China’s smartphone market is going through a major slowdown for the first time in nine years. 98.8 million smartphones were shipped during 2015’s first quarter, 4% down year-on-year and quarter over quarter, 8% lower as well.
Analysts suggest the previous quarter’s excessive inventory was partly to blame, but more so the apparent shift in buyer dynamics. First-time buyers are gone and upgrade is shaping the face of mobile competition. It’s no longer about what’s new, but about how an existing phone stays new.
Upgrade is the Way Up
China’s smartphone market is the biggest in the world. It was 2011 when the world witnessed the astounding feat the Chinese market took when it surpassed the United States to become the world’s largest smartphone market. Today, however, it seems to be slowing down.
The Chinese smartphone market is struggling under the weight of the misconception that it is still emerging and developing. It was, a decade ago, but today, it resembles other mature markets like the US and Japan. China is becoming more saturated, with less and less first-time buyers.
Lesser first-timers mean more people with existing smartphones. More people with existing smartphones meansa huge potential in the upgrade market. This is where businesses relying on smartphone manufacturing struggle: how do they get them upgrade their phones quicker?
Better is Just Better
Only rightfully then, upgrades are the focal point in this century’s mobile competition. Apple is the region’s biggest player. It dethroned Xiaomi, one of the world’s most valuable start-ups. For several years, Xiaomi held the top seat with its Android-based low-cost phones until Apple stole it.
Apple had also sold more iPhones in China than the US, inspired by the Chinese’s appetite for larger-screened phones.The shift is apparent in the buyer’s inclination from low-cost phones to Apple’s gorilla glass. It is a clear-cut evidence of the change in buyer priorities and dynamics.
Apart from the inclination for larger phones, finance is less of a factor today. Apple tried a less expensive and stripped-down phone with their iPhone 5c earlier but a separate report revealed it was a big flop and lagged behind the more premium iPhone 5s.
It is no longer about cheaper is better. Nor is it about bigger is better. In the Chinese market, better is better. Still, the question on mobile upgrades still hangs in the air. To keep afloat China’s smartphone market is to solve the question.