FOCUS: Prospering smartphone market to see tighter high-tech brand rivalry in 2018

By Yekaterina Yezhova

MOSCOW, Jan 29 (PRIME) -- Russians were hungry for expensive, big screen smartphones in 2017, when sales jumped 5–8% to a record high of almost 29 million devices, bringing retailers 375–384 billion rubles, major phone sellers said, expecting to see in 2018 a hotter competition among manufacturers and further growth in demand for handsets with advanced technologies.

“The smartphone market is developing at a breakneck speed. Technologies make several steps forward within a year. Tough competition between manufacturers reflects on customers, who increase demand for new devices. As of the end of 2017, M.Video sold 18% more smartphones than a year earlier, which is almost four times higher than market average,” Sergei Sukhorukov, head of the electronics retailer’s mobile appliances department, said in a research note.

“The main growth drivers were, first, appearance of bezel-free displays, and, second, widening of assortment with interesting new devices from Chinese brands. We can certainly say that we’ll see many interesting solutions in 2018, while competition will tighten even more.”

M.Video calculated that smartphone sales grew 15% in 2017 to 375 billion rubles and 5% to 28 million devices. Retailer Euroset saw an 18% increase to 383.7 billion rubles and a 7% rise to 28.6 million units, which is a record high since 2014, PR Director Alexandra Pertseva told PRIME.

Retailer Svyaznoy’s Commercial Director Dagmara Ivanova said smartphone sales went up 7.8% to 28.9 million units.

One of the reasons behind the market growth was a greater number of devices sold through credit and installment offers, which, in its turn, pushed demand for expensive phones higher with an average price gaining 9–10% in 2017 to 13,400–13,415 rubles, the retailers said.

Sales of smartphones with a price tag of more than 40,000 rubles grew by more than 25% in units, and devices for 10,000–20,000 rubles rose 30% in units, M.Video said.

Svyaznoy sold 55% more smartphones with a price of over 30,000 rubles in units in 2017. “Expensive gadgets were in demand because of, among others, popularity of credit and installment offers, which allow buyers to get what they want and stretch expenses over a long period rationally,” Ivanova said.

Brand oligopoly

Half of the market is in the hands of three names: the long-established leaders South Korea’s Samsung and the U.S.’ Apple were joined by China’s Huawei.

Sales of China’s Xiaomi, Huawei, Honor; Finland’s Nokia, and Spain’s BQ Mobile doubled in 2017 in units. The Russian market saw a revival of Nokia in 2017 with a full range of devices, and the brand got 5% in sales in units in September–November 2017 and has growth potential. Chinese manufacturers OPPO and Vivo came to Russia in 2017, M.Video said.

“We see a rise of Chinese brands on the Russian market. Their share in revenue gained 3 percentage points to 23% in 2017, and the share in units went up 4 percentage points to 34%,” Pertseva at Euroset said.

Speedy, big, frameless

“Unlike shrinking adjacent markets – such as feature phones, tablets, and cameras – smartphones will stick to a growing trend in 2018. The share of 4G/LTE smartphones will rise: devices without 4G support will be soon considered obsolete since they’ll fail to be up to advanced realities,” Pertseva at Euroset said.

M.Video said 4G smartphones dominate the market, and about 75% of devices sold in 2017 in units support 4G as compared to 53% in 2016. “The replacement process is speeding up and the share could reach 90% by the end of 2018,” the retailer said.

The share of smartphones with NFC, a technology of contactless data transfer within a small distance, stood at 29% in 2017 compared with 19% in 2016 and 18.5% in 2015, Ivanova at Svyaznoy said. “Smartphones with the NFC function will gain popularity further because they make the process of buying simpler and safer,” she told PRIME.

Smartphones are getting larger. “The market almost lacks devices with a diagonal of less than 3.7 inches. On average, every fourth smartphone sold in 2017 was larger in diagonal than 5 inches. Demand for devices with more than 5 inches in diagonal more than doubled in 2017 in units,” M.Video said.

“In 2017, Samsung produced Galaxy S8 and kicked off the era of bezel-free devices. After that, every manufacturer offering a new range of devices used this solution in flagship models: Apple iPhone 8, LG G6, Doogee Mix, Vivo V7+, Sony Xperia XA, Xiaomi Mi Mix. Popularity of such design grows and we can expect that the portfolio of every manufacturer will have a frameless device in 2018.”

(55.8288 rubles – U.S. $1)

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