Tuesday, 12 May 2015 00:50

iPhone holds its own as China smartphone market slips back Featured

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The smartphone market in China has declined for the first time in six years, with a contraction in shipments of 4% year-on-year on the back of 98.8 million units shipped in the first quarter this year.

The market report from research analysts IDC says the YoY market decline follows a maturing in the smartphone market in China. On a quarter-on-quarter basis the market contracted 8% on the back of a large inventory buildup at the end of last year.

Of the smartphone vendors, IDC says Apple was the top vendor in China in the first quarter of this year, with consumers still having a “strong appetite” for the larger screens on the iPhone 6 and iPhone 6 Plus.

IDC says vendor Xiaomi slipped to the second position as it faced strong competition from other vendors in the low to mid-range segment of the market, while Huawei maintained third position as it saw a good uptake in the mid-range segment.

And, Samsung and Lenovo both led the market at least once last year, but IDC says rankings have since changed quickly, highlighting the volatility of consumers' brand preference in China.

According to Tay Xiaohan, senor market analyst with IDC Asia Pacific’s client devices team, to successfully combat local players overseas, Chinese vendors will need to “focus on channel relationships and localised marketing strategies."

“Most of the market’s growth will come from sub-US$150 phones as feature phone users switch to low-cost smartphones."

For the remainder of 2015, IDC expects relatively flat growth for China, while other trends expected in China for this year include:

•    Multi-brand strategies. Huawei and ZTE are positioning younger sub-brands Honor and nubia, respectively, to chip away at Xiaomi's user base, and to attempt to gain a loyal fanbase. Lenovo is also getting into the mix with the Motorola acquisition, not to mention its upcoming online-focused Shenqi division

•    Higher price tier competition. More vendors like Huawei, Lenovo, and even Xiaomi are trying to push higher into the mid to high-end segment

•    Non-traditional channel strategies. Reduced operator subsidies mean that vendors will further expand channels into more vendor-branded retail shops, direct online sales, and eTailers instead. In particular, they are trying to save on the cost that they had to pay to the traditional dealers/distributors in the past

•    Expansion into overseas markets. With the market in China slowing down, Chinese vendors will focus on increasing their presence in India as well as more Southeast Asia countries in 2015.

China Smartphone Shipments by Top 5 Vendor (in millions)

 

Rank

Vendor

2015 Q1 Shipment Volumes

2015 Q1

Market Share

2014 Q1

Shipment Volumes

2014 Q1

Market Share

Year-on-Year Unit Growth

1

Apple

14.5

14.7%

8.9

8.7%

62.1%

2

Xiaomi

13.5

13.7%

9.5

9.2%

42.3%

3

Huawei

11.2

11.4%

8.0

7.8%

39.7%

4

Samsung

9.6

9.7%

20.5

19.9%

-53.0%

5

Lenovo

8.2

8.3%

10.5

10.2%

-22.1%

Others

41.7

42.2%

45.7

44.3%

-8.8%

Total

98.8

100%

103.2

100%

-4.3%

 

 

 

 

 

*Lenovo

+Motorola

8.2

8.3%

10.7

10.3%

-23.1%

Source: IDC Asia/Pacific Quarterly Mobile Phone Tracker, May 2015

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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