China in your hand

Phone fashions come and go. There used to be an old internet joke: when men compared each other’s mobile phones, it was the only time when men would boast about a small size.

If that were ever true, it’s certainly not true these days – as IDC found out last month, one of the fastest growing areas of mobile phone growth was in the phablet market, that awkward cross between the phone and the tablet.

Does that mean that the conventional smartphone market is dying. Not in the least: the latest figures from Gartner, demonstrated strong growth for Samsung in the past year. According to the research company, Samsung’s smartphone sales recorded a double-digit increase (19.3 percent) in the third quarter of 2017. Gartner pointed out that the Galaxy S8, S8+ and Note 8 smartphones had brought back growing demand for Samsung products, achieving quarterly double-digit growth for the first time since 2015.

Will this situation last however? There have already been industry analysts pointing out that this happy state of affairs for Samsung may have a limited timespan and that there’s pressure on the vendor – not from Apple, its more traditional rival in top-end smartphone arena, but from geographically closer to home to the Korean company.

One area that has shaken up the market is the arrival on the scene of the Chinese vendors – or rather their reinvention. A few years ago, it was a different story: if you were offered a Chinese phone, most punters would have shied away. Yes, they’d be cheap but the quality was poor with a camera that was barely the functional and there’d even be the possibility that they didn’t connect to a UK network.  And if it all went wrong – there weren’t many options when it came to complaining. Let’s just say that support could be patchy.

That was then, however, it’s quite a different story and the arrival of the Chinese vendors has shaken up the scene. And changed it to such an extent that market share is going to change dramatically.

Just take a look at the introduction of Honor’s newest phones last week.  Honor, the mid-range, on-line only, brand from Huawei, unveiled two new models as part of its assault on the European market and talked optimistically of cracking the market over here. It already claims to be the top online brand in China and is hitting the top spot (or very close to it) in other European countries.

And Honor is not a one-off: Huawei itself is obviously making a fair crack at the market. Xiaomi, which is gearing up for an IPO, will have the clout to make headway over here. One Plus and Wiko have also made their presence felt in the UK and there are many others who are beginning to mop up those sales. It could change even more in the future: Oppo and Vivo are major brands in China but have done little in the UK so far.

What has changed to make Chinese phones such an attractive option.  Undoubtedly, one of the biggest changes has been the quality of the products – there’s been some considerable investment in smartphone technology and while the phones remain cheap, they’re not far off the quality of the best.  Users may well be happy to sacrifice processing power or camera quality for a model that’s several hundred pounds cheaper.

Move away from handset deals

There’s also been a change in the way that people make purchases. As was noted in a GfK survey last month, customers have been shying away from long-term contracts and instead are opting for SIMO deals, where the phone purchase is separated from the mobile contract. 

UK sales in particular have been very much based on the idea that the phone purchase is tied up with the contract – the idea that punters can shop around for an appropriate model to complement their SIM card would have been anathema just a few years ago, but it’s increasingly becoming the way to go.

What is there to hold Chinese smartphones back? The perennial problem is that of support, not many Chinese firms have a physical presence here and you may find yourself at the mercy of third-party suppliers. You may also find that Chinese software is not updated as much as some western software is.

A more pressing problem with Chinese is the issue of security. Both One Plus and Wiko were left embarrassed when news broke that their phones were sending hidden data back to China. And, as Wired reported, the back door in One Plus’s software was an open invitation to hackers.

For many people, any such security breaches would be a no-no. Just as for some people, a less than perfect camera would be a no-no. But there are plenty of customers for whom these are a minor issues and the cheapness of the Chinese offerings overshadow everything else.

The Chinese vendors have made their presence felt in so many markets around the world that it seems inevitable that they well make their way into the UK market. We can already see the change in attitude in some customers’ minds. Fashions change in mobile phones and it may be time for the Chinese to be at the forefront of purchasing decisions.

 

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