The Apple-Google Rivalry Goes Global

Forget Microsoft-Apple or Microsoft-Google. A new rivalry is developing in the tech world.

Google and Apple are increasingly squaring off over lucrative markets like the mobile computing field. And there are many examples of the competition between the two for the mobile market heating up.

Exhibit A is the launch of Android-based mobile phones. The first of Google’s Android-based mobile phones, the G1 from T-Mobile, has sold over 1 million handsets in the United States in the first six months after its launch. This compares to 1.75 million of Apple’s iPhones sold by AT&T in the first six months after its launch.

Exhibit B is Apple recently blocking a Goggle application - Google Voice - from working on its iPhone. Google Voice allows users to rout calls to multiple numbers to one phone. The software would also allow iPhone users to make free calls and text messages over the Internet, threatening revenues for iPhone carriers such as AT&T.

The battle for the “smart” mobile phone market between these two tech titans should be quite interesting and provide a profitable opportunity for investors.

Four Ways to Profit from China’s Smartphone Market

The rivalry between the two companies in the mobile computing field is occurring on a worldwide battlefield.  And now this budding Apple-Google rivalry has spread to perhaps the most important mobile phone market in the world - China.

China is an incredible investment opportunity in many areas, including the mobile phone market.

It should be a titanic struggle in the smartphone market to win the hearts of China’s huge and rapidly growing middle class population. Here are the four main actors in this real-life drama that are poised to deliver profits to their investors as they gain share of the Chinese mobile phone market.

The first two companies are very familiar to most American investors - Google (GOOG) and Apple (AAPL). The other two companies are somewhat less familiar to American investors.

China Mobile (CHL) is the leading mobile services provider in China. The company also boasts the world’s largest mobile network and the world’s largest mobile subscriber base. China Mobile’s subscriber base is approaching 500 million subscribers. The company has a license to provide 3G mobile phone services in China.

China Unicom (CHU) is China’s second largest mobile phone operator with over 140 million subscribers. In October 2008, the company merged another Chinese telecom company - China Netcom. In January 2009, the company was granted a license to offer 3G mobile services.

China’s Mobile Phone Market

China is the world’s largest mobile phone market, with 700 million subscribers. However, China has only recently launched third generation services, which offer broadband-speed data connections.

Smartphone penetration in China is running at 10 percent of all handsets sold. But the smartphones are expected to generate higher revenues as subscribers access features such as music and games downloads.

China Mobile will fire the opening shot in the battle for high-value subscribers over the next couple of months with the launch of the 3G OPhone, which runs on Google’s Android operating system. China Mobile had held discussions with Apple about potential iPhone distribution, but these discussions broke down as the two firms could not agree on how to share the revenues.

China Mobile’s OPhone will offer customized applications for high-value-added services such as music downloads and mobile TV. China Mobile will make a very aggressive push to sell the OPhone, with plans to subsidize these high-end handsets for customers up to 50 percent off the retail price.

The launch of the OPhone by China Mobile comes as China Unicom is nearing a three-year exclusive agreement with Apple to sell the iPhone in China. The company is expected to offer the iPhone when it launches its countrywide 3G services this autumn. China Unicom is hoping to use the iPhone as a powerful tool to lure some of the lucrative young mobile users from China Mobile.

The Battle for the Chuppies

The average monthly revenue per user in the Chinese mobile market is 60 renminbi. For China Mobile’s customers, it is 85 renminbi. Companies are aiming for target revenues for smartphones users of 300 renminbi per month. So the potential smartphone subscribers will most likely be young professionals, relatively wealthy, well-educated, and English speaking. In China, this can only mean Chuppies.

Chuppies are China’s young well-off generation. They have money in their pocket, are brand conscious, and savvy about technology. The impending launch of competing subsidized smartphones means that the battle for the Chuppies has started.

It will be quite a battle. The OPhone has shortcuts to MobileMarket, China Mobile’s equivalent to Apple’s iTunes applications store; to Fetion, its messaging service; and to middleware that allows Internet browsing on different mobile platforms such as Microsoft’s Windows Mobile.

Compared with China Unicom, China Mobile makes it easier for its subscribers to consume from their smartphones. Subscribers will be able to pay for Mobile Market downloads directly from their accounts, whereas iPhone users will have to pay with their credit cards.

So for now, it looks like Google was smart to partner with the market leader - China Mobile. However, it will probably come down to who offers the highest quality services and to the user-friendliness of the phones.

Either way, the smartphone market in China is an investment opportunity that investors cannot afford to miss.

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