China Mobile: Apple is in the driver's seat

Frustrated China Mobile chief Xi Guohua says it’s Apple, and not the world’s largest mobile operator, that is in the driving seat in the relationship between the two.

The reason: the lack of TD-SCDMA chips from Apple’s sole supplier, Qualcomm.

Qualcomm has not yet released a TD chip, although next-gen chipsets will be backwards-compatible with TD-SCDMA. These will begin sampling in Q4.

“Qualcomm is now speeding up TD chip development, but for the timetable don’t ask China Mobile,” a testy Xi told the Chinese language ENN Weekly.

Xi’s impatience underlines China Mobile’s need to get hold of the iPhone, as this blog recently argued. Thanks to the iPhone, China Unicom is now starting to consistently outsell China Mobile in 3G.

In one of his first interviews since becoming chairman a year ago, Xi also said he would not get into a price war, despite price-cutting by China Unicom, and said his biggest anxiety was OTT competition.

The ENN Weekly piece notes the game is getting away even from China Mobile. The combined 2011 profit of China’s three mobile operators of 146.6b yuan was less than Apple’s net of $25.2b (165b yuan).

Like other cellcos it has struggled to innovate effectively. Its instant messaging service Feition, launched five years ago, is still well short of the market leader Tencent and its QQ service.

Responding to a criticism often made domestically, Xi said China Mobile was fully-committed both to TD-SCDMA - launched just three and a half years ago - and next-gen TD-LTE. He says LTE will not be mature for another two years and that an existing base station could be upgraded to LTE in “three hours at the outside”.

Yet for all the focus on innovation and warding off internet competitors, Xi's view is an old-fashioned (or realistic) one, that Mobile’s strength was its networks and that the “main thing right now is to run our networks well.” 

Internally the operator talks of ‘four-network collaboration’: the 2G network as current source of profit; the TD-SCDMA network as competitive weapon in the next two years; WLAN for data offload; and TD-LTE as the future. Xi says his goal is to get them working together for optimal efficiency.

Networks aside, Xi’s strategy for the mobile web age is no different from that of other hard-pressed CEOs. He refers to the need for “smart channels” and “open platforms,” without going into detail.

He also makes the familiar-sounding assertion that China Mobile “won’t merely just carry out traffic operations - rather we will build a better, easier, smarter information transmission channel revolving around the mobile market, cloud, M2M platform and other core platforms.”