China Mobile Touts Ophone Plan

China Mobile (NYSE:CHL), the world’s largest mobile operator by subscribers, is reportedly warming up to launch up to 30 new smartphone models in 2010 that are designed to run on the carrier’s home-grown TDSCDMA 3G standard. The devices (called “Ophones”) are being developed using the company’s proprietary “Open Mobile System (OMS)” smartphone operating system based on Google’s (NASDAQ:GOOG) open-source Android software platform.

Moreover, China Mobile has revealed its plans to build more than 80,000 3G base stations in 2010 to cover all Chinese regions with its 3G TDSCDMA network. The carrier exited 2009 with 5.51 million 3G subscribers and 87,000 3G base stations and currently has 100,000 base stations in aggregate.

Despite its strong market position, China Mobile faces the threat of market share erosion due to stiff competition from its peers China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) as they both operate internationally acclaimed technology-based 3G networks.

Leveraging the widely popular WCDMA standard based 3G network, China Unicom launched iPhones (3G & 3GS) in mainland China in October 2009, offering it a significant competitive edge over China mobile. Moreover, China Unicom is marketing its customized Android handsets (called “Uphones”), which have been designated as a major national project by the Chinese government.

Ophones represent China Mobile’s answer to iPhone. The company has collaborated with leading handset vendors such as Motorola (NYSE:MOT), LG, Samsung, HTC and Dell (NASDAQ:DELL) for its Ophone project. China Mobile has already developed 266 TD-SCDMA handset models through these collaborations.

China Mobile introduced the first Ophone by Motorola in December 2009, which is being positioned to target the carrier’s high-end subscribers. The company plans to spend RMB150 million (US$22 million) over the 2010-2011 timeframe on design and development of Ophones. China Mobile expects the relatively low-priced Ophones (compared to iPhone) to drive demand for its less-mature TD-SCDMA technology based 3G services in China and boost subscriber base.

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