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[2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Aug 23, 2014

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Page 1: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base
Page 2: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

About 1st 2nd and 3rd tier in China

China has a population of more than 1.3 billion people. However the lifestyles, living standards, education level and consumer needs of the population varies greatly from region to region and from city to city. The mega cities of Beijing, Shanghai, Guangzhou, Shenzhen are a world apart from the rural towns of western china. Despite these big differences the smartphone has become ubiquitous throughout the country, Umeng now tracks 780million active smart devices across China. Much is known about users in the tier 1 cities as well as the provincial capital 2nd tier cities, in this report Umeng brings into focus some of the characteristics of mobile users in the smaller tier 3 cities and towns.

First tier includes 4 biggest cities in China, maybe also “the most international” ones –

Beijing, Shanghai, Guangzhou and Shenzhen.

Second tier includes 15 cities, namely, Tianjin, Chongqing, Nanjing, Hangzhou, Chengdu,

Wuhan, Xi’an, Qingdao, Shenyang, Dalian, Xiamen, Wuxi, Jinan, Changsha and Fuzhou. They are all big cities with large populations and high GDP.

The rest are third tier cities and below. Don’t be fooled into

thinking tier 3 means small, many tier 3 cities have populations

over 1million. Tier 3 city users represent the majority of

Chinese users and the future growth area for the mobile

internet market.

1st tier cities

2nd tier cities

Page 3: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

380 500

590 700 780

0

200

400

600

800

1000

2013 Q

1

2013 Q

2

2013 Q

3

2013 Q

4

2014 Q

1

The increasing trend of

domestic active devices

Nearly 60% of active devices located in third tier cities or smaller

Umeng currently track over 780 million active smart devices in China, including phones and tablets.

58% of active devices are distributed in cities of the third tier and below, more than triple of that in Beijing, Shanghai, Guangzhou and Shenzhen together.

By million

19%

23% 58%

Distribution of active

devices in cities

(2014-3)

First-tier cities

Second-tier

cities

Third-tier cities

and below

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

Page 4: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

iOS devices in 3rd tier cities and below outnumber those in 1st and 2nd tier cities

The number of devices in cities of the third tier and below is continuingly increasing.

In the past the majority of iOS users where urbanites living in 1st and 2nd tier cities, this year this has changed with 54% of iOS users now based in 3rd tier cities or below

The Android market has also shown strong growth with 60% of all android devices now in the hands of users living in lower tier cities.

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

20% 18%

29% 22%

51% 60%

Mar 2013 Mar 2014

Distribution of active

Android devices

Third-tier cities

and below

Second-tier cities

First-tier cities 23% 21%

30% 24%

47% 54%

Mar 2013 Mar 2014

Distribution of active iOS

devices

Third-tier cities

and below

Second-tier

cities

First-tier cities

Page 5: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

27% growth in daily sessions in third-tier cities grow by 27%, catching up with

those in first and second tier cities

The rapid growth smartphone usage means that Tier 3 city users now use their phones just as much and just as often as users in first and second tier cities.

Data Source: Umeng Analytics Platform www.umeng.com

First-tier cities Second-tier cities Third-tier cities and

below

Annual changes daily session per user

2013

2014

Annual growth 10% Annual growth 27% Annual growth 18%

Page 6: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

0

1

2

3

Jan 2014 Feb 2014 Mar 2014 Apr 2014

Number of 4G sessions by

month (Android)

4G battlefield

The roll out of 4G network across major cities by all network operators started last year and many cities now benefit from 4G coverage. The number of 4G sessions has grown by nearly 3 times since the beginning of 2014.

Currently 4G is only available in 1st and 2nd tier cities however soon the battlefield will move to 3rd tier cities too.

2.8 times of that in January

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

0%

20%

40%

60%

80%

100%

Jan 2014 Feb 2014 Mar 2014 Apr 2014

Monthly 4G traffic

distribution by province

Others

Jiangxi

Fujian

Zhejiang

Jiangsu

Hubei

Shanxi

Beijing

Page 7: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

China Mobile has the largest share of internet data traffic while China Unicom

has seen the fastest growth in the past two years

In Q1 of 2014, among the top three operators, China Mobile had the largest share of mobile phone data traffic, accounting for 56% of the total.

In 2011, data from Umeng shows that in the past two years, the share of China Unicom has grown from 19% to 31%. The share of China Telecom didn’t change much.

The share increase of China Unicom is down to the popularization of 3G network in the past two years. Compared with the dominant position of China Mobile in the 2G network, the 3G network traffic is almost equally divided by the three top operators. It can be seen that the 4G network will become the next hot battlefield of operators.

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

28%

12%

34%

88%

37%

2G

3G

Traffic distribution among

the top 3 operators

(2014 Q1)

China Telecom China Unicom China Mobile

13%

15%

31%

19%

56%

66%

2014Q1

2011Q3

Traffic distribution among

the top 3 operators

through 2.5 years

China Telecom China Unicom China Mobile

Page 8: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

From the regional distribution of users, it can be seen that users in cities of the third tier and below prefer wallpaper, system tool, video, music, game, entertainment and photography apps, to meet their leisure and entertainment needs and manage their own devices. These are perhaps more familiar types of apps for users upgrading from older feature phones.

The most popular apps used by users of cities of the first and second tiers are travel, navigation, business, finance and education apps. Representing their higher incomes and urban lifestyles.

Tier 3 city users access their phones for Entertainment and gaming

Data Source: Umeng Analytics Platform www.umeng.com

0%

25%

50%

75%

100%

Trave

l

Navi

gati

on

Fin

an

ce

Ed

uca

tio

n

Bu

sin

ess

IM

Mu

sic

New

s

Ph

oto

gra

ph

y

Healt

h

E-c

om

merc

e

SN

S

Life

Bo

oks

En

tert

ain

me…

Gam

es

Vid

eo

Sys

tem

to

ols

Wallp

ap

er

Geographic distribution of vertical users Third tier and below Second tier First tier

Page 9: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

More “night owl” users in third-tier cities, with the night peak arriving one hour

later than that in first- and second-tier cities

Most of users in cities of the third tier and below use apps after 22:00 while the peak hours for users in cities of the first and second tiers start from 21:00. Users in cities of the third tier tend to use mobile phones before the bed time to relax and entertain themselves.

There are less users in cities of the third tier and blow who use mobile phones between 7:00 and 11:00 than those in cities of the first and second tiers, which is to some extent due to the fact that there is less users of navigation and business apps.

Data Source: Umeng Analytics Platform www.umeng.com

0%

2%

4%

6%

8%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

24-hour distribution of app usage in

different cities

First-tier cities Second-tier cities Third-tier cities and below

Page 10: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Third Tier city users have different tastes in games

Users in different cities prefer different types of mobile games. The most popular games among users in cities of the first and second tiers are simulation business games, education games and adventure games, while users in cities of the third tier and below prefer action games, card games, sports games.

Data Source: Umeng Analytics Platform www.umeng.com

16% 18% 20% 22%

Adventure

Education & family

Simulation

First- and second-tier cities

39% 39% 40% 40% 41%

Sports

Board & Card

Action

Third-tier cities and below

Top 3 game categories in different cities (by session)

Page 11: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Strong showing from domestic brands

The market share of Chinese brands Coolpad and OPPO surpassed that of HTC in Q1 of 2014. so far, four of the top five brands of active Android devices in China are Chinese brands. But the market dominance of Samsung still cannot be shaken.

Data Source: Umeng Analytics Platform www.umeng.com

23.8%

8.0%

7.7%

7.6% 5.2% 4.8% 3.9%

3.9%

3.7%

1.9%

29.4%

Distribution of active Android device

brands 2014 Q1

Samsung

Lenovo

Huawei

Mi

Coolpad

OPPO

HTC

BBK

ZTE

Sony

Others

Page 12: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Third tier cities shun big name in favor of competitively priced local brands

Samsung grabs the biggest market share in all cities, with the highest of 33% in first-tier cities while its market share in cities of the third tier and below is only 20%. It is followed by Xiaomi in first-tier cities while by Lenovo in cities of the second and third tiers and below.

The combined market share of the top five brands shows that most of the big name brands are concentrated in first-tier cities and these users are more aware of big name brands when making a choice; while in cities of the third tier and below, less Android brands are used for users are more sensitive to the price.

Top 5 Android brands in different cities(2014 Q1)

Data Source: Umeng Analytics Platform www.umeng.com

5%

7%

8%

11%

33%

OPPO

Lenovo

Huawei

Xiaomi

Samsung

First-tier cities

5%

7%

8%

8%

26%

OPPO

Huawei

Xiaomi

Lenovo

Samsung

Second-tier cities

6%

6%

8%

8%

20%

Coolpad

Xiaomi

Huawei

Lenovo

Samsung

Third-tier cities and

below

Page 13: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Summary

The number of active smart devices in China exceeded 780 Million by Q1 2014. 58% of active devices are distributed in cities of the third tier and below, more than triple of that in Beijing, Shanghai, Guangzhou and Shenzhen together.

The rapid growth smartphone usage means that Tier 3 city users now use their phones just as much and just as often as users in first and second tier cities. With living standards continuing to improve and 4G rolling out across the country we can expect to see mobile use in tier 3 cities only grow further.

Users in cities of the first and second tiers expect mobile Internet to meet their living, working and educational needs in life (travel, navigation, business, finance, education, etc.), while users in cities of the third tier tend to use mobile apps to meet leisure and entertainment needs (videos, games, entertainment and photography), and better manage devices (wallpaper and system tools).

Users in 3rd tier cities are more likely to purchase a domestic device rather than from a big name manufacturer

Users in cities of the first and second tiers prefer simulation games, education games and adventure games; meanwhile, action games, card games, sports games and music games are the favorite of users in cities of the third tier and below.

China Mobile has the largest share of internet data traffic while China Unicom has seen the fastest growth in the past two years.

Page 14: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Recent Trends in China Market

Page 15: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

iPad mini beats iPad 2 and becomes the most popular iPad device in China

Since January 2014, the % of active iPad mini in China has surpassed that of iPad2 in China, making iPad mini the most popular device of the iPad series. Meanwhile, the share of iPad Air and iPad mini 2 released at the end of 2013 also keeps growing.

As far as iPhone is concerned, the % of active iPhone 5s has surpassed that of iPhone 5, with the “Luxury Gold” color proving popular with Chinese customers.

The number of active iPhone 5c remain low with little or no growth in share.

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

0%

10%

20%

30%

Nov

2013

Dec

2013

Jan

2014

Feb

2014

Mar

2014

iPad Series Distribution

Trend

iPad Air

iPad mini 2

iPad mini

iPad 2 0%

10%

20%

30%

Nov

2013

Dec

2013

Jan

2014

Feb

2014

Mar

2014

iPhone Series Distribution

Trend

iPhone 5s

iPhone 5c

iPhone 5

Page 16: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

The percentage of jailbroken of iOS devices is 14.2%

The ratio of jailbroken iOS phones reached an all time low of 12.7% in December 2013, but has now climbed up to 14.2% as of March 2014.

One of the popular reasons in China to jailbreak is to allow the use of 3rd party Chinese character keyboard apps. Apple has recently announce at WWDC that they will support party keyboards. It will be interesting to see if this translates into a further drop in the number of jailbroken phones in China.

Data Source: Umeng Analytics Platform www.umeng.com

10%

12%

14%

16%

18%

20%

Oct 2013 Nov 2013 Dec 2013 Jan 2014 Feb 2014 Mar 2014

Jailbroken rate of iOS devices in China

Page 17: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Dec 2013 Mar 2014

The amount of active TV

box in China

The number of active android based TV boxes in the country exceeds 7 million

The number of Android set top TV boxes installed with mobile apps has grown by 50% in the past quarter. There are 7 million TV boxes in China, accounting for 1.4% of active Android devices.

The top five TV box brands are Xiaomi, Kaiboer, 10Moons, Tmall and Inphic.

1.5 times of that

in January

Data Source: Umeng Analytics Platform www.umeng.com

Data Source: Umeng Analytics Platform www.umeng.com

5.7%

6.0%

6.4%

10.9%

25.4%

Inphic

Tmall

10Moons

Kaiboer

Xiaomi

Top 5 TV box brand

(2014.3)

Page 18: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Glossary:

Active Device: active device refers to device which has activated at least one app covered by Umeng platform in the stipulated time frame. All the “devices” in the report refers to “active devices”, not the actual shipment.

Different tiers of cities: cities are divided into different tiers according to several indicators such as population, GDP, and educational strength, rather than their mobile Internet development. Specifically, first-tier cities include Beijing, Shanghai, Guangzhou and Shenzhen; second-tier cities includes 15 cities, namely, Tianjin, Chongqing, Nanjing, Hangzhou, Chengdu, Wuhan, Xi’an, Qingdao, Shenyang, Dalian, Xiamen, Wuxi, Jinan, Changsha and Fuzhou; the rest are third-tier cities and below.

Release Date:

June 2014

Data Source:

Analysis data in the report is based on over 230,000 Android and iOS apps from the Umeng platform. All data was collected from January to April 2014.

Statement:

All data belong to Umeng platform. Any people and organization are permitted to quote the report, please cite original source when using this data.

About

Page 19: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Analytics

Umeng Analytics is the leading mobile app analytical platform in China. We provide enterprise level analytics solutions to developers, allowing in depth analysis of user behavior and assist developers to efficiently distribute their apps and maximize monetization opportunities. Over 210,000 apps use Umeng across iOS, Android, Windows Phone and Windows 8 platforms.

http://www.umeng.com/analytics#

Share

Umeng share helps developer integrate more than 10 main stream social network share modules like Weib and WeChat quickly, super easy and smooth.

http://www.umeng.com/component_social

User feedback

Listening to feedback from your users is important to your app performance. Encouraging user feedback would bring improvements to your app and lead to higher user engagement.

http://www.umeng.com/component_feedback

Crash Report

Crash Report is specially developed with app developers in mind, providing detailed reports on issues with apps and the exact causes. With the help of Crash Report, you can tackle problems more efficiently.

http://www.umeng.com/component_update

Umeng products

Page 20: [2014 Q1 Umeng Insight Report] The Third Tier - Revealing China's Largest User Base

Umeng is the largest mobile app analytics platform in China. Umeng's state-of-the-art mobile analytics , developer tools and data-powered push notification platform helps developers increase the size and value of app audiences. More than 80,000 developers, 230,000 apps use Umeng across IOS, Android and other platforms. The team is working around the clock to build better solutions for mobile app developers.

www.umeng.com weibo.com/umengcom [email protected]