Small Business VoIP

Access Markets International (AMI) Partners reportedly announced the availability of its latest market research effort titled, “2009 Marketing Telecommunications Products and Services to SMBs in China: Market Opportunity, Competitive Environment, End-User Needs and Buying Behavior,” and said its main finding is that there significant scope for growth in both the wired and wireless telecommunications for the Small to Medium Business (SMB) market segments in China.

Research analysts at the firm pointed out that even though future trends indicate landline usage could decline in China, there are however two factors that could boost growth: one, the Chinese government’s protectionist approach; two, until very recently landline growth has been very strong and may sustain in developing areas other than the East coast of China.

“SMBs’ fixed voice services continue to decline in China, and service providers are determined to implement a strategy of transformation by paying greater attention to improving value-added services,” said Gina Luk, Research Manager for Asia-Pacific Telecommunications and Networking, AMI. “Future fixed terminals will enhance telecom and mobility functionality. This trend is consistent with the future development of fixed networks, where both voice and data will be transmitted by one IP network, and fixed-mobile convergence (FMC) will become commonplace in China,”

The research company said that there is strong long term, planned growth for both the fixed and wireless segments in the pipeline. Added to this are a few significant acquisitions and mergers such as China Mobile’s (News - Alert) acquisition of China Tietong Communications and China Unicom’s CDMA business network, and the merger between China Unicom’s GSM business and China Netcom (News - Alert).

An important factor that has cleared the way for the planned growth to continue unhindered is the Beijing Olympics are done and dusted, claimed sources. In most Western countries, an even like the Olympics would be treated as yet another project to be parallel processed by concerned agencies and associated vendors. In China, however, a mega event such as the Olympics was viewed as one of National importance because it presented the best possible face of China to the world, and the entire country (including associated businesses) worked together towards its undisputed success.

“The outlook for Chinese wireless expansion is bright. Gains in penetration are the primary driver due to the country’s strong macro-economic growth,” said Luk. “Faster than expected adoption of TD-SCDMA wireless and declining costs makes wireless service affordable to more of the population. Furthermore, strong growth in data revenue is likely to have a very long tail.”

AMI said that network operator spend on telecom equipment is expected to increase marginally over the next 12 months mainly due to the extension of 2G infrastructure to rural areas and the deployment of 3G networks. Official sources added that revenues from the Chinese SMB telecom market were approximately US$12.8 billion in 2008, and 93 percent was spent on telecom services with a heavy emphasis on cell phone services and local and international phone calls.

Officials at the organization claim that VoIP options such as Skype (News - Alert), and Personal, or Portable, Digital Assistants (PDA’s), and Smartphones are the “in” things for Chinese SMBs. The Smartphone bit is in keeping with a global trend that indicates, among consumer electronic devices, Smartphones are the gizmos that have a demand in the current down economy as evidenced by the following commentary: 1.21 billion mobile handsets, including 171 million Smartphones, were sold in the year 2008 resulting in a 5.4 percent increase in sales over the previous year, and significantly less than the 16 percent increase in sales of 2007 over 2006.

With other handset sales struggling to grow substantially, companies are ramping up their marketing strategy for selling Smartphones. This, coupled with a reasonable consumer acceptance in Q408, augurs well for the future of Smartphones. Additionally, consumers feel that they are getting a lot of devices and utilities rolled into one carry-anywhere- access-anything-use-anytime advantage.

“Wireless will take advantage of the relatively low fixed Internet base in China to become the dominant means of accessing the Internet,” said Luk. “The opportunity for broadband wireless access is enormous.”

AMI cautions that service providers, vendors and marketers need to have a clear understanding of SMB business concerns along with the impact of the current economic environment on future prospects, before foraying into the potentially lucrative fixed-line telephony, mobile telephony, Internet, and broadband market opportunities in China.