Thursday, November 24, 2011

China Overtakes U.S. as World's Largest Smartphone Market

It's no surprise to analysts, but it's newsworthy all the same. China has overtaken the United States for the first time to officially become the world's largest smartphone Relevant Products/Services market. So says Strategy Analytics.

The market research firm reports that smartphone shipments reached a record 24 million units in China during the third quarter of 2011. Smartphone shipments reached just 23 million units in the United States.

"China's rapid growth has been driven by an increasing availability of smartphones in retail channels, aggressive subsidizing by operators of high-end models like the Apple iPhone, and an emerging wave of low-cost Relevant Products/Services Android Relevant Products/Services models from local Chinese brands such as ZTE," said Tom Kang, director at Strategy Analytics. "Nokia currently leads China's smartphone market with 28 percent share, while HTC heads the United States smartphone market with 24 percent share."

Apple, Samsung Chasing Hard

Handset shipments grew 20 percent annually to reach record levels in China in the third quarter of 2011, according to Strategy Analytics. Competition is increasing rapidly from local Chinese brands ZTE and Huawei. What's more, the firm reports, Samsung and Apple are chasing hard.

If China Telecom launches a CDMA iPhone 4S early next year, Strategy Analytics expects Apple's share to spike further. HTC and Sony Ericsson were the big share gainers this quarter as their Android models captured shelf-share in major cities of east and south China.

In terms of the Asia Pacific, China is first in handset shipments, followed by India, Japan and South Korea. Together, these countries account for 70 percent of the region's market by volume.

"The United States remains the world's largest smartphone market by revenue, but China has overtaken the United States in terms of volume," said Neil Mawston, executive director at Strategy Analytics, noting that China is now at the forefront of the worldwide mobile Relevant Products/Services computing boom.

"China has become a large and growing smartphone market that no hardware vendor, component maker or content developer can afford to ignore."

Android Rising

China's status as the world's largest smartphone market explains the rise of Android, which is predicated in large part on lower-cost smartphones.

"While there are plenty of people in China who can afford very high end smartphones, there are plenty more who cannot," said Avi Greengart, an analyst at Current Analysis. "Android has done extremely well at the low end, particularly from native Chinese companies that are selling literally tens of millions of Android smartphones into that market. So this is not at all surprising."

But, as Strategy Analytics noted, Apple has set its sights on China. Apple has mentioned in several of its investor calls that it is slowly growing its retail business there. Greengart noted that Dell, too, is focusing on China with its smartphone brand.

"China is, without a question, a huge and important market for almost any major manufacturer. HTC sells phones in China," Greengart said. "China has all sorts of unique challenges as well, but in terms of volume, it's no shock or surprise to anyone that as phones get smarter they are getting smarter all over the world, not just in the West."

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