Friday, August 09, 2013

Smartphones: The changing of the guard continues. Panasonic out. China Mobile, Xiaomi in big push.



Xiaomi looks to take low-end share of the Chinese smartphone market >>

KEY MOBILE TRENDS: commoditization, decling ASPs and margins.

Last month, NEC announced it was leaving the smartphone business and possibly the handset business altogether (see my entry: "NEC's Minolta Moment"). NEC was once a top global handset vendor and number one in Japan.

Now, according to sources out of Asia, it appears that NEC's compatriot Panasonic will exit the smartphone business as well. The reason is clear: on-going losses in a increasingly competitive market. It's time to move on. Barriers to entry keep coming down, and so are ASPs and margins. Panasonic's smartphone push was doomed.

In reality, the marketplace won't notice the void. Panasonic's share of the pie was so thin, this is hardly worthy of much reading. However this is another signal of how drastically the handset business has changed during the past decade or so. During the mid- to late-'90s, Panasonic was consistently a top-five global handset vendor, and was a market leader together with NEC in Japan. Expect more big-name brands to sneak out of the hardware business during the coming years.

One of the key trends in the smartphone business is the changing of the guard. The old-time players are leaving, new blood is coming in.

So here is news of a smartphone push from two Chinese players, China Mobile and Xiaomi. I remember Xiaomi well from a report I wrote back in 2007 when I was a Nokia employee, highlighting this growing Chinese player. One Nokia manager got back to me to assure me that top management knew all about Xiaomi and in fact, Nokia's CEO at the time marked the company as a top future handset competitor in the Chinese market. Commoditization was always a key concern, and drove strategic thinking long before most industry followers realized.

The China Mobile news is not unprecedented: operators have been introducing in-house branded handsets for decades. But China Mobile is not just some operator: it's the world's largest by a margin. With 740 million subscribers, if you want to gain real market share in China, you want to work with China Mobile.

China Mobile's two handsets, Android devices based on MediaTek guts, support TD-SCDMA, China's own 3G standard. Many vendors, including Apple, do not have TD-SCDMA models yet.

Note that China will soon have 300 million Android users, which is about the population of the United States. China in becoming Android nation.

China Mobile's first branded smartphones: Androids for $80 and $210

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