China changes rules of smartphone battle

Caroline Gabriel/Wireless Watch
14 Aug 2012

smartphone wars

Samsung has promised “something big” for September 1, probably the latest Note to steal some thunder from the expected “iPhone 5” debut on the 12th. Squeezed between those two dates is Nokia World, where the Finnish firm is likely to unveil its first Windows Phone 8 Lumia models, as it struggles for visibility between the big two.

At least Nokia has something different to show off – it is increasingly hard for other Android players such as HTC, Sony, Motorola and LG to be seen at all under the shadow cast by Samsung on the Google OS landscape.

However, it is too early to call the sector a duopoly. Google's acquisition of Motorola and its own stepped-up Nexus strategy may shift the battle lines; Sony's latest results indicate that its buy-out of Ericsson is bearing fruit; and with China now the world's largest smartphone market, the rules are changing rapidly, in favor of less traditional vendors.

Chinese vendors gain in largest market

China is the best indication that this is still an immature and fluid industry. The country is now the dominant force in global smartphones, doubling its purchases over the past year to account for 27% of all shipments in the second quarter. According to calculations by research firm Canalys, 42 million smartphones shipped in China, up 199% year-on-year and 32% on Q1. By comparison, the former number one market, the US, made up 16% of a global total of 158 million devices.

There is little comfort in this shift for western handset makers like Motorola, Nokia or even Apple. While Samsung retained the lead it took from Nokia last year, with 17% of the Chinese market in Q212 (but down from 28% in Q1), most of the growth benefited domestic suppliers. Chinese vendors shipped 25.6 million units, a huge year-on-year growth of 518%, and took 60% of the space between them. By contrast, non-Chinese manufacturers grew at a more stately 67% to ship 16.7 million smartphones.

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