Major elements of understanding on developments of the smartphones sector in China
With a population of over 1, 3 billion people, it was easy to foresee that the largest market for smartphones in the world is in China.
According to a study by the research CANALYS office, the market share of worldwide smartphone sales in the first quarter of 2013 was 22% in China, followed by 16% in the United States.
How to explain this evolution? The factors listed below have contributed to the development of Smartphone in China
The Samsung / Apple war :
After North America and Europe, China was clearly the next territory to conquer for Apple and Samsung.
Apple was the first spark by implementing several stores in the Chinese megacities. Prices presented Apple stores in China are higher than those offered in Western countries. The brand is regarded as a symbol of luxury and wealth. The smartphone becomes a new object with which the Chinese can externalize their wealth (very important behavior in China). The fad pushes consumption and the emergence of a middle class with incomes increasingly wealthy boosts sales of smartphones in China.
In early 2012, 19% of smartphones in China were distributed by Apple while in 2007 only 2% of them were from this brand.
Mainly distributed by the company China Unicom, Apple has recently forged links with the largest mobile phone operator of the world, “China Mobile”.
However the price is a barrier for the vast majority of Chinese and Samsung has understood.
The Korean company, with Apple, were one of the main triggers for the emergence of smartphones in China. To fight against its competitor, Samsung has relied on a series of smartphones low and mid-range sold under $ 200. Indeed, with 19% market share, Samsung is now recognized as number one in China.
Finally, to dethrone Apple, the South Korean hit hard by offering its smartphone “Samsung Galaxy III / IV” with high quality with lower price than Iphone with a massive communication campaign
Particularly well adapted to the country in question, operating Samsung system, “Android”, has proven its worth and was a resounding success for its simplicity and flexibility.
It also allowed the Korean brand to penetrate the Chinese market through its download platform, offering much more free quality software than the “Appstore” platform for the Apple iOS system. (Where many good applications are downloadable in demo version with very limited content. Users must purchase the application to have the full version. Or a integrated purchase system are implemented directly in the apps.
The success of Apple and Samsung has inspired many other manufacturers of smartphones: Nokia, for example, chose to compete with Samsung on the average market / upscale with its series “Lumia” in the second half of 2012.
Wishing to participate in the war of smartphones on their territory, the Chinese brands Huawei, Lenovo, ZTE fight on price and technological change.
Apple changement of strategy ?
The strong momentum in smartphone sector, especially in this new Eldorado as is China, pushes manufacturers to constantly evolve their strategies.
Underestimating the ability of local manufacturers to offer quality handsets (often copied Western brands) at low price, Apple has decided to review its strategy and make China its new priority: the objective is to be positioned in the same range as Samsung, with cheapest smartphones for emerging markets.
There is a rumor that a new series of iPhones would soon see the day, with a price not exceeding 99 € for a good quality in order to conquer the entry level segment.
So Apple wants to impose itself on top of technology with its famous range of iPhone “classic”, and on the entry level with its new terminal to the quality / price unbeatable.
Chinese manufacturers: unified to Conquer
Chinese manufacturers are already preparing their new strategies:
Chinese companies have limited capacity for innovation: due to insufficient patent portfolios, lack of resources and technological know-how.
The global giants are beginning to have too much importance on all ranges of smartphones. To avoid to be the big losers in this war, chinese manufacturers have to make a strategic Choice : potential mergers or acquisitions. For the moment the projects are still kept secret, some rumors escape, some suggest or imply potential interest: Such is the case of Richard Yu, Chairman of Huawei, who said during the presentation of P6 London that an acquisition like Nokia could be possible, and would create some interesting synergies. A few hours after this interview the company Huawei noted that no project was underway, although this idea has been considered.
The end of« feature phones »
Global sales of smartphones will exceed those of phones features before the end of 2013. This trend is confirmed by the IDC (International Data Council) office. The global smartphone market will grow 32.7% a year from 722.5 million to 958.8 million devices sold between 2012 and 2013. With 52.2% share of the market anticipated, sales of smartphones and surpass those of feature phones.
If global smartphone sales increase, this is for one simple reason: Emerging markets want to be fitted!
Sales of feature phones were massive in the emerging countries such as China, India, Brazil … Now these markets seem mature and demand for smartphones is felt.
Western countries are already equipped but remains to be done in developing countries. Thus, as we have seen with Apple and Samsung strategies, many companies offer phones at entry-level prices.
During the year 2013, emerging markets will concentrate 64.8% of smartphone sales, against 43.1% in 2010.
In 2011, the average price (for all countries) of a smartphone was $ 447. In 2012 it rose to $ 407 to finally arrive in early 2013 to $ 372, a decrease of $ 75.
This decrease is especially felt in emerging markets where manufacturers fit to win new market share.
In these countries, the average price of a smartphone is $ 307.
Ryan Reith, IDC analyst says:
“At a time when the global smartphone market grew by 33% year on year, the average selling prices fell by 8% in 2012, with a further decline of 9% expected this year (…) The democratization of smartphones increasingly in emerging and they are often a primary means of access to computing markets. ”