobile, these netbooks are priced from RMB 3,399 ($497.20) to RMB 4,999 ($731.24). Shanghai Mobile offers four types of monthly subscription packages, charging users RMB 50 ($7.31), RMB 100 ($14.63), RMB 200 ($29.26) and RMB 300 ($43.88) for data traffic volume of 500 megabytes, 2 gigabytes, 5 GB and 10 GB respectively. An RMB 0.01 ($0.001) surcharge is incurred for each kilobyte exceeding the package amount.
"TD-SCDMA netbooks and related services are just too expensive. They are priced out of the market for the majority of Chinese consumers," Zou Liying, an industry analyst with CCID Consulting, said.
Despite heavy subsidies offered by China Mobile towards the purchase of netbooks and associated service subscriptions, not many consumers have responded, according to Zou. Consumers recognize that such subsidies are only temporary and that they will have to pay a much higher price to use TD-SCDMA services with the netbooks in the long run, as opposed to using standard broadband Internet services.
In Shanghai, China Mobile will provide five of six TD-SCDMA netbook models a subsidy of RMB 2,100 ($307.18) and offer the lowest-priced model a subsidy of RMB 1,500 ($219.4).
According to Zou, poor market performance is not exclusive to Shanghai. "The available models and subsidy amounts in other cities such as Beijing and Nanjing are similar to those offered in Shanghai. Consumers are reluctant to buy products and commit to services immediately, as they are price sensitive and will wait for a price cut and for services to mature," Zou said.
Aside from high prices, there have also been complaints that the TD-SCDMA signal is poor or completely lacking in some places.
"The TD-SCDMA signal is quite unstable and in most places, I cannot use my netbook to access the Internet at all," Liu Qing, a TD-SCDMA netbook user, told Interfax on July 18. "I called China Mobile's customer service hotline to complain multiple times, but was given the response that they were not able to immediately resolve my problems regarding TD-SCDMA Internet service, but that they are working on a solution. I feel disappointed with the product and services," Liu said.
Interfax previously reported the slow pace of base station construction in large cities due to climbing rents and public opposition.
"At present, the 3G network is still in a preliminary stage in China and is unable to provide satisfactory user experiences," Zou with CCID Consulting said.
Despite criticism from analysts and consumers, industry players remain optimistic that netbook sales will pick up, according to recent Chinese media reports.
Luo Zhongsheng, general manager of TD-SCDMA terminal products of leading Chinese telecom manufacturer, ZTE Corp., told Chinese industry portal Sina on July 20 that although it will take time for the 3G TD-SCDMA market to mature, it has a bright future. In particular, he expressed confidence in TD-SCDMA netbooks.
"I estimate that China Mobile's total TD-SCDMA netbook sales volume has reached between 100,000 and 200,000 units," Luo said.
Meanwhile, Datang Telecom Technology Co. Ltd. predicted on July 19 that its net profit for the first half of this year will grow by more than 70 percent year-on-year, mainly driven by increased 3G terminals sales, including netbooks.