China's Carriers All Turn to Mobile App Stores in 3G Race

China's three mobile carriers are all developing download platforms like the iPhone App Store as their competition for 3G users intensifies.

China Mobile has launched an application download store, and rivals China Telecom and China Unicom are developing them, sources said Wednesday.

China licensed the three state-owned carriers to build networks based on different 3G standards early this year. The carriers have since worked to match each other's expansion of 3G handset offerings and other services as they race to win users.

The application stores a major part of their efforts, which have sped up in recent weeks. But the download stores confront a range of obstacles that could dampen their appeal to users. Those include billing issues, a lack of user familiarity and the availability of pirated applications online, said Shi Weixing, founder of HandCN and 9thq, two Chinese companies that make mobile applications.

The China Mobile store, called the Mobile Market, went online last month with a little over 1,000 downloads available for operating systems including Symbian and Windows Mobile. The store also has downloads for "Ophones," or devices that use a China Mobile OS based on Google Android. The most popular downloads so far include a Chinese character input method, a motorcycle racing game and China Mobile's instant messaging client, according to the store Web site.

China Telecom is also working on a mobile application store and expects it to launch this year, a company representative said. Like its rival, the carrier aims to support multiple OSes and is currently seeking support from handset makers for the store, she said. A beta version of the store's Web site was online early Wednesday but could not be viewed in the afternoon due to traffic controls, according to a statement on the site.

China Unicom is developing a download store as well, said Shi, the application developer, citing sources at the carrier. Local media have also reported China Unicom's plans for an application store. A China Unicom spokesman declined to comment on plans for a store, but said the company is developing applications for 3G users, with focuses including music and video.

One stumbling block for the carrier-run download stores in China is low user demand for mobile services beyond voice calls and text messaging. Chinese users are unfamiliar with software downloads for devices besides the iPhone, and carriers will need popular handsets to lead buyers to their download stores, said Shi. A lack of attractive handsets offered by China's carriers has helped keep down growth in their 3G subscriber numbers.

But developers, who are often individuals or small companies, will not create applications for the carrier stores unless they have many users, and some may be unable to shoulder the cost of adding support for multiple OSes to their products, said Shi.

Pirated applications offered for free online could also draw users away from the paid downloads in the carrier stores. Cracked versions of popular handsets like the iPhone, which can run any software and are sometimes smuggled into the country, are widely sold at Chinese electronics bazaars. But users can also crack official handsets with help from one of a few large Chinese Web sites to make them run pirated applications, said Shi.

"I do not view the model of carriers running application stores very highly," he said.

China's carriers have tried to remedy their lack of fashionable handsets through deals with well-known foreign vendors. China Unicom last week said it would sell the iPhone in China this year, and China Telecom is in handset distribution talks with vendors including Palm and Research In Motion (RIM), the maker of the BlackBerry. China Mobile last week displayed a prototype of a Dell smartphone among other devices that run its mobile OS.

China Mobile's 3G network uses an unproven domestic mobile standard being heavily backed by the government, while its rivals' networks use 3G standards commonly used overseas.

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