NEW YORK (TheStreet) -- Google's (GOOG) Android operating system has taken the Chinese mobile market by storm, helping to dramatically lift the number of smartphones purchased in the region while grabbing share from competitors like Nokia (NOK).
But even as Android adoption continues to climb exponentially, the future of what this growth means for Google remains unclear as the company encounters endless obstacles at the hands of the Chinese government.
Smartphones in China have exploded, representing around 17% of all global handset sales in 2010, up from 8% of shipments two years prior, according to market research firm IDC. Android phones, in turn, account for 20% of these shipments, from less than 1% a year ago.
"It's like Android is the savior [of China]," said Teck-Zhung Wong, a Beijing based analyst with IDC. "People in China were starved for smartphones before."Android's sharp rise has come at the expense of Nokia's Symbian platform which saw its smartphone market share in China fall 10% over last year to 65%. The platform also has an edge over Apple's (AAPL) iPhone and Research In Motion's (RIMM) BlackBerry phone which haven't gained as much traction in China because of their high price -- around $700. Android phones, meanwhile, can be purchased for less than less than $150, well within the sweet spot for Chinese consumers, said Michael Clendenin, managing director at RedTech Advisors, a Shanghai-based consumer technology research firm. "China has 200 million migrant workers which may complain about spending 20 cents on noodles but they'll spend a month of wages to buy a decent low-end smartphone [like Android] because that's their conduit to the world while they're traveling," he said. "There's a very vibrant use of smartphones here." Investors are bullish on Android growth in China, too. Former president of Google's China operations Kai-Fu Lee launched a start-up incubator two years ago focused heavily on Android mobile development. And venture firm Doll Capital Management, announced in April the launch of a $100 million "A-Fund" to support early-stage Android entrepreneurs, particularly in Asia. DCM general partner David Chao estimates that Android will grab about 50% of the Chinese smartphone market over the next three years, comparing the potential impact of the platform to that of MS-DOS, Microsoft's (MSFT) operating system which became the standard platform for personal computers.
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