Component shortages cut smartphone brands by two thirds
The number of active smartphone brands around the world is down to almost 250 in 2023 so far from over 700 in 2017 as a result of the chip shortage.
A maturing user base, improving device quality and the recent industry headwinds are some of the reasons for the declining number of active brands says Counterpoint Research.
At its peak in 2017, the global smartphone market saw more than 700 brands fiercely competing. By 2023, the number of active brands (that have recorded sell-through volumes) is down by two-thirds to almost 250, according to Counterpoint’s Global Handset Model Sales Tracker across 70 key countries.
Local smartphone brands such as Micromax in India and Symphony in Bangladesh, have lost significant share or even exited over the last five years. However this reflects the earlier decline in smartphone brands across Europe, such as Sagem and Siemens iback in 2005 with a massive shakeout of the European industry.
In a rapidly evolving smartphone industry, small brands have struggled to keep up with big brands across many fronts. While big brands have continued to invest in R&D for 4G and 5G, manufacturing and capacity building, small brands have been largely dependent on white-label devices.
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Small brands capitalized on the market’s transition from 2G to 3G/4G, benefitting from strong entry-tier demand, particularly in Africa, Asia and Latin America. However, the needs of the average mobile phone consumer have been evolving since and the user base has matured. Therefore, there is now a greater demand for better specifications and design, brand value and ecosystem integration.
The rise of Chinese brands like Xiaomi, OPPO and vivo has also accelerated the decline of small brands. Chinese brands have been able to introduce significantly better smartphones at aggressive price points, providing customers better value for their money.
From the COVID-19 pandemic and component shortages to the ongoing global economic slowdown, multiple headwinds have affected smartphone brands across the board in the recent past. For big brands, it has been relatively easier to shore up profit margins in this market environment. But small brands have struggled to keep operations running.
Going forward, the number of smartphone brands will continue to decrease, and large global brands will be in the best position to adapt to all the macroeconomic headwinds and technological transitions in the market.
Small-scale or even incumbent brands looking to survive in this market need to invest in R&D to differentiate, be prudent with their target segments and marketing strategies, track the competition closely and identify gaps and opportunities to succeed says Counterpoint.