Are smartphone companies now focussing on middle and small budget smartphones.
Last year alone, a whopping 1.55bn units were shipped globally. Out of these, the 2 market leaders- Samsung and Apple- had a combined market share of just about 35% (355m units).
You can look at this from following perspectives:
One, the two giants aren’t known for their prowess in the low-end market. They are mostly into the high-end market and apparently, it isn’t as hot as the pocket-friendly niche.
And two, the small manufacturers who have consistently focused on the lowly-priced and medium range devices are clearly outselling their premium competition, controlling as much as 65% of the new smartphone sales.
I’m talking about the fast-rising Chinese phone makers Huawei, Xiaomi, Oppo, ZTE, and other brands such as LG and the comeback kings Nokia. So, should these companies continue pursuing the iPhones and flagship Galaxies even in an era where most of their traditional markets have stagnated?
Overall Sales are Declining
According to leading sales portal, sales declined 5 % in Q4 of 2017 – the first YoY(year on year) decline ever reported.
And it seems the market is well past its best days especially in the much coveted China market, Europe, and the US.
“I think it’s a question of market segmentation” Henrich Fredricks, an online sales consultant for one of the leading players says.
“Yes, the entry-level smartphones are perhaps fast sellers but I don’t think it’s sustainable” He continues.
By and large, Samsung has retained a stranglehold on the market with Apple remaining a close second for all these years.
But now it seems the market is finally ready for a major shake-up with Huawei, Xiaomi, and
Lenovo leading a vicious onslaught.
The Focus is on the Pocket
Forget about the wallet-busters. Wallet-friendly is the latest fad
For these ambitious firms, the strategy is simple. Make tonnes and tonnes of smartphones priced within $100 - $300 range while delivering the best camera, touch, 4G, screen, multimedia, wireless charging, and indeed all other specs.
At the same time, market aggressively to the regions which are still showing signs of growth.
These happen to be the price conscious MEA (Middle East & Africa) and India.
And it seems to be working. For instance, Xiaomi’s low and mid-range phones helped it usurp Samsung as the best-selling brand in India in Q4 of 2017.
So, What Changed?
We can say the market is fast headed into uncharted territory.You see, for long, the craze to own your first smartphone was driving sales. Manufacturers were comfortable introducing new models knowing that penetration was still low and there was almost a full guarantee of landing a ready buyer. Globally, penetration is estimated to be well over 80% and a bigger number of companies are fighting over a shrinking piece of cake. It’s clear the time for a rethink has come.
Indeed, going forward, growth will most likely be induced by adopting specific strategies to push sales to the right groups.
Technology is now cheaper
As the market trudges towards saturation point, technology has become cheaper. And some of the sales territories are still highly price-sensitive. So it makes a lot of sense for companies such as Apple to refocus their energies on the remaining mass but, price-sensitive market. After all, recent handsets such as the Xiaomi Mi, Huawei Honor 8, and Motorola provide outstanding specs at very affordable prices and are very popular in some of these markets. High-end only may be the bane of these brands.
Look at Samsung, Apple and Google. They are now actively pushing pricing to about $1,000 for the highest-end devices, and seem to be creating a new market segment - the “ultra-premium” class.
But, what of the sales figures?
As we said, sales have been falling drastically in the prime U.S. and Europe markets, a trend which will eventually catch up in the rest of the World.It means these manufacturers may eventually be left with a very tiny market if they don’t diversify to cater for the ignored portion. If you can’t beat them, join them. While some top-of-the-heap smartphones makers have been rooting for devices retailing at prices which leave a gaping hole in one’s pocket, those on the tail end of the budget are keeping costs in check- attracting swarms of buyers along the way. So, rather than stick to the narrow high-end smartphone market, manufacturers should wake up to the reality of this performing category and join the bandwagon. Otherwise, being out of touch could cost them big in the long-run!