Kai-Fu Lee: 500 Million Smartphones in China by End of 2013

The former director of Google China, Kai-Fu Lee, has put up a nice post over on LinkedIn with a handful of key stats that show how China’s smartphone market is growing at an astonishing pace. He points out that, despite a slow start, China’s appetite for smartphones is now vast – “China will be twice [the size of] the US smartphone market in a year! Only two years ago, China was a laggard with a tiny portion of the US.” In total, that means the current 200 million smartphones in China (or 250 million by the end of this year) will grow to 500 million by the end of 2013.

Two major drivers behind all this (see Mr. Lee’s image below) are Android and China’s countryside. Android is being adopted 2.6 times faster in China compared with the US; and China’s less developed areas are now buying smartphones in huge numbers:

Why the late blossoming? Kai-Fu Lee explains in his post:

Originally, China’s market developed more slowly because of two reasons. First, usable 3G networks took much longer to develop than other countries. Second, there are few [telco/phone] subsidies in China, so users had to pay one or two month’s salary for an iPhone or Android. These inhibited the growth.

But both issues have changed. Broadband wireless is now over 58 percent [penetration], and smartphone prices have dropped to about $100 for an acceptable Android phone, and about $200 for a full-featured Android phone. Smart phones are now spreading like wildfire. About a year ago, there were less than 50 million users, basically affluent or tech saavy users who were willing to pay $500 for a phone and $30 a month for 3G. But now, students, young white-collar, and even blue-collar workers, are swarming into the smartphone market!

All this is great news for Google, and for the top three Android phone-makers in the country right now. Of course, Apple’s iPhone is still there at a higher price-point, and Microsoft’s Windows Phone is growing steadily.

But the analysts Canalys might disagree with Mr. Lee’s stats, as it recently forecasted that China is going to own just 50 percent of the 594 million smartphones that are shipped in the Asia Pacific region in 2016. Or perhaps Canalys is being a bit pessimistic with its stats for China?

[Source: LinkedIn, via Sinocism’s China Newsletter]