Will US Consumers Become More Receptive Towards Chinese and Indian Smartphone Manufacturers?
Smartphones are currently synonymous with two market leaders, namely Apple and Samsung. Currently responsible for more than 50% of the overall smartphone sales globally, Apple and Samsung both have continuously tried to make their presence felt on the global platform through technology and innovation. Both of these market players are, however, facing competition from Chinese and Indian companies on their home turf, the US. These companies are not only expressing an interest to enter the US soil, but also trying to dislodge these two market vendors from their top spot.
Players like Lenovo and Huawei are trying to expand in US while others like Xiaomi are opening up online stores, which would sell low cost accessories and smart phones on the foreign soil. These smartphone manufacturers are managing to develop and sell products, which would make consumers value them more than just a device company. Most of them are working towards creation of products that would work best as self-contained ecosystems. Till now, only HTC has been able to achieve so, wherein the products enhances the digital experience of the consumers. Others are coming up with services which would make them see more than just smartphone companies. To cite an instance, the Chinese video streaming site LeTV introduced a smartphone, whichis expected to be available to US consumers within a year.
It’s not that cheap smartphones haven’t been around, but they came with weak processors, small screens and dated software. Bigger players like Samsung took note of this discrepancy and offered better models with better cameras and bigger screens, albeit at a higher price. Xiaomi helped in breaking this trend. They came up with a new wave of smartphones with high endspecs at a relatively lesser price. Furthermore, to strengthen their position in the market, they focused completely on direct sales to avoid costs of retail network. Another such example is Micromax from India, which has a well-known and established distribution system enabling them to sell high volumes of smartphones. Nurturing this trend further has been Cyanogen. They not only provided an alternative operating system to the Google services laden version of Android, the company powered OnePlus One handsets which started the trend of consumers preferring these lower priced phones. Growing middle class, end of carrier subsidies and other trends have actually been creating growth opportunities in such developed economies and companies like MediaTekare completely focused on this lower end space. Furthermore, carriers in the US are actually introducing new phone leasing plans, which would reduce consumer’s reliance on subsidies, thereby making these low cost phones more attractive.
However, the biggest challenge for these new manufacturers is to establish themselves as a brand in a market where 41% share belongs to Apple. Most of these companies agree that marketing has become a huge priority. The Chinese brand ZTE announced sponsorship with New York Knicks, Golden State Warriors and Houston Rockets NBA team. Micromax roped in Hollywood’s actor Hugh Jackman for advertising their products. Pricing analysts thinks that these companies have to spend a disproportionate amount of money to get in the market. However, besides trying to create a presence, another problem that these brands face is image problem, as most of these brands are widely mistrusted.
In US, this distrust is a major problem. While the consumers in China or India would buy the handsets outright, the US consumers see what carriers the mobile devices support. This is actually good for consumers who can pay premium rates in installments. This installment payment method is popular, because of which it might be difficult for the Chinese players to generate interest in the USA. This is the same reason because of which Apple, Inc. managed to stay in profit without having to introduce less expensive models.
These small vendors from China and India are relentless in their approach. However, it is still unlikely that any startup smartphone company will be able to overthrow Samsung and Apple. It would definitely affect the profit margins of the big players, especially as they struggle to maintain their consumer base. To combat these, Samsung is investing huge amounts of money in marketing to maintain their dominance in both the developed and developing nations. On the other hand, Apple, too, is desperately trying to convince the market that they can grow their smartphone share beyond their home ground, US.
It is true that all smartphone manufacturers are trying their best to develop products that would have a prominent place not only in the pockets but also in shaping your life. However, what the companies need to learn is that they should impart value through their devices and not try to overestimate consumer’s demands.