Qiku stirs up crowded smart­phone mar­ket

China Daily (Canada) - - FRONT PAGE - By GAO YUAN gaoyuan@chi­nadaily.com.cn

The crowded smart­phone mar­ket in China is about to add an­other heavy­weight player with in­dus­try ex­perts an­tic­i­pat­ing fur­ther price wars among the key play­ers.

In­ter­net mag­nate Zhou Hongyi threw his hat into the smart­phone ring on Wed­nes­day and promised fans “exquisitely made” hand­sets that will sur­pass Xiaomi Corp both in qual­ity and price.

“I un­der­stand (sell­ing smartphones in China) is a red ocean mar­ket, ac­tu­ally it is an ocean full of blood,” Zhou said. The red ocean is used to de­scribe a mar­ket packed with play­ers and one in which profit mar­gins are wafer-thin.

“But I am en­ter­ing the mar­ket any­way be­cause I be­lieve there is no mar­ket that can­not be over­turned and the lead­ers will not be al­ways on top,” Zhou said.

The 45-year-old, who headed Ya­hoo China in the early 2000s, drove out In­ter­net se­cu­rity firms that charge cus­tomers roy­al­ties by in­tro­duc­ing free-ofcharge anti-virus soft­ware prod­ucts about a decade ago. Zhou’s Qi­hoo 360 Tech­nol­ogy Co Ltd ac­counts for the lion’s share of the for­pri­vate­free on­line se­cu­rity mar­ket.

His smart­phone firm, named Qiku, is a joint ven­ture with Coolpad Group Ltd, a ma­jor con­tract smart­phone maker in China. The new brand will un­veil three types of hand­sets run­ning a tai­lored An­droid op­er­at­ing sys­tem as soon as next month.

“Our de­vice will eas­ily sell at 5,000 yuan ($800) on the mar­ket, but we will of­fer buy­ers a re­mark­ably lower price,” Zhou said, with­out giv­ing de­tails of the prod­ucts.

The three hand­sets will each tar­get low-, mid- and high-end mar­kets with the low­est price tag at around 1,000 yuan, a Qiku em­ployee familiar with the pric­ing strat­egy told China Daily.

Lo­cal hand­set ven­dors opt to lower prices in the highly com­pet­i­tive smart­phone mar­ket to grab big­ger mar­ket share, in­dus­try sources said.

Hours be­fore Zhou an­nounced the launch of the af­ford­able de­vices, Xiaomi said it will lower the price of its flag­ship de­vice Mi Note Pro by 300 yuan.

At a ri­val show put on by the Bei­jing-based mo­bile firm, Xiaomi co-founder Lei Jun gave out free de­vices to re­porters and said he has been try­ing to lower the price of the high-end Mi Note to main­tain the com­pany’s lead in terms of mar­ket share. The orig­i­nal price for the de­vice was 3,299 yuan.

Lei also in­di­cated that Xiaomi’s next fo­cus will be in In­dia and other emerg­ing mar­kets where the com­pe­ti­tion is not as fierce and no one wants a price war.

Wang Jing­wen, a Shang­ha­i­an­a­lyst at Canalys China, said ma­jor Chi­nese ven­dors are fac­ing the strong­est head­winds in their home mar­ket since the smart­phone boom be­gan in 2011.

Wang said lower price is no longer the main cri­te­rion for Chi­nese smart­phone buy­ers as cus­tomers have started to fo­cus on user ex­pe­ri­ence.

“Con­sumers are los­ing their ap­petite for ul­tra-low­cost de­vices, as ex­pec­ta­tions in­crease in line with spend­ing power and — com­bined with ris­ing mar­ket sat­u­ra­tion — this is re­sult­ing in a ma­jor shift to de­vices that pro­vide bet­ter user ex­pe­ri­ence,” she said.

But the price war is kick­ing off. Last month, on­line video com­pany LeTV Hold­ings Co Ltd said its first-gen­er­a­tion hand­sets, with a screen size sim­i­lar to Ap­ple Inc’s iPhone 6 Plus, will “crush” Ap­ple and Xiaomi be­cause of low price and high per­for­mance.

The de­vice is equipped with Qual­comm Inc’s fastest mo­bile chip and is sell­ing at 2,499 yuan, which is a frac­tion of the cost for the iPhone 6 se­ries. LeTV said it re­ceived more than 2.6 mil­lion or­ders for its de­vice less than two days af­ter the on­line pre-sale started.

PRO­VIDED TO CHINA DAILY

Zhou Hongyi, founder and CEO of Qi­hoo 360 Tech­nol­ogy Co Ltd, un­veils the smart­phone brand Qiku in Bei­jing on Wed­nes­day. Qi­hoo is team­ing up with Coolpad Group Ltd to sup­ply Qiku hand­sets.

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