The smartphone market is showing a "K-shaped" consumption trend, with two segments, high-end and entry-level, performing well. Consumers' preferences are polarized, and price has become a key factor influencing purchase decisions.
In the field of high-end flagship models, Apple and Samsung continue to dominate the market. Apple's iPhone 15 series is the top three best-selling models, and is favored by consumers for its outstanding quality and innovative performance. Folding screen mobile phones have also become a new hot product, leading the growth trend of the high-end market. It is predicted that in 2024, the shipment of high-end models will account for 73-74%, becoming the dominant force.
Diversification of the brand pattern
In the global smartphone market, Apple surpassed Samsung to reach the top, occupying 20.1% of the market share. The rapid rise of domestic brands such as Xiaomi, OPPO, and Transsion has also squeezed Samsung's share of the global market to a certain extent.
In China's domestic market, the performance of domestic brands is even more eye-catching. Huawei, Honor and other brands have formed a three-legged situation with Apple and Samsung. In particular, Huawei has regained its place in the high-end market with the hot sales of the Mate 60 series.
Consumers are becoming more and more diverse in their consideration of mobile phones. According to the survey, 66% of consumers value useful information such as prices, discounts, and product descriptions. 54% of consumers prefer loyalty programs with exclusive discounts. The concept of environmental protection has also begun to influence consumers' purchasing decisions, with 40-50% of people saying they are willing to pay more for environmentally friendly products.
The popularization of 5G mobile phones is accelerating
The adoption of 5G handsets is accelerating. According to the data, in the quarter of 2024, 77% of new models are 5G-capable, a significant increase from 56% in 2021. Currently, 62% of smartphone users say their phones support 5G networks.
The widespread adoption of 5G networks is influencing the usage habits of consumers, especially the younger generation. They are more inclined to take advantage of the high rates of 5G networks to stream videos, play online games, or use their phones as hotspots.
With the popularity of 5G mobile phones, consumers' expectations for 5G network performance have also become rational. In 2022, 48% of 5G mobile phone users said that the experience on 5G networks exceeded their expectations. By 2024, that number will drop to 38%. As 5G networks continue to mature, users' expectations for performance will be more in line with actual capabilities.
Despite the increasing popularity of 5G phones, most users still feel that phones are not fully realizing the full potential of 5G networks. 53% want more applications and experiences optimized specifically for 5G networks. Another 26% expressed disappointment with the current lack of innovative 5G applications and services. This presents an opportunity for operators to make a splash, with 50% of 5G handset owners saying they are looking forward to receiving a 5G package that includes innovative digital services.
Consumers are still relatively satisfied with the current mobile service, and have no plans to change operators for the time being. 67% of subscribers haven't changed their mobile service provider in the past year, and only 18% said they might consider switching carriers in the next year.
Foldable screen phones go mainstream
As smartphones become entertainment hubs, consumer interest in foldable phones is growing, thanks to the ability of foldable phones to offer a larger display screen when unfolded. In particular, the starting price of clamshell folding mobile phones has been as low as about 6,000 yuan, and it is moving towards the mainstream consumer market.
According to CMR's forecast, China's mid-range folding phone market will grow at a compound annual growth rate of 52% by 2026. More and more mobile phone brands will also launch folding screen products at different price points in 2024 to meet the needs of different consumer groups.
2024 promises to be the year when rollable phones really go to consumers. Previously, rollable phones have been stuck in the concept product stage, but in 2024, they are finally expected to reach mass production and enter the field of vision of consumers.
Smartphones are more "smart"
In 2023, artificial intelligence (AI) will move from concept to reality and begin to be widely used in various fields. In 2024, AI technology will be further integrated into smartphones to improve user experience, optimize performance, and support more advanced features.
Mobile phone chips have begun to be ready for the application of AI, equipped with powerful neural network processing units (NPUs. In 2024, we will see mobile phone manufacturers take full advantage of AI technology, develop a variety of interesting AI use cases, and integrate AI functions into flagship models.
Chinese mobile phone manufacturers are competing in the research and development of AI mobile phones. Xiaomi leads the AI mobile phone market with the flagship 14 series; Honor, on the other hand, explores cross-device AI capabilities on the MagicBook Pro 16. OPPO, on the other hand, has positioned its brand as AI innovation through large-scale marketing campaigns. We see a clear divergence in AI product strategies among Chinese manufacturers in 2024, but their common goal is to increase consumer awareness and adoption of AI features to build sustainable business models.
The Chinese market is highly competitive
In the quarter of 2024, China's smartphone market grew by 1.5% year-on-year, achieving positive growth for the fourth consecutive quarter. This was mainly due to the promotion during the Chinese New Year holiday, which brought strong momentum to the market.
In this fierce market competition, Huawei performed the best, with a year-on-year increase of 69.7%. This is largely due to the hot sales of the Mate 60 series of 5G phones, as well as Huawei's brand influence in the high-end market. Despite Huawei's resurgence, the Honor brand also achieved 11.5% year-on-year growth thanks to popular models such as the X50 and Play 40, as well as the expansion of offline channels.
Vivo's best-selling models in the low-end and mid-range segments, such as the Y35 Plus, Y36 and S18 series, helped it gain the top spot in the quarterly market share at 17.4%. Honor and Apple followed with 16.1% and 15.7% share, respectively. It is worth noting that Apple's sales in the Chinese market have been directly impacted by Huawei, and there has been a decline.
For the full year, Shi expects China's smartphone market to achieve low-single-digit year-on-year growth. With the rise of generative AI technology, Chinese phone makers have begun to integrate this feature on their flagship models. We expect that in 2024, mobile phone manufacturers will continue to explore new applications of AI, and these innovations will eventually penetrate the mid-range market as well.