HONG KONG/SINGAPORE: Slowing innovation at iPhone maker Apple gives
Asian rivals their best chance yet to conquer developed markets, retailers and
consumers say – thanks to better designs and lower prices.
Apple last week unveiled new iPhones with wireless charging, an
edge-to-edge screen and dual cameras – all features already widely available in
phones from China's Huawei and Oppo, and Samsung Electronics.
While Apple must convince buyers to fork out nearly US$1,000 for its
high-end model, challengers are tilting at the luxury market, offering similar
features for less money.
Chinese vendors, formerly seen as churning out cheap phones with
copycat innovation, have upped their quality game and now control nearly half
the global mobile market. By cramming high-end features into affordable
devices, and using a canny mix of promotion, advertising and retail reach, they
have also won over some loyal Apple users.
She said Huawei, ZTE, Lenovo and TCL – all Chinese firms – were among
the top-10 best-selling smartphones in its stores.
Chinese manufacturers' rapid growth has been fuelled by strong domestic
sales, but they now export 40% of their smartphones, almost double the number
just three years ago, according to CLSA.
Huawei, whose smartphone shipments to Europe jumped more than 50% in
the first half of this year, is poised to overtake Apple as the world's
second-largest vendor.
The Chinese firm's confidence was on show in a short Facebook video ad
ahead of its "RealAIphone" launch next month, using a clown to poke
fun at Apple's facial recognition feature that unlocks the new iPhone.
Huawei plans to unveil its top-of-the-line Mate 10 phone on Oct 16,
with artificial intelligence-powered features such as instant translation and
image recognition. And media reports speculate the phone will have an
edge-to-edge screen, and undercut the iPhone on price. Huawei declined to
comment.
With their growing scale and the flattening of hardware improvements,
other Chinese firms are also looking to crack the high-end smartphone market.
Xiaomi, for example, unveiled a full-screen phone this month that
features a sleek, all-ceramic 'unibody' design and 12-megapixel front camera.
The special edition Mi MIX 2 retails for US$720. Also, Xiaomi, Oppo and Vivo
are working with Qualcomm to embed ultrasound sensors under smartphone screens
to improve the touch function.
"Chinese brands with growing scale, access to the same supply
chain, rising components buying power, aggressive marketing and value-for-money
offerings have stalled Apple's growth rate and nullified the differentiation
points," said Neil Shah, research director at Counterpoint.
Apple declined to comment beyond what their executives have said
publicly about why they hold off on certain technologies.
Still a big gap
To be sure, Apple maintains a healthy market share lead over Chinese
rivals in the premium segment, and few experts see Apple fans switching from
the iPhone X to Huawei's Mate 10.
"The biggest challenge they (Chinese firms) face would be proving
to consumers their products and brand are worth paying that much for,"
said Xiaohan Tay, an analyst at research firm IDC.
"Apple has taken years to build that premium brand image, and
Samsung too. If they can pay a little more to purchase an Apple or Samsung
phone, most consumers may still continue to do that."
In the US$600 plus segment, Apple has 63% market share, against just 3%
for Huawei, and the US firm's retention rate of around 82%, versus Huawei's
52%, suggests it will be tough for Chinese firms to raise their prices,
according to UBS.
The average selling price of smartphones from the top-3 Chinese makers
- Huawei, Oppo and Vivo - is just US$248,or two-thirds less than the cheapest
iPhone 8.
Yet experts say the threat of competition is real, especially as buyers
pay more attention to smartphone apps than hardware features.
"How much impact would a US$1,000 iPhone really have on UX (user
experience) of WhatsApp, or YouTube, or Snapchat?" said Sameer Singh,
founder of research firm Tech-Thoughts.
"The most popular apps being available on
both platforms (Apple's iOS and Google's Android) really makes the experience a
bit of a wash, making it harder to justify the price point based just on
features. This isn't all that different from the PC industry 10-20 years ago.
At one point, a PC was a PC irrespective of the manufacturer." — Reuters
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