Any technology is in an ever changing state – perhaps none so much as mobile technology – as new manufacturers spring up all over Asia and especially in China and India where large populations can translate into big profits. Samsung and Apple have long dominated the the smartphone scene, not only in the U.S., but globally Samsung and the Android OS have dominated close to 80-percent of smartphone shipments the past two years (see the chart below). Analysts are now acting surprised that the Chinese are coming in to take over the smartphone industry – like those ‘foreigners’ are going to steal business away from the U.S. companies…which could not be further from the truth. Right now, Motorola is the only real U.S. smartphone designer and manufacturer – Apple may be a U.S. company, but make no mistake, the iPhone is a ‘foreign’ made device. Samsung is from South Korea as is LG, HTC is from Taiwan and Sony is from Japan. It looks to me as if the ‘foreigners’ already dominate the smartphone and mobile technology world.
Lenovo is another great company that has been selling Servers, PC’s, laptops (ThinkPads), and tablets so long in the U.S., we sometimes forget that they too are from China. They recently purchase another company as American as apple pie – Motorola Mobility – from Google and will soon start bringing their smartphones into the U.S. Lenovo is one of the better known names from China, but ZTE and Huawei are also large and well-established companies from China…slowly inching their way into the U.S. market. Some lesser known companies are really starting to flex their muscles as well – Xiaomi, Meizu, and OnePlus are other China-based companies. Most were start-up companies and have grown tremendously over the past year or two…and all three are building quality, flagship smartphones for almost half the price of the established firms.
Potential customers in China and India, were just that…potential, but with the economies of the world changing, more jobs are available in these once emerging nations and now those potential customers are turning into demanding customers – they want the improved 4G service and high-end smartphones that we enjoy. Once happy with a 2G or 3G entry-level phone, as their nation’s technology and internet grows so does the sophistication of their customers – they wanted the devices that once only Samsung and Apple could deliver. Their own manufacturers started listening and are building high-end models to compete directly with Samsung and Apple, but at half the cost. Their own citizens could not buy them fast enough, leaving a shrinking market for Samsung and especially Apple, as Samsung was already making some cheaper devices for sale in those countries.
It is only natural that once these companies were established in their own countries that they would want to ‘flex their muscles’ in the European and U.S. markets – where we demand the best, but still want a bargain that Chinese companies can offer. Xiaomi has already started selling their smartphones in India through an exclusive partnership with Flipkart – a local e-commerce seller already established in India. Xiaomi is already selling in most of the Southeastern parts of Asia and is eyeing Brazil as their next target. Xiaomi is often referred to as China’s Apple, although they would prefer a comparison to Amazon – selling through the internet, shipping everywhere and making money with add-ons and upgrades. They snatched ex-Google executive Hugo Barra to help them devise a plan to spread their devices throughout the world and he is estimating that by the end of 2015, they will be throughout the U.S. They have even grabbed up the website mi.com, perhaps to help with sales in the U.S., as Xiaomi does not exactly roll off our tongues.
OnePlus One is another Chinese firm that has a loyal following in the U.S., although they are still struggling to produce enough phones to meet the demand and have set up a lottery type system to ‘raffle’ off chances to purchase a OnePlus One smartphone – this is turning many potential customers off. Smartphones are constantly coming out and the companies must strike while the ‘iron is hot,’ otherwise most techies will move on to the ‘next big thing’…because there are plenty of them. Carl Pei of OnePlus confided that, “It helps that a lot of people don’t know that we are a Chinese firm.” Although I doubt that mentality is still prevalent among current smartphone buyers – we are keenly aware that most of the products we enjoy – Smart TVs, Appliances, cameras and most electronics all come from Asian countries. These companies were already doing a global business, if not yet in smartphones, just about everything else.
Many of these Chinese companies were making what the industry calls unbranded “white labeled” devices, once branded by the carrier’s name, but are now being sold as Ascend and Honor brands – mostly as prepaid devices. Lenovo will slowly start making its move the first of the year once the Motorola deal is finalized by year’s end. Huawei and ZTE, once blacklisted by the U.S. Government as Chinese companies that were spying on us via tech from their companies, are now gaining wider acceptance. Many others have labeled them copycats of others designs…namely Apple…and they claim that once in the U.S. they will face stiff patent-infringement (PI) claims, that are not enforced in their own countries. However, the Chinese headset makers are building up an arsenal of licenses from existing patent holders in preparation for any court battles that may arise. Many companies, such as Huawei and ZTE are generating their own-patented way of doing things.
Another reason to believe that the Chinese smartphone companies will survive and move on to global sales – the intense rivalry that is instilled in their society and that translates into their business dealings. They take a look at the giant market, the cost conscious customers, the price of manufacturing and they develop faster, better and more efficient ways to deal with technology. They may steal an idea or two here and there – all companies do…Apple certainly did not invent the compact music player or smartphone – but then the Chinese firms innovated from there. Now they are working on a way to successfully market their devices in other parts of the world…if they have the same success with marketing that they have had with building a better smartphone, then we should expect to be seeing their smartphones in the U.S…very soon. Please hit us up on our Google+ Page and let us know if you are looking forward to more phones and more competition from China…as always, we would love to hear from you.