Internet minnows struggle in China’s cramped smartphone market
June 9, 2014 Leave a comment
Internet minnows struggle in China’s cramped smartphone market
Staff Reporter
2014-06-03
Encouraged by the extraordinary success of Chinese budget smartphone maker Xiaomi, a number of internet firms in the country muscled into the market in the first half this year only to find themselves stuck without room to grow, reports Guanzgzhou’s 21st Century Business Herald.
What surprised them has been the sluggish market demand, as mobile phone shipments in the domestic market plunged 24.7% year-on-year in the first half of 2014, the paper said. In addition, the market has been overcrowded with some 381 players, a great majority of which are vying for the remnants of a market left by the 10 leading players which accounted for 74.3% of the market, 20% higher than a year earlier.
Of the top 10, Xiaomi is the only internet-based brand. Meanwhile, newcomers are facing a litany of barriers in carving out a presence, notably difficulties in securing a supply chain, tapping the sales channels and finding effective marketing methods.
As the majority of newcomers have been struggling to keep their heads above water, startup Smartisan has managed to sell 60,000 units in less than two weeks after its launch, prompting its chairman Luo Yonghao to boost the sales target this year to 500,000 units. The brand sets its price at 3,000 yuan (US$480), targeting intellectuals and middle-class consumers, rather than rank-and-file netizens, the paper said.
The high-price strategy of Smartisan is bold since most indigenous brands price their products at less than 2,000 yuan (US$320), leaving the sector for handsets priced at 3,000 yuan (US$480) or higher to Samsung and Apple.
Unfazed by the poor performance of its peers, LeTV, an internet video-program provider, has also organized a 100-member R&D team for developing smartphones and is scheduled to roll out its smartphone models in the third quarter before they hit the market in the fourth, the paper said.
Wang Jun, analyst at Analysys International, noted that smartphones can complement LeTV’s core online video-program service, thereby forming a complete living-room internet ecological chain. Jun added that a potential constraint for LeTV’s plan is the absence of a major 4G network.
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