& cplSiteName &

Asia Strengthens Its Grip on Smartphone Market

Robert Clark
News Analysis
Robert Clark
1/31/2014
50%
50%

Lenovo's acquisition of Motorola Mobility from Google, the largest ever by a Chinese tech firm, will provide it with access to key markets and the chance to challenge Samsung as the dominant Android brand. (See "Lenovo to Buy Motorola From Google?" and this Google statement confirming the agreement.)

But it also underlines how the center of gravity of the handset business is now very firmly in Asia-Pacific, and especially China.

As a result, you can now add smartphones to the list of consumer electronics products that were pioneered in the West but which are now dominated by Asian firms.

This time it's companies from South Korea and China, not Japan, that have taken the mantle.

Apple Inc. (Nasdaq: AAPL) is the only non-Asian firm in IDC's top six smartphone suppliers in the fourth quarter of 2013, commanding the number two position. Samsung Corp. tops the table, with Huawei Technologies Co. Ltd. third, followed by Lenovo Group Ltd. (Hong Kong: 992), LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

In China, the world's largest smartphone market, the iPhone is being outsold by the cheaper Coolpad, which costs less than $100, and three other local brands, reports Bloomberg. That helps explain why Apple was so keen to enter the Chinese market and increase its presence there. (See China Mobile Gets the iPhone.)

Yet even China, where consumers bought 350 million smartphones in 2013, is becoming saturated, says CK Lu, principal research analyst at Gartner Inc. .

He says the acquisition will help Lenovo to expand beyond its home market: Motorola has brand recognition in North America and Western Europe, where Lenovo is absent.

But these developed markets are declining in importance. Motorola, though, also has an 8% share in Latin America, while Lenovo is strong in countries such as India, Indonesia, and Russia. According to IDC forecasts, emerging markets will account for 42% of the smartphone market in 2017, up from 32% today.

The scale economies that firms such as Lenovo, Samsung, and Huawei can bring to bear will ensure they can continue to dominate a business that is now being driven by falling prices.

Despite these prospects, Lenovo's stock dipped more than 8% on news of the deal, primarily because of the short-term impact on its cash in the wake of Lenovo's recent $2.3 billion acquisition of IBM's x86 server business.

Lenovo CEO Yang Yuanqing told Bloomberg: "Before, we only had PCs as a core business. Now, we've built two pillars: the first is enterprise, and the second is this mobile business."

Yuan says Lenovo will retain the Motorola brand.

— Robert Clark, contributing editor, special to Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
R Clark
50%
50%
R Clark,
User Rank: Blogger
2/2/2014 | 10:52:22 PM
Re: Market saturation
You'd think Apple would get a bit of a bump this year from China Mobile and the 4G rampup, but I guess they won't be chasing the sub-$150 segment in China and emerging.  Bring on the wearables?
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/2/2014 | 3:12:55 PM
Market saturation
Market saturation in China is not something you hear much about, and assuming Apple has been hoping otherwise as it tries to gain ground there.
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 30, 2017, The Westin Times Square
March 20-22, 2018, Denver Marriott Tech Center
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
SmartNICs aren't just about achieving scale. They also have a major impact in reducing CAPEX and OPEX requirements.
Hot Topics
Nokia Bell Labs & Verizon Stretch Fixed 5G to the Home
Dan Jones, Mobile Editor, 11/13/2017
OEMs: Reliance Jio Wants Only Your Software
Craig Matsumoto, Editor-in-Chief, Light Reading, 11/10/2017
Eurobites: Telefónica Reckons Plastic Is Fantastic for FTTH
Paul Rainford, Assistant Editor, Europe, 11/15/2017
Animals with Phones
Why Cats Don't Run Tech Support Click Here
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives