China Unicom Hopes 1000-yuan Smartphones Will Boost 3G Use

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China Unicom is gearing up to sell a new wave of smartphones for 1000 yuan (US$154), a price that the carrier believes will accelerate the growth of the mobile Internet in China among users of unsubsidized pay-as-you-go phones.

For that price, buyers will get a 3G phone with Wi-Fi capability, a 3.5-inch touchscreen, a processor running at 600MHz or faster, and a high-speed Web browser. Many of the phones will run Android, China Unicom said Monday as it announced its plans to sell more low-cost smartphones.

A China Unicom spokesman said the carrier plans to release many of these smartphones with a 1000 yuan price-tag, but could not say when they will be released.

The low cost smartphones are part of the carrier's strategy to bring its faster third-generation (3G) network to more Chinese users. The country's 3G user base has already exceeded 60 million. But this only accounts for a small percentage of China's nearly 900 million mobile phone users, the vast majority of which use slower second-generation networks.

China Unicom itself has 174 million mobile subscribers, 18.5 million of them 3G users, while its larger rival China Mobile has 600 million customers, although only 26 million of them are signed up with its 3G networks.

Some analysts attribute the higher proportion of 3G users among China Unicom's subscribers to the company's exclusive rights to sell the iPhone in China, giving its smartphone offerings a leg up over the competition.

Analysts and industry executives believe the uptake of smartphones in China will lead to more Internet usage in the country. Currently, the country has 457 million Web users, according to the China Internet Network Information Center.

The devices, however, have been out of reach for most consumers due to their high costs. For instance, an Apple iPhone 3G can cost at 3,999 yuan ($616), while many other popular devices sell for similar prices.

Smartphones priced at 1000 yuan or lower are expected to further open the market. By 2013, smartphones will account for half of all mobile phone sales, said Lu Libin, an analyst with Beijing-based research firm Analysys International. Currently they account for 27 percent of phone sales.

"The costs will decrease over time," he added. "We are already starting to see the release of lower-cost smartphones around 1000 yuan from China Unicom and its competitors."

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