SMBs in China and India to Drive $9.5B in Mobile Spending This Year

(Business News & Technology News, 4 May 2007)

Small and medium businesses in the emerging economies of India and China will boost investments in wireless infrastructure by about 17 percent this year, with China accounting for the lion's share of this spending. Of the $9.5 billion in wireless infrastructure spending by China and India this year, China will account for up to US$7.2 billion, says the latest study by Access Markets International (AMI) Partners Inc.

Wireless infrastructure includes equipment and services spending on portable PCs, PDAs, handheld devices and cell phones. "Though currently only 9 percent of China's PC-owning MB (medium businesses with 100 to 999 staff) workforce is mobile, 79 percent of China-based PC MBs have mobile employees," said Antara Jaitly, AMI's New York-based Research Analyst. Mobile employees are those who travel for business at least 4-5 days a month. "While India's MBs also currently exhibit low mobile workforce penetration (10 percent of the Indian MB workforce is mobile), 71 percent of India's PC-owning MBs have mobile employees."

Mobility of employees among SBs (small businesses, or companies with up to 99 staff) is also taking off. Up to 46 percent of China's SBs and 40 percent of India¡¯s SBs have mobile employees. "Strong economic and population growth, coupled with relatively low penetration rates for wireless technologies in India and China provide connectivity opportunities for adoption of products such as notebook PCs and mobile phones," Jaitly said.

Notebook PC ownership is expanding rapidly among China-based MBs. Right now, 82 percent of MBs in China currently own notebooks, and an additional 34 percent plan to buy one in the next 12 months. AMI's study also reveals that portable PC adoption is on the rise among Indian MBs, where 55 percent currently own a notebook PC and another 14 percent plan to buy one in 2007. "The growing importance of notebook PCs is evident even among price-sensitive SBs that have traditionally viewed desktops favorably," Jaitly said. "About 20 percent of China-based PC-owning SBs and 12 percent of India-based PC-owning SBs are set to buy notebook PCs this year."

Another opportunity comes from the rapidly expanding cell phone subscriber base in China and India. This trend has helped telcos offset the weakness in mature markets such as Japan and Western Europe. "Wireless phone equipment and cell phone service spending among SMBs in China and India will reach $4.9 billion this year," Jaitly said. "Factors such as brand recognition, expanding distribution network and portfolio breadth across price segments are vital to mobile telecom success in these economies."

The increasing need for 24/7 connectivity among Chinese and Indian SMBs is boosting demand for mobile access technologies. Mobile access to email and mobile instant messaging are the most common mobile applications used by these SMBs. "As SMBs in India and China reap the rewards of improved connectivity and mobility, adoption of networking services such as wireless LAN is expected to gain traction," said Jaitly. "Currently, 33 percent of China's LAN-enabled MBs have deployed wireless LAN, and an additional 25 percent of them are planning to do so in the next 12 months."

India too presents untapped WLAN (wireless local-area network) opportunities. Though 70 percent of Indian MBs have a LAN, less than 25 percent have deployed WLANs. WLAN penetration is low among SBs in both countries. However, WLAN adoption will gain strength as SBs increasingly deploy LANs and high-speed Internet connectivity. This, combined with an emerging environment of competitively priced networking equipment¡ªsuch as wireless routers¡ªwill eventually drive SMBs toward an increasingly wireless business experience.

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