According to the Ministry of Information Industry, the annual output of mobile phone in 2006 was 417.47 million, increasing by 60.6% over the same period the previous year. While the annual output of Xiao Lingtong with PHS (Personal Handy-phone System) was only 10 million, decreasing by 25.1% over the corresponding period in 2005.

Xiao Lingtong, also known as Little Smart, bridges the gap between cordless phones and mobile phones with cheaper infrastructure that is easier to set up, but has narrower coverage than mobile phone systems such as GSM, GPRS or CDMA. As the reduction of telecommunication charges of mobile phones increases, Xiao Lingtong has been adopting a one-way charge system. This strategy is now facing some tough challenges. Besides the charge, Xiao Lingtong is also inferior to mobile phone in the fields of signal coverage and business variety. According to statistics, the year of 2006 is the second year to see Xiao Lingtong’s annual output low, and its output in 2005 slumped by 30.8% over the previous year.

Contrary to Xiao Lingtong’s situation, mobile phones sales in 2006 have steadily increased, and the market shares of handsets were concentrated further into the hands of big manufacturing enterprises. The annual output and the selling amount in 2006 are respectively increased by 60.6% and 59% over last year.   .