Mobile Phone Design Industry Development in China,2005

Current competition in China's home market is tough, pricing war has become universal. As a matter of fact, a new mobile phone model can only keep its price for a few months before divng. Manufacturers have to release more and more new models for profits. A new model's release is always accompanied by the diving price of existed products. Some manufacturers only depend on introducing new models to gain profits. The R&D speed is left far behind the market desire, hardware configuration upgrade, mobile application development, etc. Therefore, a new object Cmobile design company was born.

In order to save the development cost, China indigenous manufacturers transferred their handset design orders to those indigenous companies. To make the mobile phones more familiar to Chinese customers, they start to buy out the domestic mobile phone design houses' design projects massively. During 2003-2004, Chinese mobile phone design houses achieved a prominent performance in China home market.

As of the beginning of 2005, China already has about 60 mobile phone design houses.

Successive increasing mobile design houses lead to more specialization in the market. At present, there are mobile phone software development companies, mobile phone hardware design houses, mobile phone style design companies, handset structural design houses in the upstream. Mobile phone software companies include handset interface software, games, office and network software, multi-media software, and other application software development companies.

Since 2004, growth of Chinese home market has been slower than before. Indigenous brands' market share has been declining. This has caused many design houses' bad performance even bankruptcy. The market trend is as following:

Horizontal integration

1. Small and medium sized mobile design houses will merge with the big ones

2. Public companies become multinational mobile phone design houses

Vertical integration

1. Mobile phone design houses evolve to mobile ODMs

2. Mobile phone design houses evolve to handset vendors with their own brands

3. China domestic design houses evolve to foreign mobile brands' Chinese R&D center