Soomal Annual Report 2016: Smartphone
Author:Soomal
Source:eng.soomal.com

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In 2016, Soomal reviewed 25 smartphones on audio, display, call quality and camera. The number is slightly fewer than that of the previous year. Limited by manpower and energy, models we chose are latest released and popular in China. Also we raised the level for testing, among these 25 smartphones, the cheapest one Meizu MX6 is about $300. Although those basic smartphones are sold at a large quantity, and spread the latest 4G network, they may not be the best to choose in the future. According to IDC's report, during the year 2016, the average price of smartphones raised from 1200 Yuan (about $190) to $259, and the price of accessories raised, too. Chinese forks are tending to purchase a better smartphone rather than just a basic one as the income gains.

To enter a premium smartphone market, in addition to work hard, opportunity is also important for manufacturers. Samsung Galaxy Note 7 fired, recalled and cancelled, Apple iPhone 6s and even 7 series shut down unexpectedly, but only part of them been recalled in China. These incidents gave Chinese brands an opportunity to entry the premium smartphone market. vivo, Huawei, Xiaomi and other Chinese barads released their latest flagship models and pulled up the average cost of domestic smartphones.

Although the headline is Smartphone, we are not just concerning smartphones, we are concerning all devices and contents that have close connection with smartphones, such as Smart Home, Voice Assistant, VR and so on. On CES 2017, intelligent voice service system represented by Google Home and Amazon Alexa attracted lots attention. In China, Jingdong cooperated Iflytek uses Dingdong voice assistant connects other household appliances that support Jingdong Decsmart, trying to build Chinese Smart Home.

In addition to social and communication, gaming and entertainment are also important applications for smartphones. The year 2016 is called as the very first year of VR industry. The most impressive products of VR are HTC VIVE and Sony PlayStation VR. Also, Chinese manufacturers provided various VR products and hardware solutions in ChinaJoy 2016. However, contents such as videos or games are so lacking that the fast-growing VR hardware cannot be fulfilled.

In 2016, the number of China's auto production and sales is over 28 million. The huge market and fierce competition force those century-old traditional automotive industry cooperates with modern IC, computer and smartphone industry. Intelligent vehicle and automobile became another topic of CES 2017.

Upgradation of Chinese Brand Smartphones

In the past, Chinese brand smartphones represents replica and undurables. But things changes last year.

The edge curved AMOLED display brought great success to Samsung on smartphone. However, Galaxy Note 7, the latest Samsung flagship model, is dead. While, Apple released iPhone SE/7/7 Plus and Apple Watch 2, but battery problem occurs, we also met unexpected shut down several times when outdoor using in a low temperature. iPhones did not sell that much in China 2016.

However, iPhones are still the most popular smartphone in the world. iPhone had been born for more than 10 years, sold for more than a billion, and the design and technical characteristics standard for this industry.

The downturn of Samsung and Apple in China gave chance to other brands to catch up with. In 2016, the total number of China's mobile phone shipment is 560 million, of which domestic brands reached 498 million. Contrary to many people's expect, the best seller brand is no longer “中华酷联” (ZTE, Huawei, Coolpad and Lenovo), and becoming OPPO, vivo and Huawei. In the past, Xiaomi and other Internet-related brands were the best sellers, but OPPO and vivo proved the offline retailers are still the most important channels.

The market shares and reputation of domestic smartphone brands also gained in 2016. We saw more shipments with better quality and technique. With domestic household income growth and technical progress, users are no longer just concern about the CPU and RAM performance, manufacturers released smartphones with high resolution front camera, high image quality rear dual-camera, or (a) separated DAC chip(s) to provide better unique choice, and began to seek a breakthrough in industrial design. This competition will be the test the strength of manufacturers' R&D, less will survive. Simple and crude high performance in CPU and RAM or even deception will only bring a tragedy result.

Bargaining Power: The domestic smartphone manufacturers not only have a larger share in consumer market, but also in the upper reaches supply chain. Sony turned from Apple and Samsung to China in CMOS image sensor market, and even provides a large number of customized models. ESS, AKM and other audio IC manufacturers regard Chinese brands as the most important customers, and provided mobile version of premium DAC chip, such as ES9028, ES9038, as well as AK4376.

How is the oversea market of Chinese brands? India, another country with over a billion people, overtook the U.S. last year to become the world's second-largest smartphone market by users and is projected to generate a billion smartphone sales in the next five years. Chinese smartphones makers, such as OPPO, vivo, Lenovo, Xiaomi and Gionee are increasing looking to India for growth overseas. Although Samsung is still holding the largest market share in India and Apple acquiring most profit, Chinese smartphones are killing India's brands, and captured over 40% market share. Those brands had survived in a price, manufacturing, marketing and advertising war in China, and used similar strategies in India. Besides price war, patent rights and tariff could also hinder further growth in India, OPPO, vivo, Xiaomi and Gionee are planning to invest hundreds of millions dollar to build industrial parks in India. However, to our surprise, Transsion, an unknown brand in China, is the leading smartphone vendor in Africa. This manufacturer was the first Chinese smartphone maker paying lots attention to Africa and gave the selfie solution for the black.

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