Emerging markets spur smartphone revolution

By Geoffrey Murray Source:Global Times Published: 2013-12-8 21:33:01

Illustration: Chen Xia/GT

Illustration: Chen Xia/GT


There are an estimated 6 billion mobile telephone devices used in the world today, and, for the first time, a small majority are smartphones.

The catch-up process has been rapid, and the trend will continue. Indeed, various market analyses suggest smartphones will occupy three quarters of all usage by 2017 as the world loses interest in feature phones.

There is fierce competition for market share and it's clear that any manufacturer with ambition has to look east.

While developed markets in the West are slowing down or even stagnating, smartphone sales in the developing countries of Asia are soaring; by 2017, when global sales are predicted to reach 1.7 billion units, around 60 percent will be sold in the region.

As one would expect, China has been leading the way, but the market there is now reaching maturity and the real boom is happening elsewhere in the region.

India was a late starter, but explosive growth is likely to propel it to become the world's third biggest market over the next four years. That being said, the majority of first-time buyers may still opt for a standard mobile phone before moving up the technological ladder.

Southeast Asia, however, has already made that leap.

One market study found that smartphones account for 75 percent of the devices sold last year in seven key regional markets: Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines, although there are some wide variations between countries.

Last year, in fact, the Philippines recorded a world-leading growth rate of over 330 percent in smartphone sales - the country was also responsible for about a quarter of all regional sales. Indonesian buying is soaring, but feature phones still dominate based on a mixture of affordability concerns and lack of consumer awareness.

As far as the rest of the world is concerned, the market share of both western Europe and the US will continue to decline, while Africa, the Middle East and Latin America have still to get going.

So, assuming the projections are correct with regard to Asian dominance, which manufacturers are going to best cater for demand?

Among the major handsets manufacturers, South Korea's Samsung has capitalized on its home-field advantage to secure the regional top spot; at least for the time being.

Apple is strongly challenging due to phenomenal China sales of its iPhone, but this is an expensive purchase for many. There are persistent rumors that Apple will produce a cheaper cut-down version for emerging market consumers.

China's Huawei has been making rapid strides and has big plans to consolidate and improve on its current No.3 position.

Shenzhen-based ZTE is now in fifth but is breathing down the neck of Japan's Sony Corporation, which is hoping to leapfrog Huawei by developing a whole range of new smart devices deliberately aimed at buyers in Brazil, Russia, India and China.

One interesting aspect of the vast amount of market research being carried out is the decline of the once-dominant US and European manufacturers (like Motorola and Nokia).

One explanation is that they became complacent and assumed they would continue to be market favorites. Now they are paying the price and face big struggles to develop new technology and software products to meet the demands of growing markets.

Fierce competition is certainly benefiting the consumer overall. Surveys show the Asia-Pacific region is the best place to save money, with a median smartphone price of $215 in 2013 (down 8.1 percent from the previous year) compared to $253 in Europe and a startling $565 in North America - the only region in the world where prices actually rose.

The key to future success lies in continuing to cut prices while maintaining a level of technology that meets consumer expectations.

The Android operating system has enabled new manufacturers to enter the smartphone market and focus on low-cost devices to build brand awareness. This is crucial if manufacturers are to break out from the urban elite sector and appeal to the mass market, especially in developing countries.

The author is a lecturer at the China Foreign Affairs University. bizopinion@globaltimes.com.cn



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