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December 10, 2015

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Home » Business » Biz Commentary

Lots of hype, but what’s actually new here?

By Zhu Shenshen | December 10, 2015, Thursday | Print Edition

Winter looms for Chinese smartphone vendors.  I could feel the chill while attending a series of recent industry events held to introduce or promote new products. Innovation seemed to be in deep freeze.

The global smartphone industry is rounding out the year with its first single-digit annual growth on record, according to research firm International Data Corp (IDC).

The admonition voiced by Yu Chengdong, consumer business group leader of Huawei Technologies, China’s No. 1 smartphone brand, reminded me of Dickens’ ghost of Christmas future.

“Only two or three smartphone vendors (Apple, Samsung and Huawei) will survive,” he said in recent interviews. “Other players will be phased out in three to five years.”

For top Chinese vendors like Huawei, Xiaomi and Lenovo, the temperature is dropping.

At the Xiaomi conference in Beijing last month, Lei Jun, the company’s founder and chief executive, recalled with nostalgia the initial stages of creating the electronics company and developing the first-generation phone model. 

As one of the audience, I was moved by his emotional words. Lei is, after all, one of China’s most successful entrepreneurs. But that didn’t change my attitude toward Xiaomi’s latest products.

At the event, Xiaomi launched three new products, including the Redmi Note 3 at a price of less than 1,000 yuan (US$156), a new tablet computer with upgraded hardware, and an air purifier.

“It’s a very, very, very competitive market,” Lei said with a heavy sigh.

Xiaomi didn’t give any clues about its flagship model Mi 5. That had been expected since the model Mi 4 debuted in June of 2014.

Lenovo Group Ltd, which used US$2.9 billion to acquire Motorola Mobility from Google Inc,  posted a loss of US$714 million in its fiscal second quarter ended September 30. The company blamed the loss largely on clearance of a backlog of smartphones and said it might take “four to six quarters” to turn the money-losing handset business to the black.

Two days after Xiaomi’s conference, Huawei held an event in Shanghai to unveil its new flagship model Mate 8 and a round smartwatch. It was the company’s first global debut of high-end models on the Chinese mainland.

The Mate 8 features full metal design, fast fingerprint recognition and  internatonal roaming services. With a pricetag of more than 3,000 yuan, it is targeted at the so-called “business elite.”

Huawei has been criticized for a lack of “surprises” in the new flagship model. Fingerprint recognition and metal design are already features of entry-level models costing less than 1,000 yuan.

In the circle of journalists who cover these IT events, it’s not uncommon to hear grumbling like: “We attend a dozen smartphone debut events a month, but they are almost always the same.” 

Indeed, the high frequency of smartphone conferences underscores the need for spin-doctors to keep brands in the public eye amid cutthroat competition.

I came away from the past month’s events staged by Xiaomi, Huawei, Vivo and Coolpad with a set of recurring buzzwords spinning in my head: metal design, fingerprint biometrics and security, long battery life and selfie-friendly camera. 

Industry executives at these conferences seemed abnormally preoccupied with which brands would emerge the winners in sales during the Single’s Day online shopping sweepstakes on November 11.

What excitement exists in the industry seems to be coming from offshore. Users are buzzing about Apple’s Force Touch technology, HTC’s virtual reality expansion, Yota’s dual-screen design and Samsung’s edged screen display. But I haven’t seen much enthusiasm swelling around domestic brands.

As slower global growth damps sales of smartphones, manufacturers and vendors are looking to the sheer size of the China market to help rescue the industry. However, sales in China are forecast to be in the low single digits in 2015, according to IDC.

That compares with the heyday of smartphone sales not all that long ago, when growth rates were 15 to 20 percent annually. If IDC is right, this year will be the first when the rate dropped from double digits.

Worldwide this year, smartphone sales will increase 9.8 percent to 1.43 billion units, IDC predicts. Slower growth is expected to intensify slightly over the 2015-2019 forecast period, the research firm said.

Among Chinese brands, Xiaomi now expects 2015 sales of 80 million units, lower than its previous forecast of 100 million.

OnePlus, a start-up firm with business overseas, shuttered its classy “experience stores” in Shanghai and other major cities recently, just several months after opening. 

Still, not all is gloomy for China’s smartphone vendors. Huawei’s self-developed mobile chip and Vivo’s Hi-Fi music experience and 3D display screens possibly portend the advent of “spring” just around the bend for the industry.

Biz Commentary


 

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