Tag: China

Chinese smartphones to shake things up

android-china-communistSales of high-end smartphones are still very strong, but the market seems to be slowly shifting to cheaper gear.

As smartphone penetration rates in developed markets are already relatively high, much of the new growth is coming from emerging markets which don’t have the capacity to gobble up millions of pricey iPhones and flagship Galaxies.

According to IDC, the average price of smartphones has dropped from $450 to $375 since early 2012. As growth is now being generated in China and India, cheaper smartphones are starting to take off. Lenovo stands to gain from the trend, as it already has a very powerful grip on the Chinese market. Chinese players like Huawei and ZTE should also do well. The big losers might be Apple and Samsung, but nobody expects them to sulk and sob in the corner while their lead evaporates.

Apple is apparently working on a cheaper, plastic iPhone, designed specifically to target emerging markets. Samsung and HTC already have mini versions of their flagship phones and although the Galaxy S3 Mini was a disappointment, HTC seems to have cracked it with the HTC One Mini. Motorola’s new X-phone, or Moto X, is set to launch in a week or so and it won’t be a high-end device as many had expected.

However, Chinese smartphone makers still might get the best of big brands. We are seeing similar trends in the low-end tablet market. Chinese manufacturers can respond to changes much faster, they are more dynamic and their costs are much lower. Samsung and Apple might spend hundreds of millions on marketing, but no-name smartphone makers can’t rely on an overpaid hype machine – their only choice is to come up with low-BOM (bill of materials), yet competitive low-margin products, which means China is actually teaching the West a lesson in capitalism.

ABI analyst Michael Morgan told Bloomberg that the days of fast growth in the high-end smartphone market are over.

“It’s the Chinese companies who know how to survive on tiny margins that are ready for the fight that’s about to ensue,” he said.

In other words we may be in for a repeat of the PC price slump of the mid nineties. Chinese manufacturers can churn out cheap smartphones and tablets, much like PCs, but this time around the shift might even be faster. Even if Chinese companies can’t access the latest and greatest in mobile tech, that doesn’t really matter in the mid-range and low-end. Last year’s tech is good enough and it’s cheap, which is exactly what they need.

Furthermore, most chipmakers should have no qualms about selling their latest processors to anyone willing to pay – since most of them don’t have their own smartphone business, although Samsung is an exception. The same goes for most other components and some chipmakers have a vested interest in peddling their own designs. Nvidia seems to be leading the way, as it is already working on reference smartphone and tablet designs. Its next SoC (Tegra 4i) is a mid-range chip with LTE and the first products based on the new chip, and possibly Nvidia’s reference design, should appear in early 2014.

This is also pretty bad news for Nokia, which had hoped to replace its Symbian and S40-based offerings with cheap Windows phones. However, Nokia feature phone users in emerging markets seem to be choosing cheap Chinese Androids instead.

However, most high-end smartphone sales in Europe are still coming from carriers, thanks to comprehensive (and usually quite pricey) two-year plans. If European and US carriers embrace more mid-range Chinese phones, things could change in a heartbeat.

Tablet makers cut targets citing white-box competition

cheap-tabletsBig brand tablet makers have slashed their shipment targets for 2013, citing stronger than expected competition from white-box vendors. According to NPD DisplaySearch, worldwide tablet shipments should hit 256.5 million units this year, up 67 percent from 153.6 million units last year.

However, big brands will lose market share, as white-box outfits are growing faster. Apple, Google, Microsoft, Samsung, Acer and Asus are expected to lose share at the hands of Chinese white-box makers, who are slowly making inroads in the international market. NPD DisplayResearch estimates that top brands shipped 172 million units in April, but shipments are believed to have dropped to 167 million units in June.

Market leader Apple is also feeling the pinch. It shipped 67 million iPads last year, but NPD DisplaySearch has cut mighty Apple’s shipment target for 2013 from 88 million units to 74 million.

However, despite the cuts the tablet market is looking as healthy as ever, but it might be becoming a bit more heterogeneous. Cheap Androids might undercut industry heavyweights, but at the moment this is more of a regional trend than a global one. White-box vendors are doing well in some parts of Asia, but they won’t take western markets by storm.

While browsing through some cheap tablets at Computex, we got the impression that they have a lot of potential and they might be competitive in some markets. However, it won’t be a repeat of the Macintosh vs. vanilla PC battle of the eighties. The trouble for white-box Chinese tablets is that they can’t just waltz into Europe and the US. For the time being many of them can only sell their kit in mainland China. As one vendor told us, if they tried to go overseas, their collective hind quarters would be sued by Acer and other big players.

Bird Flu may well disrupt the supply chain

Ostrich_male_RWDThe bird flu epidemic could have a knock on effect on the supply chain if rates of infection continue to rise, disties have said.

The warnings come as China has confirmed 108 cases of what the World Health Organisation describes as the “most lethal” viruses seen so far since March 31.

The H7N9 strain of the virus has also caused 22 deaths.

Yesterday, Taiwan also reported it had seen its first case of the virus in a man who had recently returned from working in eastern China where most cases have been reported.

And as things continue to get messy for the medical world it seems business could also be affected.

“Bird Flu is one of the most feared diseases of this century,” one distie told ChannelEye.

“While we’re currently chugging along there is a big risk of disruption if the disease continues to spread,” he added.

Others shared his sentiments. “There’s not really been much change at the moment in terms of the bird flu outbreak. But we’ve seen slower sales and delayed shipments in the past when there was problems with things like SARs,” another added.

Another told ChannelEye: “It depends how mad the world goes. If we start having to quarantine things then supply of products will be severely altered. But let’s see how far this scare mongering goes.”

Avnet and Microsoft shine a business light on China

surface-rtCompanies are looking further into China in a bid to boost business.

This week both Avnet and Microsoft have made railroads into the country. The gossip grapevine suggests that Microsoft has decided to extend its selling channels for its Surface RT tablets, which it previously sold through two distributors- its online store and chain store for electronics, Suning.

The giant had not been able to go through further channels as a result of an exclusive distie deal with Suning, but now sources have said that this deal expired in February, paving the way for Microsoft to pick up new channels. It is also claimed that Microsoft was unhappy about the way Suning had dealt with sales, failing to push Surface and get an advertising network around it.

In a bid to boost sales its now, according to the WPDang, turning to four new distribution partners aboard. These include PC Mall, Sundan, One Zero and 360buy.

And its not just Microsoft moving into Chinese circles. Today distie Avnet announced that it was buying Hong Kong’s RTI Holdings, RTI Technology China, Eastele Technology China, and DSP Solutions, value-added distributors of telecom equipment and related components in Hong Kong and China.

The company said that it wanted a piece of RTI as a result of its “focused technical expertise,” as well as its “strong presence” in the Chinese market.

It is hoped that the purchase will help the company break into the Chinese market, which it has so far struggled to do.