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J’son & Partners Consulting presents brief results of the research: Traditional and New Manufacturers of Mobile Devices in Russia and in the World.

 

 

Smartphones Manufacturers Presented on the Russian Mobile Devices Market

 

J’son & Partners Consulting's estimations: share of traditional smartphones manufacturers - Apple, Samsung, LG, Sony, HTC – has a decreasing trend on the Russian market, which is proved by smartphones sales indicator in pcs. for 2012 – 2014, the total share decreased from 91,3% till 57,2% for 2 years.

 

The increasing penetration of B-brand manufacturers is influencing the decreasing market share of traditional manufacturers. B-brands are presented mainly by Chinese and Taiwan companies, which actively expand on the Russian market for the last three years; they provide good equipped – by functionality and by technical characteristics – smartphones in lower average price segment. Total share of smartphones, produced by new manufacturers in total sales, reached 37,4% in 2014 that is 30 p.p. higher than the indicator of 2012.

 

It is worth to point out that Russian operators also increased its share on smartphone market from 1,4% in 2012 till 5,4% in 2014.

 

 

According to J’son & Partners Consulting's estimations, the average smartphone's price by traditional manufacturers has an increasing trend and remains the highest on the market, while average price of smartphones produced by new manufacturers and branded operator devices, on the other hand, had a decreasing trend during 2012 – 2014.

 

Price difference between average prices per smartphone by traditional, new manufacturers and operator smartphones increased in 2012 – 2013.

 

In 2012 the cost per A-Brand smartphone was 1,9 higher the then price per B-Brand smartphone and 2,7 higher than the cost of branded operator smartphone, in 2014 this difference reached 2,7 times and 6,8 accordingly.

 

 

Many manufacturers increased retail prices on devices in 4Q2014. It is worth to mention that increased prices of budgeted smartphones are not that critical for consumers as the increase in more expensive devices' segments. It gives wide potential market growth for new manufacturers and operators, which can offer mobile devices with the price that is in higher demand on the market.  

 

Smartphones Manufacturers on the Global Market

 

Apple and Samsung are still the leaders – total manufacturers share was 40,1% - results of 2014 that is 10 p.p. lower than the indicator of 2012. The competitive situation is getting more intense, market is always moving: smartphones manufacturers are trying to find new ways to conquer mobile audience in order to keep and increase its share.

 

Such manufacturers as Huawei and Lenovo are replacing traditional market players, had they increased its common share per 4,8 p.p. during 2012 – 2014. And also smartphones manufacturers, which are part of the category Others, total sales share of which is increasing very fast, as it can be seen on the figure below.

 

 

 

Chinese brands have wide perspectives to fasten their positions on the global market of premium mobile devices thanks to opportunity to manufacture mobile equipment with low primary costs, and equip devices with all necessary and popular specifications.

 

Share of Samsung is decreasing on smartphones and mobile terminals market, the demand on Samsung smartphones is especially lower in Western Europe and Asia. The company experienced the most solid drop of its share on the smartphone market in 3Q2014, which forced the company to seek new ways to keep its audience of premium segment smartphones.

 

Apple share is decreasing within the researched period, but it is important to mention that after the launch of iPhone 6 and iPhone 6 Plus, Apple could neutralize the loyalty to the Apple brand and new devices were able to mitigate technical and functional advantages of flagman models of smartphones on Android OS, which are not less innovational as Apple.

 

Lenovo company took third place on the global smartphone market with 6,5% share with aggressive growth in 47,6% in yearly indicators during 2012 – 2014. The most prominent sales results had Lenovo company - reached in China, Russia, India, Indonesia and Brazil.

 

Chinese manufacturers – Huawei and Xiaomi – are not in the position of «running behind» anymore on the smartphone market. They produce high quality devices with appealing range of functions, and are offered on the market by lower market price. The important competitive advantages of Chinese manufacturers in the coming future on developed market will become a development of popular socially oriented brand and marketing campaigns, covered large audience.

 

Overview of Range of Mobile Devices, Offered by Leading Manufacturers on the Global Market.

 

Mobile devices market is very appealing for manufacturers of consumer equipment. The number of market participants is increasing, which makes traditional manufacturers to diversify its product range, expanding the line of mobile devices with high technology wearable devices – smart-watches, helmets of virtual reality and fitness trackers.

 

 

 

Peculiarities of Product Range, Offered by Mobile Devices Manufacturers:

 

 

  • Samsung and Apple – the highest number of wearable devices; Chinese Huawei and Taiwan HTS are close to market participants’ data.
  • The number of manufacturers, focused on the development of high technology wearable devices is more than the number of manufacturers that develop the segment of general phones (not smartphones).
  • Manufacturers are leaving the segment of mobile phones and are moving towards multi-functional and technological devices, which create market trend on the market of consumer electronics in the world.
  • It is interesting that if previous traditional manufacturers offered general cell phones (not smartphones) during first market launch, nowadays, new manufacturers miss this category of mobile devices and launch on the market with smartphones and tablet PCs.
  • The leader by the range in all mobile devices categories is Samsung.
  • Alcatel is the only manufacturer among the researched, which provide solid number of non-smartphones in its product line.

  

Expert Opinion

 

In terms of the research J'son & Partners Consulting's specialists surveyed Russian mobile devices market and found out their opinion on the Russian market perspective.

 

Maria Zaikina

Svyaznoy, Head of PR Service

 

-      What are the fisrt successful milestones of operator branded devices in Russia and its sales perspectives?

 

I would like to specify that the model of smartphones sales by operators in Russia is much different than overseas. For example, in USA, operators sell A-Brand devices, “compensating” to the consumer major part of its cost; and revenue, first of all, on long term contracts on cellular communication with relatively high fixed subscriber fee. In Russia, such contract with high fixed monthly fee is not that popular. That is why the model is different - operators do not provide high subsidies on flagman devices but offer smartphones, mainly in budgeted segment, under its own trade mark.

 

An important factor of operator smartphones popularity – is the price. Budgeted segments of smartphones are still developing very fast as they are the key in replacement of general phones by smartphones. And let’s not forget that usually operator offers an additional bonus to its smartphone, for example, like internet package – this is one more reason why to buy such device.

 

Operator smartphones in 2014 had been mainly presented in the segment – till 3 thousand RUB, and competed with budgeted B-Brands, that are not that popular on Russian market. Nowadays, due to increasing prices, operator smartphones transit from the segment of 1,5-3 thousand RUB to the higher price segments, where you can find also A-Brands and more popular B-Brands. So, operator devices are transiting to the segment with higher competitive situation.

 

- What perspectives can traditional and new manufacturers wait for on mobile devices market, your opinion? What strategies will be impelemnted by the key group of providers? What are the competitive advantegies?

 

 

It is not correct to name all B-Brands to new manufacturers. For example, Lenovo, Huawei, Explay, Fly are not “new born” on Russian market and had already win over Russian population. In many cases, exactly thanks to such brands and investments in marketing, infrastructure and services, expanded model range, B-Brands became successful in Russia in general. Smartphones by these brands are presented not only in low price segment, but in medium and high – thanks to popularity on the market and use of expensive technologies they can provide us competitive product.

 

Such B-brands gradually increased its popularity and conquered market shares. Primary they presented devices in a low price segments, and afterwards, when devices were becoming popular in the country, they have started to launch more expensive flagman models. For example, such strategy was used by Lenovo and Huawei in Russia, last year they presented their flagman models: Mate 7 and Vibe Z2 Pro with the price over 35 thousand RUB.

 

At the same time, there were not that many B-brands smartphones in flagman segment on the Russian market – the total number of sold smartphones by B-Brands was not more than 0,5% in this price category. In the category 15-25 thousand RUB, B-Brands indicators are very poor – the share of such companies in the total smartphones sales in the segment increased for 1 p.p. till 3% for the year. Lenovo and Huawei remained leaders.

 

New B-brands that launched dozens of models on the Russian market had formed the most budgeted price segment – till 1,5-3 thousand RUB, so it is more reasonable to purchase a smartphone than general phone now. Smartphones sales in the low price segment start to increase – as a result, shares of these brands also grown, especially with the zero-base start. And now, for example, share of B-Brands in Russia, according to Svyaznoy data (results of 2014) reached around 45% (pcs.).

 

There are several reasons why “new” Chinese, Indian and Russian brands are so popular, but the key one – is the price and availability in the large retail networks with high clients’ traffic.

 

As for the A-Brands, the key role in their success is playing the “force of the brand” – for ordinary customer, such names as SONY or Samsung are saying much more than any other name of B-Brand. Flagman models have a lot of fans. In medium and high price segments, for example, where Samsung, SONY and many other brands have a wide product line, it is very hard for B-Brands to compete with global manufacturers – and it doesn’t matter how well developed a smartphone is, the client in most cases make a choice based on brand’s popularity.

 

Besides “brand’s force”, global manufacturers still have more advantages in front of B-Brands from the point of some technologies. In particular, we can specify curved screens by LG and Samsung – in most cases, exactly A-Brands are launching new devices with new functions on the market, and B-Brands than copy it. But this advantage is close to “zero” with the time. B-Brands which gained a certain weight on the market and reputation, are actively invest in new technologies and some of them are even becoming a “pioneers” of technological process. In particular, we can specify Huawei, which provided the idea to use a slot for SD-storage as another place for SIM card.

 

-    How economic situation is influencing the changes of russian mobile devices market structure by manufacturers? Market forecasts?

 

The role of B-brands on the market will grow in 2015, as people are more and more attention paying to the correlation price/functionality, nevertheless Samsung remained a leader by sales in pcs. in 1Q2015.

 

B-brands have expanded its shares on the market for the last several years, offering devices mostly in the price category – less than 15 thousand RUB and less than 5 thousand RUB. And relatively not so long ago, global popular manufacturers have started to launch on B-brands niche. For example, in the price segment – till 5 thousand RUB you can find smartphones by Samsung and Nokia. We are expecting the increased competition for market share in the price segment 5-10 thousand RUB in 2015.

 

The strongest positions in 2015 will have companies with the widest range of devices in different price segments.

 

Victor Lukanin

Euroset, Deputy Vice President

 

-    Where mobile devices market is going? What perspectives are traditional and new manufacturers waiting on the mobile devices market, your opinion?

 

 

Smartphones sales share on the total phone market in 2014 increased from 47% till 62% vs 2013 (number of sales) and from 82% till 90% (revenue)

 

Samsung is keeping leadership by vendors on the cell phones and smartphones with 21% share (pcs.) and 23% ($). Nokia’s share decreased for 7 p.p. in the number of sales from 26% till 19%, but the vendor still has second place on the market. The third market player is Fly, with increasing share from 10% till 11% (pcs.). Apple is on 5th place and now has same position as Alcatel on the market by pcs. – 7% and took 27% of the revenue from sales.

 

We are not dividing brands on A and B classes. This is an old classification, which doesn’t reflect the real status and vendor’s reputation on the market. It is more correct to specify New and Old brands. We are observing that for several years, customers’ preferences refocus toward smartphones models by new manufacturers - Fly and Lenovo, which have almost the same quality and functionality as devices from the old echelon. In general, Samsung remained as a market leader by the number of smartphones sales – 21%, Apple is next – 11%, and Fly is the third – 3 p.p. increase from 7% till 10%, Lenovo’s share increased from 1% till 5%.

 

Due to the fact that major new-brands are producing their smartphones based on Android, share of devices with this OS is increasing. In 2014 share of Android smartphones increased from 75% till 83% (pcs.) and decreased till 65% ($) due to the expanded range of devices in the budgeted segment.

 

The most prominent growth in 2014 vs 2013 showed price category – till 2 thousand RUB per a smartphone – 221% (pcs.) and 223% ($). Growth share in the segment from 2-4 thousand RUB was 78% (pcs.) and 77% ($). High growth showed the category of 4 – 6 thousand RUB - 56% increase (pcs.) and 57% ($).

 

In 2014 smartphones with 4G support took almost 15% in pcs. of the market and 41% in revenue of sales of all smartphones on the market. Samsung had fastened its position, by increasing share from 4% till 16% in pcs.

 

Sales share of smartphones with large screen size is still low – only 2% of the total smartphones market sales for 2014. In 2014 more vendors participated in the segment than in the previous year. Samsung is still keeping the leadership in the segment – 37% in pcs. and 53% in $. In general, the demand on smartphones depending on the screen size in 2014 divided almost equally between smartphones with 3” = 4” - 47% of all market sales and till 4” - 5,5” - 48%.

 

Sale share of smartphones with NFC support in 2014 decreased in pcs. in comparison to 2013 and reached 17%, in $ - growth of such devices from 30% till 35%. Segment is the absolute leader, vendor’s share was 40% in pcs., and 36% in $.

 

Sergey Sobolev

Megafon, Head of Product Department – Mobile Equipment  

 

Megafon is agreeing with J’son & Partners’ estimations of average smartphone price by traditional and new manufacturers, and also operator devices in 2014. But the number of new manufacturers in our retail network had already overstepped sales of smartphones by traditional manufacturers for 2014. Share of customized smartphones in sales of 2014 was 17%.

 

-    What are the fisrt successful milestones of operator branded devices in Russia and its sales perspectives?

 

In 2013 Megafon launched on the market its own smartphones - MegaFon Login by the lowest market price (1990 RUB) and by this forced other market players, same as manufacturers, to decrease prices on their devices. Hundreds thousands smartphones had been sold, and MegaFon Login became a “symbol” product for Russian smartphone market, and proved that smartphone can be not expensive but still of high quality.

 

During 2013 – 2015 Megafon expanded the model range of its own products under Login brand: additionally to smartphone (3rd generation is available now), 3G tablet PCs became available, and in February 2015 will be launched operator phablet MegaFon Login for 3990 RUB.

 

Tablet PC MegaFon Login 3 (was launched in August 2014), took 30% of tablet PCs sales in Megafon Retail for 5 month.

 

There are no analogues to our devices by correlation price/quality and all of them are showing good level of sales.

 

-      What perspectives can traditional and new manufacturers wait for on mobile devices market, your opinion? What strategies will be impelemnted by the key group of providers? What are the competitive advantegies?

 

On one side, all traditional manufacturers (A-Brands) have very popular brands with the high loyalty level, and this is the plus. On the other, customers today are trying to optimize their costs, and we can observe the active growth in budgeted segment smartphones sales (till 5-7,5 thousand RUB),  where B-Brands models are popular. Budgeted models with solid functionality are popular on the market today. And is very vital for those who only try to use smartphone instead of general phone, just “to try”, if it is suitable and comfortable for them. That is why, it is very important for manufacturers to offer the price lower, and provide high quality characteristics in the fight for the market share.

 

- How economic situation is influencing on the changes of russian mobile devices market structure by manufacturers?

 

Customers try to save and refuse to purchase the smartphone for 10-15 thousand RUB and prefer much cheaper devices. The exception – top class devices (for example by Apple), customers renew the park gradually after the launch of the new model.

 

- Forecast for Mobile devices market development?

 

Smartphones sales in pcs. will further grow, as the trend of general phones replacement by smartphones is still going. But maybe not that fast as last year.

 

Due to macroeconomic factors the growth will be provided by budgeted segment, where operators’ positions traditionally are very strong same as equipment, manufactured under their trade marks.

 

Increasing interest towards phablets, as hybrids between smartphones and tablet PCs. Such device allows to use Internet and other smartphones’ functions more comfortable – to watch the video, read books etc. – at the same time has relatively small measurements. This gives an opportunity to use the device as the only one (it allows to save on purchasing one device, instead of 2).

 

Increase of LTE devices and devices supporting LTE-Advance share. In Megafon retail, share of devices with LTE support in 1Q2015 was 6,5% that is 2 p.p. higher than in 1Q2014. 

 

Sergei Fomin

Marvell-Distribution, Director for Strategic Development in CIS Countries

 

- What are the fisrt successful milestones of operator branded devices in Russia and its sales perspectives?

 

Russian mobile communication market differs from European or American: we almost don’t have subsidized devices, where part of costs is covered by long-term contract. That is the reason why branded devices play mainly in the low price segment, usually providing “first” price. In this case we can speak about the success in regard to sales in pcs., but not in monetary terms. There are almost none operator models in the medium or high segment.

 

-     What perspectives can traditional and new manufacturers wait for on mobile devices market, your opinion? What strategies will be impelemnted by the key group of providers? What are the competitive advantegies?

 

 

The economy of “New Chinese Dragons” success in mobile devices is quite simple. Primary focus on internal Chinese and close markets of South-Eastern Asia, where there is a boom on smartphones with large screens (era of traditional push phones was almost missed), provided solid manufacture volumes. As a result – high decrease in devices’ primary costs.

 

Nowadays, there are no competitors to Chinese manufacturers in the correlation between the screen size/price. The tendency toward larges smartphones screens was supported by traditional manufacturers just recently, but the success of large version of iPhone 6 gives them a hope to keep the share in the medium and high market segments.

 

-    How economic situation is influencing on the changes of russian mobile devices market structure by manufacturers?

 

 

Well, it is obvious that RUB depreciation played good for manufacturers that can provide comfortable retail price for customers – around 10 000 thousand RUB. This will be exactly the segment, where key demand and competition will be focused in 2015. In the meantime, it will force many manufacturers of 2nd echelon, first of all OEM-products, leave the market, as they won’t be able to work with such low-margin sales for a long time. In monetary terms, the correlation of operational systems’ shares, more likely, will remain the same, as despite the uncomfortable price segment of iOS devices, the ecosystem is developed much better, and this will keep sales and provide leadership in the high priced segment.

 

-    Forecast for Mobile devices market development?

 

If to limit all forecasts by one sentence – 2015 will be characterized by the sales growth of devices with 5+ inches screen size, drop in average price in USD (some growth in RUB), decreasing number of market participants and its slight fall at the end of the year in general (5–10 % in USD by smartphones and 25–30 % in USD by push devices).

 

Aleksandr Nikolaev

Explay, Commercial Director

 

-    What perspectives can traditional and new manufacturers wait for on mobile devices market, your opinion?

 

The economic situation on the market is not that easy. That is why the increasing product range and popularity of low cost devices, but remaining level of demand and also decrease of premium segment sales devices will be among the key growth market drivers. Chinese and Russian manufacturers due to their flexibility can increase its share in such terms. First of all because of the price, additional functions, which were “met” positively by the public – for example, the number of SIM cards or analogue TV in some models.

 

-    Mobile Devices by manufacturers – key market trends? How will current economic situation influence the market structure?

 

The tendency of B-brands share increase was obvious in 2014, in 2015 it will remain. As for brands, the advantage has manufacturers that can sell devices by 2014 prices. If look at segments, we can observe the fall in tablet PCs sales, probably due to economic situation.

 

-   What are the fisrt successful milestones and sales perspectives in Russia in the sphere of operator branded devices?

 

It is possible that customers will pay attention on operator devices starting this year. In most cases it depends on operator, model range and the price.

 

Detailed Results of the Research are Presented in the Full Version of the Report:  New and Traditional Mobile Devices Manufacturers in Russia and in the World

 

Example of Report’s Content

 

Resume

Introduction

1. Overview of Global Mobile Terminals and Smartphones Market, 20122014

1.1. Global Mobile Terminals Market Volume

1.2. Global Mobile Terminals Market Structure by Manufacturers

1.5. Global Smartphones Market Volume

1.6. Global Smartphones Market Structure by Manufacturers

1.7. Key Trends by Manufacturers on the Global Mobile Terminals Market

2. Overview of Russian Mobile Terminals and Smartphones Market

2.1. Mobile Phones and Smartphones Market Volume, pcs. and $

2.1.1. Mobile Terminals Market Volume, pcs. and $, 2012–2014 (quarterly dynamics)

2.1.2. Mobile Terminals Market Volume, $, 2012–2014 (quarterly dynamics)

2.1.3. Mobile Terminals Sales Structure: Smartphones and Mobile Phones, pcs., 2012–2014 (quarterly dynamics)

2.1.4. Mobile Terminals Sales Structure: Smartphones and Mobile Phones, $, 2012–2014 (quarterly dynamics)

2.1.5. Smartphones Market Structure by Operational Systems, % of sales, pcs., 2012–2014 (quarterly dynamics)

2.2. Average Retail Price on Mobile Terminal, Market Structure by Price Segments

2.2.1. Dynamics of Average Retail Price per Mobile Terminal (USD, RUB), 2012–2014 (quarterly dynamics)

2.2.2. Dynamics of Average Retail Price per Smartphone in Russia, USD, 2012 – 4Q2014 (quarterly dynamics)

2.2.3. Mobile Terminals Market Structure by Price Segments, % of sales, pcs., 2012–2014 (quarterly dynamics)

2.2.4. Smartphones Market Structure by Price Segments, % of sales, pcs., 2012–2014 (quarterly dynamics)

2.2.5. Mobile Phones Market Structure by Price Segments, % of sales, pcs., 2012–2014 (quarterly dynamics)

3. Overview of Mobile Devices Manufacturers

3.1. Mobile Terminals and Smartphones Market Structure by Manufacturers

3.1.1. Dynamics of Mobile Terminals Market Structure by Manufacturers, % of sales, pcs., 2012–2014

3.1.2. Dynamics of Mobile Terminals Market Structure by Manufacturers, % of sales, $, 2012–2014

3.1.3. Dynamics of Smartphones Market Structure by Manufacturers, % of sales, pcs., 2012–2014. (quarterly dynamics)

3.2. Brief Profiles of Manufacturers

3.2.1 Samsung. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.2. Apple. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.3. Huawei. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.4. ZTE. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.5. Lenovo. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.6. Explay. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.7. HTC. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.8. Alcatel. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.9. Fly. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.2.10. Xiaomi. Product Range Policy, Overview of Bestsellers, Sales of Structure by Federal Regions.

3.3. List of Popular 2014 Models

3.4. List of New Models, Which will be Launched in 2015

3.6. Technological Trends by Mobile Terminals and Smartphones Manufacturers:

3.6.1. Traditional Manufacturers. Averages Price, Share in Total Sales, Structure by Technologies (LTE, 3G, NFC, DS).

3.6.2. New Manufacturers. Averages Price, Share in Total Sales, Structure by Technologies (LTE, 3G, NFC, DS).

3.6.3. Operators as Mobile Equipment Manufacturers. Averages Price, Share in Total Sales, Structure by Technologies (LTE, 3G, NFC, DS).

4. Russian Mobile Terminals and Smartphones Market Forecasts 

Conclusions

 

This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.