Mobile communication and computing are fueling further market expansion in the smartphone segment.
The Android platform is driving product development and manufacture in China’s smartphone industry. Although many will continue to use Windows Mobile OS, more companies are adopting the former to take advantage of its open source attributes. Makers are likewise looking to leverage the more than 100,000 applications supported by the platform.
ZTE, Huawei and Yulong have released compliant handsets. In 2H10, the first launched about 10 models, including the Racer, Link and X850. Besides China Unicom, these phones are now carried by H3G in the UK, Bouygues Telecom in France and Vivo in Brazil.
Android phones are currently the main product lines of IMC International Mfg Corp. Ltd and Reach Tech (Xiamen) Co. Ltd. Most releases from the former use Android 1.5. The supplier is planning to roll out 2.1 and 2.2 versions this year.
Mobile phone design house Reach Tech is enhancing its R&D capability to manufacture more handsets running on the popular platform. It expanded its product development team from a dozen to about 50 people in early 2010.
With large enterprises such as HTC, Motorola and Samsung releasing midrange and high-end models, China suppliers target the low-end and midlevel sectors to avoid direct competition. Besides weak technical capability, makers, particularly small ones, are finding it difficult to obtain authorization for Google Mobile Service. A number of enterprises are therefore launching Android handsets without GMS capability.
The rising popularity of Android in China reflects a global trend. Although Nokia’s Symbian OS will continue to drive more than one-third of the world’s smartphones, the former is rapidly catching up. Global output of mobile phones based on this platform grew by more than 800 percent in 2Q10 and even higher in 3Q, according to Canalys. In the US, devices based on this OS collectively represent 34 percent of the market. The country is the largest smartphone consumer worldwide, and the system is mainly used in this area.
But despite the strong penetration of Android, Windows Mobile 6.5 OS will secure its mainstream position in China. Several makers believe Windows Phone 7 will help the system retain its lead.
Still, some suppliers predict that no single platform will dominate the smartphone line. They think that the five operating systems, namely Symbian, Apple’s IOS, RIM, Windows Mobile and Android, will establish their niches in the next five years.
Strong smartphone market
Smartphone product & price trends
Taiwan: Touchscreens top smartphone trends
Mobile applications, falling handset prices and open systems are the major factors driving growth in China’s smartphone manufacturing industry. Functions that support communication and computing are becoming the benchmarks for product development and upgrade efforts in the line.
Rising demand for handheld devices with convenient Internet access is fueling orders for smartphones. Decreasing prices help boost adoption and sales, especially in highly subsidized markets where the main differentiator is the cost of the data plan instead of the unit.
Worldwide, the line accounted for 19 percent of the total supply in 2Q10, according to ABI Research. In 3Q, phone vendors sold 81 million smartphones, up 90 percent from 42.8 million during the same period in 2009.
IDC data showed that for the first nine months of last year, global handset companies sold 200.6 million smartphones, an increase of 67 percent YoY. The segment outpaces the overall growth rate of mobile phones sixfold as carriers continue to expand their range of brands and customers seek more browsing and multimedia features.
In China, about 200 mobile phone manufacturers are capable of producing smartphones, representing 20 percent of the total supplier base, which also includes design houses. Large enterprises are launching products in partnership with telecom carriers, but small and midsize makers still specialize in regular handsets.
Yulong was set to release six Android models in 2010. Shenzhen Wanyuan Industries Co. Ltd has introduced Windows Mobile 6.5 and Android 2.1 variants. It will roll out 3G versions as well. The smartphone output of IMC increased by 5 to 7 percent YoY last year.
Smartphones from China suppliers generally belong to the low-end and midrange categories. These adopt Android and Windows Mobile OS, and support GSM, CDMA and 3G networks. Aside from basic mobile phone functions, current selections incorporate a camera, internal memory, Bluetooth, MP3/MP4 playback, FM radio, games and web browser. Wi-Fi and GPS, which used to be limited to high-end varieties, are now found in more mainstream models.
Touchscreens are also increasingly used. Smartphones equipped with these have larger than 2.8in displays. Units without use 2.4in screens, and regular or QWERTY keypads. Some slide-type variants are designed with both touchscreen and QWERTY keypad to satisfy customers’ requirements.
China-made smartphones range from $100 to $300, depending on the screen size and type, memory capacity and functions. Low-end products are between $100 and $130. These support GSM and CDMA, Windows Mobile 6.5 and Android, Bluetooth 1.2/2.0/2.1 and Wi-Fi. They come with a 2.4 to 3in touchscreen and 1.3 to 2MP camera.
Midrange versions operate via W-CDMA, CDMA2000 and TD-SCDMA, in addition to technologies adopted in entry-level units. These have a 2.8 to 3.5in resistive touchscreen, a 2 to 5MP camera, Wi-Fi, Bluetooth 2.0 and 2.1, GPS, a TV receiver and G-sensor. Quotes are between $131 and $200.
High-end 3G/HSDPA variants come with 3 to 4.3in capacitive touchscreens. On top of features found in midpriced types, such devices provide Bluetooth 3.0 and a 5 to 8MP camera. These range from $201 to $300.
IMC has released the model H6 Android 2.1 smartphone, which runs on quadband GSM 850, 900, 1,800 and 1,900MHz. Equipped with a 3.2in HVGA touchscreen with trackball, the product supports Wi-Fi 802.11b/g, Bluetooth 1.2, Java, WAP/MMS, eBuddy, Opera, Facebook and Skype. It has a G-sensor and a 2MP camera with fl ashlight. The unit also provides up to 512+256MB memory and 4GB of storage extension via a TransFlash card.
Most China enterprises purchase chipsets from MediaTek, Qualcomm, NXP, Hisilicon and Rockchip. They acquire touchscreen panels from TPK, Young Fast, Wintek, J Touch and Chimei.
Manufacturers expect the hardware processing capability of smartphones to be faster in coming months with the use of enhanced chipsets. Consequently, mobile applications for the segment will also increase.
Apple’s store has more than 250,000 of such programs, and Google’s Android over 100,000. Makers such as Reach Tech are planning to release their own mobile applications soon for Android phones, which will be then be offered to customers free of charge.
Suppliers forecast prices will slide in the next few years as the line continues to develop. They predict up to 5 percent quote reductions in the next six months.
Meanwhile, older components will disappear from the market and newer ones with larger capacity will be launched. Chipset providers such as HTC, Motorola and Samsung will also turn into competitors.
Touchscreens are leading R&D trends in Taiwan’s smartphone industry. Higher camera resolution, QWERTY keypads and larger displays of about 3.5 to 4.3in are also emphasized in the latest models.
Polarized designs are being released in the entry-level and high-end categories. In the first, the only major differentiator is the price. For upscale units, product performance and multimedia functions are the key determinants.
Some upscale variants are optimized for gaming, and audio and video playing. These are equipped with high-resolution AMOLED displays, 720p HD camcorders, Dolby Mobile, and SRS Wow HD. HTC Corp. offers models with stands for placing the unit on the table while viewing a movie or browsing the Internet.
Taiwan remains a major production hub for iPhone and Android handsets. Its smartphone industry has been growing since the debut of the first. Market Intelligence & Consulting Institute or MIC predicts the segment will enjoy a 70 percent increase in outbound shipments in coming months.
Midrange and high-end models will be the main revenue earner. The market for entry-level products, however, will also expand beginning 2012 as 3G penetration heightens in developing countries, MIC predicts. Taiwan’s largest 3G solution vendor, MediaTek, is set to launch its 3.5G chipset this year.
The island’s position as an important subcontracting partner of many internationally known brands, including Nokia, Motorola, Sony Ericsson, LG, Palm, Apple and RIM, is fueling sales among local companies. In 2009, the area accounted for 6 to 7 percent of the global export volume of mobile phones. The ratio was estimated to have climbed to 9 percent in 4Q10.
Taiwan exported an estimated 76 million units last year, up from 46 million in 2009. iPhone and Android-enabled models accounted for a significant portion of deliveries.
Symbian and BlackBerry OS was used in 155 million smartphones worldwide last year. Android and iOS were found in only 46 million and 40 million handsets, respectively, but suppliers acknowledge that these are the fast-growing segments. MIC predicts that Android will take up 24 percent of the market by 2013, especially with the expected release of more models based on its 3.0 platform in coming months.
Aside from iOS and Android, Microsoft is pushing its Windows Phone 7, which supports Xbox Live, Windows Live, Bing and Zune services.
Model: HTC 7 Surround
IMC International Mfg Corp. Ltd
Reach Tech (Xiamen) Co. Ltd
Shenzhen Wanyuan Industries Co. Ltd
Shenzhen Wanyuan Industries Co. Ltd
Note:This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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