Smartphone Sales, Future Growth, & Innovation Strategies, Worldwide 2018-2025

Smartphone Sales, Future Growth, & Innovation Strategies, Worldwide 2018-2025

Publish Date: 2Q 2018 | Code: 4750 | File Format: PDF & Interactive Excel

The research is about continuing on the glide path amid slowdowns by inculcating innovative Smartphone Sales, Marketing, & Innovation strategies. The research makes a useful point that long term innovation policy will stir up short term consumer needs; and that players when planning new launches must pay close attention to the prevalent market-consumer dynamics.

Smartphone Sales, Future Growth, & Innovation Strategies, Worldwide-2018-2025
Smartphone Average Cost Per Unit Forecast by Company
Smartphone Brand Loyalty Chart

Features

Smartphone Innovation – What’s next? The reasons which led us to choose this particular project arise from the developments of the smartphone industry in the past couple of years.  Smartphone sales declined for the first time ever in the fourth quarter of 2017. Smartphone manufacturers sold nearly 408 million devices in Q4 2017, down 5.6% from the same period a year ago. That marks the first annual decline in the history of smartphone market.

David Brown, Senior Analyst at Researchica, said, “The rate of upgrade from feature phones to smartphones has declined in the past couple of years due to lack of quality ultra-low-cost smartphones. And people who already own smartphones are now less likely to upgrade to higher-end models and holding on to them for longer periods, as they see no real value for money.”

A new trend has started where existing smartphone owners are even buying nicer feature phones. The Indian Greenfield player Reliance Jio exploited this trend and introduced world’s first 4G feature phone, JioPhone, at a very competitive price of INR 1,500 (US$ 22). Reliance sold more than 50 million JioPhones in less than a year and now selling more than 7 million units each month,” Mr. Brown added.

After a decade of extraordinary growth, when few smartphone manufacturers, particularly Apple, had been generating exceptionally huge demand for their every new smartphone model, the industry is today at a point where even Apple is struggling for survival. A hardcore Apple fan might not agree, but it’s a reality. It reported in April 2016 that its iPhone unit sales fell for the first time ever, and they ended up declining for that full year. Apple’s sales have largely rebounded, though they again slid in the Q4 2017 despite the launch of the iPhone X. In fact, many big brands such as Sony, Nokia, Motorola, Blackberry, and HTC are virtually phased out of business now.

There is no doubt that the smartphone market has been slowing down of late. And the main reason is that the smartphone innovation is completely dead. Over the past few years we’ve seen only small annual upgrades to our smartphones. The smartphone industry is desperately looking for a huge breakthrough that may drastically change the industry, the way the original iPhone did in 2007. And it’s high time even for the so called top players of today to come up with something really innovative not just to be at top but to even be in the market.

It’s not that leading players have done nothing in the recent years, but those were small iterations. Mobile payments finally became a thing, thanks to Apple Pay. Fast charging is now possible, thanks to Qualcomm. Curved screens hit the market because Samsung dared bending glass. All these features look innovative; however, when we evaluate the impact of these developments on the smartphone business and the smartphone manufacturers, these developments fall way short to be considered truly futuristic. 

We sought to analyse the current situation of smartphone market, the unique challenges, and how the smartphone manufacturers can reinvent themselves to counter those challenges and enhance their competitiveness. [That’s exactly what this Report endeavours to answer.]

In particular we analysed: 

  • What would be the fate of Apple and Samsung in the wake of growing influence of Chinese players? Will the growth of Chinese players be sustainable? What should the likes of Apple and Samsung do next?
  • What are the factors that are contributing to the declining demand of smartphones? What should be “the ideal strategy” for smartphone manufacturers in the wake of this slump?
  • What are the most sought after features in smartphones that users are willing to pay (more) for? How is the buying behaviour of smartphone users evolving?
  • Why current market condition is highly favourable for tier 2 and tier 3 smartphone manufacturers? How can they grab this unique opportunity and lead?
  • What are some highly futuristic smartphone technologies & concepts currently under development/ evolution? What would be the impact of 5G networks on evolution of smartphones?


    Such and many other matters we examined led us to come up with this unique research. A research which isn’t focused on any particular technology or company -but rather, is specifically targeted at driving growth through product innovation and/ or innovative sales strategies.

This report explores the changes that strong growth of tier-2 and tier-3 players, alongwith increasing influence of new product segments such as PDA and HMD, would bring to the smartphone market in terms of Pricing, Demand/ Segments, Features, & Innovation. And how do smartphone manufacturers, more importantly circumvent those challenges in their quests to keep continuing forward? Our team studied more than 50 players who have been able to drive sales in overtly competitive market conditions, make blockbuster launch strategies in new markets, bounce back after train of failures, including players who’re prepared rock solid for the next 3 years.

Excerpt#2

As the craze of smartphone is fading and users are continuously searching value for money, smartphone manufacturers are under constant pressure to reduce cost. Smartphone manufacturer Xiaomi entered into Indian market with ‘online-only strategy’, a lean, low-cost method of distribution. The company debuted with online retailer Flipkart in July 2014. This strategy offered Xiaomi nationwide presence at relatively no cost. The cost of establishing physical stores & traditional distribution channels could be huge. The company was able to transfer huge cost savings in the form of discount pricing to its customers. This difference helped Xiaomi offer similar hardware attributes at 40% lesser price than Samsung. As a result, Xiaomi became the 5th largest smartphone company in India within five months of its debut, purely on the strength of its online presence. Xiaomi is now the leading smartphone player in India accounting for 27% market.  Xiaomi is now strategising to keep its lead amid intense competition from strong rivals such as Samsung and Huawei. Apart from device innovation, Xiaomi is also exploring Direct-to-Retail (DTR) approach to cut down its distribution costs further by up to 25%.

Limiting Focus to Emerging Opportunities for Bounce Back

BlackBerry is exploring fresh opportunity apart from its smartphone sales to register growth in the future. In the smartphone segment, BlackBerry is looking to bounce back by focusing on inbuilt security features amid growing concerns of safety of personal data, worldwide. Apart from that, it is looking to capture opportunities arising out of autonomous vehicles. The company is confident that it is well prepared in this segment. Other smartphone manufacturers such as Samsung and Apple are also eyeing for this opportunity; however, BlackBerry seems to be moving ahead and in the right direction.

HTC is working on a blockchain powered smartphone called the Exodus. HTC is currently going through a very bad phase and the market acceptance of this phone will decide the fate of the company. The blockchain powered phone is expected to be in the range of US$ 1,000.

Designing for the Future

Huawei is highly bullish on AI, its role in smart economies, and of course AI powered smartphones as well other devices. Huawei launched its AI driven P20 smartphone series in April 2018. As the technology’s use is in a fairly early stage, it’s an incredibly competitive space, but has an important role in the future of devices; from personal assistants to AI-enabled camera technology. And Huawei has a strong lead here backed by strong R&D. Huawei sold over six million P20 Series devices within 3 months.

Moreover, Huawei has sold 100 million units in the first 6 months of this year, and it is likely to replace Apple from number 2 position by the end of this year.

The smartphone market is definitely going through a transition phase. A situation which is currently more in favour of tier-2 and tier -3 players, and a lot is at stake for tier-1 players. In fact, the market is currently so volatile that tier-2 and tier-3 players or even some new player can take the leadership position within 1 or 2 years. Researchica has thoroughly examined the pipelines of Samsung and Apple, and it is unfortunate that they lack in meeting the market expectations. Although, they are not finished yet, but how long they get to survive this disruption, is something only time can tell. At the same time, it’s a great opportunity for tier-2 and tier-3 players to further strengthen their position in the market either through ground breaking product/s or through aggressive push of sales and marketing strategies.

 

Glimpse of Findings

  • Smartphone sales declined in 2017 for the first time in the history.

  • The difference between tier 1 and tier 2 smartphone players are continuously diminishing from every angle. While tier 1 players, namely Apple and Samsung are gradually losing their premium appeal, tier 2 players lead by Huawei and Xiaomi are continuously upgrading their devices to the same level. Moreover, tier 2 players are challenging the tier 1 players by offering competing features at comparatively 20%-40% lower price points.

  • Exploding batteries hampered Samsung’s brand image and it directly went in favour of Chinese brands Huawei and Xiaomi. Even after recovering from this bad phase, sales of Samsung declined by 0.3% between Q1 2017 and Q1 2018, while during the same period sales of Xiaomi and Huawei increased by 124% and 18%, respectively.

  • Chinese players are likely to snatch more than 70% market in the next 5 years from Samsung and Apple in the high-end category. Apple and Samsung will continuously lose the pricing power across all categories. As a result, Smartphone revenue of Apple and Samsung is projected to decline by upto 50% in the next 5 years.

  • 15% of Apple users are no more looking for the next product from Apple, and more than 45% Apple users are not willing to pay a premium price for same old features. So far, its ability to develop new products that are attractive and customers willing to pay a premium price has secured it much higher gross margins and in sufficient quantity to earn large profits.

  • 42% of existing high-end smartphone users are looking to purchase low cost mobiles next time.

  • Asia, particularly China and India, is the next big market having potential of 1 billion new smartphone demand by 2020. However, Chinese smartphone manufacturers are better positioned to capture this market.

  • Average global smartphone replacement cycle has been growing every year at the rate of around 3.8 weeks per year for the past 5 years. Smartphone users in the US held onto their smartphones for an average of 24.3 months before upgrading in 2017, up close to 4 months from 2014. The difference is just as big in many major European markets. Smartphone users in the EU5 held onto their smartphones for an average of 22.7 months before upgrading in 2017, up close to 4 months from 2014.

  • Growth of AI powered consumer electronics will erode 50% of the smartphone market in the next 5-7 years. 

  • Coming 2-4 years will decide the fate of the Tier-1 leaders. However threat can be contained; it boils down to $200-$350 worth of additional value (specifically for premium category phones), which smartphone makers can procure either via substitution, innovation, or imitation.  

  • Researchica advises tier 1 players to stick with the price range of $800-$1000 while offering small innovations with a mix of push and pull strategies for 3 new years. Any innovative product beyond the price range of US$1,500 will fail miserably.

Unique Attributes of this Research

  • Ratings of top 10 smartphone manufacturers across different parameters of sales strategies, future growth prospects, & innovation, worldwide.
  • Smartphone Innovation Matrix
  • Finding the best selling value proposition of smartphones by 2025.
  • Decoding the most acceptable price points across different consumer segments & categories.
  • Strategies to boosting sales even without innovation. 
  • Phones of the future – evolution of smartphone to intelligent-phone  
  • Market for concept-phones

Questions Answered by the Report

  • What are the key features of smartphone innovation?
  • How smartphone manufacturers are planning for 5G devices? 
  • Which types of changes are in the pipelines of major smartphone manufacturers? How effective will those changes be in gaining user attention, future stickiness, and market share?
  • What do users expect from smartphone manufacturers?
  • What are the current top priorities and challenges for smartphone manufacturers?
  • What features are currently seen as the biggest drivers for smartphone sales? What would be the most sought after features of a smartphone by 2025?
  • What are other technologies and concepts that will drastically erode the sales of smartphones? How smartphone manufacturers can prepare themselves against such threats?
  • Will the smartphone market keep on declining?
    [Scenario planning and market forecast across different segments]

Companies Mentioned in the Report

Apple, BlackBerry, Bright & Quick, Coolpad, Gionee, Huawei, Infinix Mobile, itel, Karbonn, Lenovo, LG, Meizu, Micromax, Motorola, Nokia, OnePlus, OPPO, Samsung, TCL (Alcatel), Tecno Mobile, Transsion Holdings, VIVO, Wiko Mobile, Xiaomi, ZTE.

Table of Contents

ToCSmartphone Sales, Future Growth, & Innovation Strategies, Worldwide 2018-2025
1Introduction
1.1Objectives of the Study
1.2Scope of the Study
1.2.1Smartphone Market
1.3Research Methodology
2Executive Summary
3Smartphone Market Analysis and Future Trends
3.1Smartphone Market Structure and Ecosystem
3.1.1Industry Competitors
3.1.2Buyers
3.1.3Suppliers
3.1.4Substitutes
3.1.5Potential Entrants
3.2Market Attractiveness Analysis
3.3Drivers & Inhibitors
3.4Smartphone Business Models Analysis and Trends
3.4.1Tier 1 Players
3.4.2Tier 2 Players
3.4.3Tier 3 Players
3.5Megatrends Impacting the Smartphones Market
3.5.1Increasing Competition among Handset Manufacturers
3.5.2Apple, Samsung Continuously losing Pricing Power
3.5.3Shrinking Gap between Feature Phones and Budget Smartphones
4Future Generation of Smartphones, Emerging Capabilities and Technologies
4.1Future Generation of Smartphones
4.1.1Technology Outbreaks
4.1.2Challenges
4.1.3Shifting in Potential Market
4.2Evolving Smartphone Features
4.2.1Fast and Wireless Charging
4.2.2Biometric Authentication – From Fingerprints to Palm
4.2.3Foldable and Flexible Display
4.2.3.1Graphene-based Flexible Displays
4.2.4Quantum Dots in Displays
4.2.5Gesture Control
4.2.6Gaze Control
4.2.6.1GazeCapture
4.2.7Brain-Machine Interface (BMI)
4.3Evolving Connectivity Technologies
4.3.15G
4.3.2802.15.4
4.3.3802.11ah (Wi-Fi HaLow)
4.3.4802.11ad
4.3.5802.11ax
4.3.6802.11ac Wave 2
4.3.7Bluetooth 5.0
4.4Computing, Analytics, and Networking Technologies
4.4.1Edge Computing
4.4.2Bioacoustic Sensing
4.4.3Virtual Assistants
4.4.4Deep Learning
4.4.5Machine Learning
4.4.6NLP
4.4.7Cognitive Computing
4.4.8Computer Vision
4.4.93D Cameras
4.4.10Mixed Reality
4.4.11Augmented Reality
4.4.12Virtual Reality
4.4.13Sensor Fusion
4.5Smartphone Innovation via Technology Intersection
4.5.1Internet of Things (IoT)
4.5.2Bluetooth Beacons
4.5.3Blockchain
4.5.4Drones
5Smartphone Sales and Revenue Models
5.1Analysis of Marketing Strategies Adopted by Key Players
5.2The New Era of Competition and Strategy
5.2.1Technology war
5.2.1.1Hardware
5.2.1.2Software
5.2.2Changing Focus of Marketing Mix
5.3Marketing and Revenue Models
5.3.1Key Success Factors of Marketing Innovation
5.3.2Increased Market Attractiveness through Collaboration and Partnerships
5.3.3Operator Tie-Ups are again gaining importance
5.3.4Hunger Marketing
5.3.5Flash Sale
5.3.6High Quality and Aggressive Pricing Strategy
5.3.7Low-Price Marketing Strategy
5.3.8Monetisation via Content
5.3.9Strategies for Low-Income and Rural Customers
6Smartphone Players’ Offerings, Business Models, and Future Strategies
6.1Apple
6.1.1Market Segmentation, Targeting and Positioning Analysis
6.1.2Strengths and Weaknesses
6.1.3Market Size, Revenue Model, and Future Strategy
6.2Samsung
6.2.1Market Segmentation, Targeting and Positioning Analysis
6.2.2Strengths and Weaknesses
6.2.3Market Size, Revenue Model, and Future Strategy
6.3Huawei
6.3.1Market Segmentation, Targeting and Positioning Analysis
6.3.2Strengths and Weaknesses
6.3.3Market Size, Revenue Model, and Future Strategy
6.4Xiaomi
6.4.1Market Segmentation, Targeting and Positioning Analysis
6.4.2Strengths and Weaknesses
6.4.3Market Size, Revenue Model, and Future Strategy
6.5Nokia
6.5.1Market Segmentation, Targeting and Positioning Analysis
6.5.2Strengths and Weaknesses
6.5.3Market Size, Revenue Model, and Future Strategy
6.6Lenovo
6.6.1Market Segmentation, Targeting and Positioning Analysis
6.6.2Strengths and Weaknesses
6.6.3Market Size, Revenue Model, and Future Strategy
6.7BlackBerry
6.7.1Market Segmentation, Targeting and Positioning Analysis
6.7.2Strengths and Weaknesses
6.7.3Market Size, Revenue Model, and Future Strategy
6.8ZTE
6.8.1Market Segmentation, Targeting and Positioning Analysis
6.8.2Strengths and Weaknesses
6.8.3Market Size, Revenue Model, and Future Strategy
6.9LG
6.9.1Market Segmentation, Targeting and Positioning Analysis
6.9.2Strengths and Weaknesses
6.9.3Market Size, Revenue Model, and Future Strategy
6.1OPPO
6.10.1Market Segmentation, Targeting and Positioning Analysis
6.10.2Strengths and Weaknesses
6.10.3Market Size, Revenue Model, and Future Strategy
6.11TCL (Alcatel)
6.11.1Market Segmentation, Targeting and Positioning Analysis
6.11.2Strengths and Weaknesses
6.11.3Market Size, Revenue Model, and Future Strategy
7Conclusions, Recommendations, and Strategic Analysis
7.1Scope for / Significance of Chinese Smartphone Players
7.2Innovation Dilemma and Future of Apple and Samsung
7.3New Role and Importance of Tier 2 and Tier 3 Smartphone Players
7.4Emerging new revenue models offer smarter way to monetisation

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ES & Core Findings
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