Extensive discussion appears alongside each of our forecasts, and we especially look at drivers to smartphone and 3G handset sales.

3G roll out together with corresponding faster mobile internet access will be core drivers to China experiencing the largest growth in smartphone sales worldwide. We forecast that 3G sales will grow at +72% CAGR, to reach 109m in 2014. This is on the back of a combined investment of US$23bn in 3G networks in 2009. In the first quarter of 2010, China spent another $880m on these. Just under one third was spent on China Mobiles home-grown TD-SCDMA network.

The shortage of affordable handsets compatible with the TD-SCDMA standard has been a significant hindrance to growth in advanced handset subscriber numbers. However, inexpensive, locally made 3G handsets and smartphones will help resolve this. For example, China Mobile has helped to successfully persuade manufacturers to bring 266 different designs of TD handsets to market, some priced at or below CNY1,000. TD-SCDMA phones will see greatest 3G growth in 2010, enabled by aggressive marketing and subsidizing of new phones, and careful service pricing.

Although they remain relatively expensive, the Android operating system will help OEMs and operators to offer lower smartphone prices. China Mobiles own Open Mobile System based on Android, and its OPhone device portfolio will be further catalysts to smartphone growth. Already, more than 20 OEMs have joined the supply chain of OPhones, including Acer, Lenovo, Motorola, Samsung, LG, Dell and Sony Ericsson. All of this will help smartphone sales to grow at +29% CAGR, to reach 98m in 2015

Subsidies will also be important for growth in 3G handset and smartphone sales. Yet because subsidies impact profits, and because of increased competition between the three operators, we foresee that subsidies and their availability on lower end handsets will decline. Impacts upon profits by 3G roll out, competition and subsidies mean we anticipate that carrier profits will fall in 2010 and then rise steadily to reach $23.3bn in 2015.

Together, the forecasts we provide in this report will be crucial for mobile carriers; vendors; consultants; financial analysts; application, content and service providers, and anyone else with an interest in the future of mobile devices, content, and the mobile internet. These forecasts will help then to understand opportunities for monetization and investment, future device roll out and behavior, content consumption/creation, and mobile internet access.