The booming smartphone market is not really all that good news for the old established brands. With the market growing each year, you have seen Chinese brands like Huawei, Lenovo, and ZTE propel past HTC, Motorola and Sony from the list of top smartphone manufacturers. And this is just the first round.
Looking at a booming market like India, you will find impressive growth in the smartphone market. Smartphone shipments rose to 9.2 million in Q2 of 2012 as compared to 2.8 million units in the same period last year according to Cyber Media Research (CMR). World leader, Samsung, accounts for a 31% share of this market, which is the same share it has in the world market. Second place will surprise many. At second place is Indian phone maker, Micromax, which cornered 23%. CMR reported that local vendors accounted for over half the total smartphone market in the quarter. This includes Micromax, Karbonn, Lava, Zen, Spice and Intex. And these companies are not only selling in India. Micromax smartphones for instance, are rebranded and sold in other countries. Samsung, is in danger of losing a segment of its market to these local players, and the situation is worse for the other top brands.
More bad news for the old players is where the market is headed. Nearly a third of all smartphones shipped in India, were phablets. Samsung popularized this new category in 2011 with its Galaxy Note series. Other major vendors have been slow to follow. LG entered the arena in 2012, but Lenovo, Huawei, and Sony entered the category only this year. HTC is expected to release its own phablet soon. Apple, BlackBerry and Motorola on the other hand, are nowhere in sight.
But as the bigger players enter the phablet category, premium priced phablets like the Sony Xperia Z Ultra and HTC One Maxx may not cut it. A gaggle of 5.3-inch to 5.7-inch HD phablets are already flooding the markets at a the US$200 price range.
Samsung, being the early bird, reaped the benefits of large margins in the Phablet market. As the other brands follow in Samsung’s wake, they face the challenge of having to compete with the much desired “Galaxy” brand on the one hand, and the hordes of local brands releasing ever improving offerings on the other.
Round two of the smartphone wars will see the rise of the local brands in developing countries. With the smartphone pie getting bigger, many new players have thrown their hat into the ring. Profit margins which would be unacceptable to large established brands, are fine with these new players. So, it looks like outside of Samsung and Apple, the one willing to tighten its belt the most may come out the winner.
Source: CMR through Forbes