Smart­phone mar­ket gets busy sig­nal

China Daily (Canada) - - BUSINESS - By SHEN JINGTING shen­jingt­ing@ chi­nadaily.com.cn

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China’s smart­phone mar­ket ex­pe­ri­enced its first slow­down in the fourth quar­ter of 2013, sig­nal­ing the world’s top smart­phone mar­ket may have be­come sat­u­rated and that fiercer-than-ex­pected com­pe­ti­tion is emerg­ing.

Af­ter nine con­sec­u­tive quar­ters of ex­plo­sive growth, the smart­phone mar­ket sud­denly halted its up­ward trend, post­ing a 4.3 per­cent drop in ship­ments in the fourth quar­ter, ac­cord­ing to re­search firm In­ter­na­tional Data Corp.

The 90.8 mil­lion smart­phones shipped in the fourth quar­ter slipped from 94.8 mil­lion units in the pre­vi­ous quar­ter. Sev­eral fac­tors drove the stum­ble, IDC pointed out.

First, China Mo­bile Ltd’s fourth-gen­er­a­tion net­work didn’t start its commercial roll­out un­til Dec 18, keep­ing many 4G hand­sets off the shelves in the do­mes­tic mar­ket.

Sec­ond, the in­creas­ing pop­u­lar­ity of large-screen phones forced tele­com oper­a­tors to cut sub­si­dies on ones with smaller screens, trig­ger­ing dis­tri­bu­tion chan­nels to clear out those stocks.

Melissa Chau, a se­nior re­search man­ager with IDC, said the world in­creas­ingly looks to China as a pow­er­house to pro­pel global smart­phone growth.

“This is the first hic­cup we’ve seen in an other­wise stel­lar growth path,” she said.

Gart­ner Inc’s an­a­lyst also warned that mo­bile phone man­u­fac­tur­ers may strug­gle to do busi­ness in China this year be­cause the na­tion’s smart­phone mar­ket will be­come highly sat­u­rated.

C.K. Lu, a Gart­ner an­a­lyst who fol­lows the con­sumer elec­tron­ics in­dus­try, said smart­phone sales to end users ex­ceeded 82 per­cent of the to­tal mo­bile de­vice sales in the third quar­ter of 2013.

“Be­cause of a sat­u­rated mar­ket, mo­bile phone com­pa­nies are find­ing it hard to main­tain steady growth in China,” Lu said.

The sit­u­a­tion has prompted do­mes­tic phone mak­ers, which were pre­vi­ously con­tent to do busi­ness within China, to start look­ing over­seas. While this trend had al­ready be­gun in 2013, IDC ex­pects it to grow in 2014.

“Chi­nese play­ers are hun­ger­ing to be­come in­ter­na­tional rather than China-only brands. Nowhere is this more ev­i­dent than in Len­ovo’s ac­qui­si­tion of Mo­torola’s hand­set busi­ness. Even smaller play­ers, some of which are un­known to much of the rest of the world such as Oppo, BBK, Gionee and, of course, Xiaomi are ramp­ing up their in­ter­na­tional ex­pan­sion plans,” Chau said.

In a pre­vi­ous in­ter­view with China Daily, Paul Ja­cobs, chair­man of mo­bile chipset firm Qual­comm Inc, men­tioned big ob­sta­cles for Chi­nese mo­bile phone ven­dors in­tend­ing to go global: namely, stay­ing in­no­va­tive and build­ing a brand.

“It’s rel­a­tively easy to­day to build a great prod­uct. The hard part is telling some­one why your prod­uct is bet­ter than your com­peti­tor’s. It takes time in build­ing an emo­tional con­nec­tion with po­ten­tial cus­tomers,” Ja­cobs said.

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