Year 2014 is expected to cause a lot of stir in the
Smartphone market for the manufacturers and users for several reasons:
1.
The number of smartphones shipped will go up to
1.2 billion in 2014 from 1 billion in 2013 – a YOY (year-on-year) growth of
19.3%, down from 39.2 % in the previous year. In Q1 of 2014, Samsung and Apple
have seen their market shares slide down by 1.7% & 1.6% respectively,
whereas brands like LG, Huawei, Lenovo and Others are gaining market shares in
the range of 0.3% to 2%, as compared to Q1 of 2013 (Source: IDC)
2.
Last year saw 322.5 million smartphones under
$150 being shipped. Many smartphone announcements in this Price Range have been
made for this year, with some prices going as low as $25.
3.
Microsoft’s acquisition of Nokia last week for
$7.2 billion has made marketers wonder on their strategy. Microsoft’s initial strategy
while acquiring Nokia was to change its ‘horizontal’ strategy of selling
software to hardware makers to ‘vertical’ strategy like Apple’s, to manufacture
software as well as hardware
4.
Lenovo acquired the Motorola Mobility business
from Google at $3 billion earlier this year
The consequences of these developments are following:
1.
6 countries are contributors of 50% of the
mobile phone market. Even though their total mobile phone penetration is high,
there is a large opportunity in the Smartphone market. As worldwide growth
slows and mature markets become saturated, the price of the smartphones will be
the primary driver to gain market shares in these emerging markets. Average
smartphone price has fallen from $443 in 2011 to $335 in 2013 and is expected
to reach $260 in 2018 (Source: IDC)
Country
|
Mobile
Phones
|
Population
|
Penetration
(%)
|
||
Total
|
Mobile
Phone
|
Smartphone
|
|||
-
|
World
|
6,800,000,000
|
7,012,000,000
|
97.00
|
|
1
|
China
|
1,227,360,000
|
1,349,585,838
|
89.20
|
46.90
|
2
|
India
|
1,104,480,000
|
1,220,800,359
|
90.47
|
16.80
|
3
|
United States
|
327,577,529
|
317,874,628
|
103.10
|
56.40
|
4
|
Brazil
|
273,583,000
|
201,032,714
|
136.45
|
26.30
|
5
|
Russia
|
256,116,000
|
142,905,200
|
155.50
|
36.20
|
6
|
Indonesia
|
236,800,000
|
237,556,363
|
99.68
|
14.00
|
Total
|
3,425,916,529
|
||||
% Contribution
|
50.38
|
||||
2.
Local manufacturers will pose a threat to the
international giants – Samsung & Apple in the emerging markets. This is an
interesting graph showing how 7 Local Smartphone manufacturers in China &
India together (Huawei, ZTE, Lonovo, Coolpad, Xiaomi from China and Karbonn,
Micromax from India) have had their market share go up continuously to achieve
11 times growth in 3 years’ time, thus overtaking Apple’s share and closing in
on Samsung’s share.
3.
Sony, Xolo, Micromax and Archos are set to enter
the Windows Phone smartphone market starting this year. Considering the fact
that Nokia is already under Microsoft, it would be interesting to see if
Windows Mobile leverages on these brands with an enhanced OS.
4.
Lenovo is growing aggressively into new markets
outside China such as Russia. Its acquisition of Motorola mobility would give
its market share a major boost, as Motorola is no. 3 manufacturer in USA.
So, what should Samsung and Apple do to maintain their
foothold in the Smartphone industry:
1. Work with network operators to offer bundle
deals in emerging markets like they do in mature markets.
2. Breakthrough in OS – to retain their
edge and position of leadership
3. Enter the Phablets market with a bigger
screen size – Iphone started off as a large screen device but features
nowhere now in the Phablets market with screen sizes ranging from 5.5 to 7
inches
4. Low end products – While Samsung has a
full range of smartphones, Iphone may need to launch a low priced smartphone to
maintain its market share in emerging markets in long run.
5. Smartwatches and other wearable devices
may be the right way to go to upset the balance in the smartphone market.
