By Xu Hong & Huang Xin

Not long ago, Hou Ziqiang, a professor with the Chinese Academy for Sciences, saw a rock when strolling around Panjiayuan curio market in Beijing. Being unable to recall the names of metals contained in the rock, he took out his smartphone to search online.

On June 8, Prof. Hou arrived in Tianjin's Binhai New Area. He was going to Binhai International Convention & Exhibition Centre. Not knowing where it was, he opened maps on his cell phone, and got to his destination by following GPS navigation.

Just as Prof. Hou noted, the marriage of the Internet and mobile communications networks has produce more application to cell phones. The diversified application of smartphones, in turn, has fueled sales volume of smartphones. A foreign research firm expects the world's smartphone sales volume to hit 2.5 billion during 2010-2015, with a Compound Annual Growth Rate (CAGR) of 24%. Another survey revealed that in 2009 sales volume of smartphones (160 million sets) already topped that of notebook PCs (120 million sets).

In the China market, smartphones with 3G, GPS and touch screen functions have respective advantages. GPS smartphone is the buzz, drawing the attention of as many as 70% of users.

So what kind of cell phones can be called "smartphones"? At the Eighth International Mobile Phone Industry Exhibition and Forum held on June 8, experts briefly summarized the essential features of a smartphone. Firstly, it must have a big high-resolution screen (3.5'' or bigger), plus a minimum of 3 megapixel camera and video camera function. Secondly, wireless broadband connection anywhere and anytime. Thirdly, integration with the computer, such as software and operating system. Fourthly, rich SMS and multimedia functionalities. Fifthly, multi-thread, multi-task graphics operating system, and powerful search function.

Simply put, a smartphone is not merely a cell phone, but a mobile computer. Experts predict that by the end of 2010, voice, messaging, calendar, browsing and search functions will become a smartphone's most commonly used functions. Furthermore, that the prices of 3G cell phones plunged quickly to catch common people's eyeballs was largely ascribable to the improved hardware environment and mature product technology. Prices naturally go south as technology grows mature and cost drops.

At the Eighth International Mobile Phone Industry Exhibition and Forum held in Tianjin, participating cell phone makers unveiled their new 3G cell phones. On display were a wide range of products, ranging from low-end to high-end. "Yet in the long run, low-end smartphone is the development trend," experts say.

According to Prof. Hou, users replace their cell phones once every 3-4 years or so. Annual sales volume of mobile phones comes to 160 million sets, with an average price of RMB1, 100 yuan. Currently, only 10 million smartphones are sold annually, at an average price of RMB2, 500 yuan. In other words, high price is partially responsible for the lingering sales of smartphones; it is beyond residents' average purchasing power.

So what would be a reasonable price for a smartphone? Experts put the range between RMB1, 000-1,500 yuan. At present, if smartphone price could drop to this level, the bottleneck for 3G would be removed, and the number of 3G smartphone users could soon soar to 100 million and even higher.

The good news is that vendors see bright prospects for low-end 3G products. On the one hand, they are stepping up technology R&D; on the other hand, they aspire to cut cost, saying that an army of low-price smartphones will be rolled out. Low-price products have become many vendors' main products, and there are even smartphones below RMB1, 000 yuan available in the marketplace.

Low price does not amount to low quality. Prof. Hou told the reporter that several days ago he had bought a homemade smartphone for more than RMB1, 000 yuan, and although he had not even heard of the brand, the phone worked very well, featuring chic design. Thus, it is clear that new-generation smartphones are evolving towards high performance at low price in China.