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November 12-15
Beijing, China

Here at the China International Exhibition Center there were 7 halls filled with telecommunications equipment. Virtually every major supplier was present. The action in many markets has shifted to Asia and the epicenter is China. Those that ignore China, especially as it relates to telecommunications, are missing the next major market window. Now some highlights.

Cisco/Linksys

In a section of the Cisco booth was a mockup of a living room with a television. In the light stand to the left of the couch was a glass case with Linksys products. In the information section of the booth Cisco was passing out literature on Linksys products in Chinese. In October retail sales began of Linksys products in China.

China Mobil

Tucked away in a corner of the booth was a demonstration of USSD (Unstructured Supplementary Service Data). As part of this demonstration was a light, A/C, window and fish tank. We were shown how, from a cell phone, one could determine the status of these devices and control them. Turing the light on and off was shown. The cost for the control is one yuan.

Samsung

Samsung continues to be a leader in home gateways. Here is some information we picked up at the booth.

Expect an announcement from KT and Samsung in January on the latest Integrated Gateway. Samsung has been working for 2 years on these products with KT. The specification for the Integrated Gateway is a joint effort between KT and Samsung. In spite of the fact that Samsung is a larger company than KT, KT drives the requirements and what gets delivered. This is due to the reality that they own the customer.

Samsung has built a product similar to the Fujitsu Siemens ACTIVY Media Center, FiTV but it is not clear at these price points there will be much of a market. However, Samsung’s product does not have the tight integration with DT that FiTV does.

FiTV, as covered in the Wave Report 0337, Story of the Issue, Broadband World Forum 2003, is a multiple purpose CE device based on a media PC using an embedded version of Windows XP, having a 3GHz Intel processor and hard disk has the ability to receive all TV formats including Analog, Digital and Pay-TV, has Interface to the Broadband network just as any PC would, PVR, DVD Recorder, Home networking gateway, Internet browsing on the television, E-mail on the television, DRM and is accessible from the Internet for programming.

China Telecom

Off in the corner of the China Telecom booth was an AP and some PCs. When asked we found that China Telecom has launched in Guangdong Province a wireless home network service. This includes an ADSL modem and wireless AP. The cost is 200RMB per month and the consumer is not charged for the CPE. The rate is 2Mb/s down, 512Kb up.

CNC

CNC has a WLAN service for businesses. They have not launched it for the home. Also in the booth was a demonstration of VoD. Currently this is in trial in Beijing and it is free. After the first of the year subscribers will pay but the amount has not been decided.

China Putin

This is a Chinese supplier of broadband products. They have DSLAMS, routers and WLAN equipment. All the ADSL modem sales are to the carriers. In spite of having WLAN AP and other products in the booth they commented it was too early for the home market. The emergence of this market will come as the number of PCs in the home increases beyond 1.

Huawei Technologies

This is the IP equipment powerhouse in China. In the Huawei booth were access points and equipment which could be used in a home network. Huawei stated that they felt the WLAN market; even in small businesses was too early. Most of the equipment they are selling is to create hot spots run as a part of a business.

We went to a number of non-Chinese companies to explore if there is a sustainable market in China. Lucent felt the market is so large that there is and continues to be opportunities for non-Chinese companies. Alcatel was much more reserved. They have the strongest position in the infrastructure for ADSL, being the largest supplier of DSLAMS. They claim 70% market share for DSLAMS in China, being the established company, both here and worldwide. But when it comes to the CPE all I got from them was a laugh. It is near impossible to compete in this market due to cost and the local advantage Chinese companies have. Currently the CPE for home networking is going to Huawei Technologies as the carriers buy for the initial deployments. Further, given that the CPE is provided gratis as a part of the service start-up, the prices must be low.

Wave Comments

Any entrant into technology based market in China must have a compelling technical and support advantage. Equally as important the prices must be aligned with what the Chinese are willing to pay. As Samsung said – we make no profits in China and India the price pressures are so great. As the China’s technical base continues to grow, the vicissitudes of the China market become even more complex and, at the same time, more difficult for outside companies to compete.

We are reminded of the eyes open eyes shut analogy. Eyes shut tell us that the huge China market is a vast opportunity only waiting to being harvested. Eyes open brings the reality that outside companies may have an early market advantage but the market forces in China will rapidly erode any such position.

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Page updated 1/24/07
Copyright 4th Wave Inc, 2007