TBR's 2016 predictions on devices market
New ways to pay for smartphones level the Android playing field
Trend: A drop in entry-level Android smartphone ASPs to nearly $50 industrywide, and new smartphone financing programs will enable lagging OEMs to kick-start growth in China and leading vendors to capitalize on growth in India.
Driver: Slowing growth in developed markets such as the U.S. and Europe and rising levels of saturation in emerging markets such as China and India force vendors to lower ASPs to remain competitive; and lower ASPs trump technical specifications as the primary purchasing differentiator.
Result: Smaller, more nimble and innovative vendors upset the established order in the smartphone market. In tandem with Android smartphones inching toward becoming a commodity device, the life cycle shift from the typical two-year refresh cycle to one that is nearly on-demand or ad hoc fuels growth of these vendors and raises them to market share heights nearly equal to those of Samsung and Huawei.
“Good enough” devices dominate Android markets, and vendors such as Samsung with significant stakes in premium markets are enduring consumers shifting their purchase habits for primary devices from premium price bands to midrange and entry-level prices. In contrast, vendors with volume-centric business models designed to run at thinner margins such as Asus, Acer, Karbonn, Coolpad and Xiaomi are finding greenfield opportunities with Samsung users looking to switch brands.
Jack Narcotta is devices practice analyst at Technology Business Research
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