China Gets Low-Cost Smartphone
May 16, 2012

China Gets Low-Cost Baidu Smartphone

Peter Suciu for

The sleeping dragon has awakened to the digital world. Last year China surpassed the United States to become the world´s largest smartphone market by volume — and while the U.S. continues to remain the largest smartphone market by revenue, the land of the dragon will likely overtake those numbers as well.

According to research firm Strategy Analytics, China remains at the forefront of the worldwide mobile computing boom, and last year saw 23 million smartphones sold in just the third quarter. The Chinese are even overtaking the Japanese for the love of all things gadgets and handheld.

The January launch of the iPhone 4S had to be canceled due to concerns over the size of the crowd. And with 1.3 billion citizens, the smartphone market is only likely to grow.

One company that will likely be one to watch is Baidu — the “Google of China” — which announced on Tuesday a new smartphone powered by its own cloud-based platform. The Changhong H5018 smartphone runs on a modified version of Google´s Android mobile OS, powered by Baidu Cloud Smart Terminal platform.

CNET reported on Tuesday that this device was manufactured by Foxconn and will be released for China´s Unicom network. The Baidu Cloud Smart Terminal allows users to access its services, which include search, run apps and other cloud-based programs from the device without the need to access the web directly. Baidu will provide Changhong H5018 owners with 100GB of free storage through the company´s cloud-based Netdrive service.

The handset reportedly features a 3.5-inch touch screen, 3G connectivity and a built-in 3megapxel camera. It will also include voice- and handwriting-recognition as well. This certainly doesn´t put the handset on par with the iPhone, but it could instead be aimed at those hundreds of millions who don´t own a smartphone.

It will reportedly cost under 1,000 yuan ($158 USD), which could put the phone in a market segment poised for enormous growth. While China leads the world in smartphone sales by volume, just 15 percent of the nation´s 1 billion mobile phone users are using 3G services. An affordable smartphone would increase those numbers dramatically. Competition in that price point is fierce — with low-cost handsets from Huawei Technologies, ZTE Corp, Lenovo, Xiaomi and even HTC. But so far few have smartphones in that price range.

It could also chip away at Apple's and Nokia´s market share. As of last year Nokia was still the leader in China´s smartphone market with 28 percent share. Issues remain, notably the slow migration to higher-speed networks in China, but the Baidu cloud solution could help get the country there.

And Baidu won´t likely limit access to its cloud via the Changhong H5018. According to an interview with TechCrunch, Baidu spokesperson Kaiser Kuo said the company could bring the cloud platform to Apple´s iOS and Microsoft´s Windows Phone 7 platforms.

“We want Baidu's Cloud Smart Terminal to function as a platform that sits on top of all operating systems, such as Windows Phone and iOS,” Kuo said to TechCrunch. “We are not yet working on a Windows Phone device but the hope is to make one.”