Up until 4 or 5 years ago, the latest flagship of major smartphone manufacturers was probably one
of the biggest news of the year for tech enthusiasts and the average Joe alike. In addition, the
premium companies that made those miraculous handsets were limited to an elite of three or four
global dominators that just couldn’t stop surprising us with every new model.
Then, saturation struck in key smartphone markets worldwide and we pretty much haven’t seen any
new releases that set the world ablaze after that. The numbers speak for themselves: Kantar
Worldpanel, a self-acclaimed global expert in shoppers’ behaviour, reported back in February that
the two-digit growth for that market is long gone. The surprising part is that emerging economies
are not only growing in that industry, but they also appear to be transferring the entire industry to
their territory. And by emerging economies we can mean no other countries that China and India,
which when combined, make up half of the world or 80% of the Asia Pacific territory.
Now that we’ve successfully made an observation, we can’t help but attempt to explain why that
may be. So with no further ado, here is why the entire smartphone industry is seemingly being
transferred to Asia.
The Western Market is highly saturated
Yeah, we said that already. But what does it mean exactly for a market to be saturated? Basically, it
means that the majority of consumers is about fed up with the certain product, thus they’re not
looking to buy more of it any time soon. That leads to the upgrade cycle of a smartphone in the US
to have risen up to nearly 28 months, while the second-hand smartphones market is rising on a
quarterly basis.
Users are not so easily impressed by newer models, since there is severe lack of innovation and
improvement in terms of specs or features.
Combine that with the economic crisis that has had a major impact mostly in the geopolitical West
world and it’s starting to get a tad clearer why the smartphone market is not going to see any
skyrockets from now on.
Asian smartphone brands have become more appealing
So, we’ve established that consumers are not as thrilled about smartphones any more and they’re
not willing to spend a high price even for a premium device. Consequently, they’re starting to steer
their attention to more value-for-money alternatives. And admittedly, Chinese manufacturers are
hard to beat on that.
Even when Apple, Samsung, Sony and LG where the only big players on the table, the phones
themselves were still being manufactured abroad, by companies based in China, India, Japan or
Taiwan.
The same companies decided over the years to keep making smartphone parts, but use them for
their own products, instead of assembling them for their European and American rivals. Hence, a
horde of Chinese and Indian brands were set up in a matter of 3-4 years right about when online
shopping started rising to unprecedented heights. That’s how tech giants like Xiaomi, Huawei,
OnePlus and Honor managed to break the marketing barrier and become world renowned.
For the record, e-commerce accounts for approximately 45% of purchases in Germany, the biggest
economy in Europe. And it’s much easier for a Chinese brand to sell its phones online than going for
a brick-and-mortar retail store at the other side of the world.
Emerging economies are now ready to sell to their own
consumers
While we were having fun with Siri’s answers to our ‘tell me a joke request, the vast majority of
people in India didn’t even have a 3G network in most of their towns. At the same time, a
considerable portion of Chinese citizens did not have access to the internet; not even their own
version which is mostly based on the Weibo search engine.
All that changed when enough Asian smartphone companies took over a fair share of the market
and they reached out to customers bringing a new product to their attention. Needless to say that
the device in question has penetrated our lives so much that it’s nearly impossible to live without it;
same thing happened to those emerging economies. Smartphone penetration skyrocketing and has
been rising ever since 2015.
To recap, EU and US smartphone markets are saturated due to lack of innovation and economic
crisis. Asia-based manufacturers seized the opportunity to offer value-for-money alternatives due to
their ability to produce handsets at lower costs. In addition, the smartphone was recently introduced
to the majority of the consumers in Asia, creating a penetration trend that experts estimate could
keep rising until 2022.
Is that shift of country domination in the smartphone industry a good thing for our own economies?
Could we benefit from that in any way? What is the industry’s future after all? Think about all those
things, the next time you’ll want to buy a random smartphone.
Sources:
https://www.androidauthority.com/where-smartphones-are-made-70798
https://www.scmp.com/business/companies/article/1947338/companies-make-tiny-components-
your-smartphone-face-trying-times
https://www.kantarworldpanel.com/global/News/Double-Digit-Smartphone-Market-Growth-is-over
https://www.cnet.com/news/smartphone-markets-glory-days-are-over-says-analyst/
https://www.mobileeurope.co.uk/press-wire/europe-increasingly-exhausted-by-smartphones-as-
market-reaches-saturation
https://traffichabits.com/how-promising-is-the-mobile-games-market-in-southeast-asia-
ab49bbcef2cf
https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/technology-media-
telecommunications/sea-tmt-2017-global-mobile-consumer-survey-sea-edition.pdf
