Samsung did something crazy last October — it introduced a non-flagship phone with new features its top end devices didn’t even have. It also threw two massive launch parties for that phone, one in Malaysia and another in Madrid.
The 2018 version of the Samsung Galaxy A7 and A9 weren’t new by any means. The A range phones get refreshed every year with newer processors and some trickle-down tech from its Galaxy S series, such as water resistance and always-on AMOLED displays. But this year’s phones were completely different. Loaded with four rear cameras, the Galaxy A9 hints at what’s to come in next year’s flagship Galaxy S10.
So why is Samsung switching strategies suddenly and making a big deal of its midrange phone? The answer, as always, is simple: China.
With over 208 million phones shipped in 2017 according to data from analyst firm Gartner, local brands such as Huawei, Oppo, Vivo and Xiaomi hold 90 percent of the market share in the first half of 2018. As such, the phone market in the Middle Kingdom is a tough one for most to crack.
Samsung had a great start there, five years ago, it owned 20 percent of the market, but today, it just owns a mere 2 percent, having found itself being priced out of the competition by cheaper and hungrier local Android rivals.
“In China we’re struggling, but we know what we have done wrong, and we’re putting lots of effort to fix it. We’re looking to bring back the Chinese customers’ love and loyalty, and I do believe maybe from next year we can see the recovery in China,” said Samsung mobile chief DJ Koh.
Koh’s new strategy is to target millennials, focusing on a big screen and a camera that can post great pictures on social media. The A7 and A9 phones can do all of that without the flagship price tag.
Even as Samsung starts gunning for China, local competitors aren’t letting up. Chinese manufacturer Oppo mostly makes midrange phones. It brands them as flagships, adding features such as a Time-of-Flight (TOF) camera and an in-screen fingerprint scanner.
Oppo also plans to release an app to take advantage of the TOF camera features and use its 3D sensors for AR. But at the end of the day, the company believes it will have another thing that will make its phones fly off the shelves.
“Design will make us stand out,” said Oppo’s overseas market product manager Chuck Wang in an interview with Techhnews. Wang believes that the company’s focus on making beautiful phones will help resonate with its customers.
China’s definitely ripe for a shift in market strategy, and Samsung may be able to tap into this with its Galaxy A7 and A9. A key strategy, could be looking into higher quality devices, which is what the A7 and A9 offer, while also figuring out how to get consumers closer with their phones.
Analyst firm Gartner breaks it down even further, classifying what we would typically call low-end and midrange phones as basic phones, of which 208 million were shipped in China last year. The firm estimates that that number will increase to 228 million by 2022, with Huawei, Oppo, Vivo and Xiaomi dominating the market with 90 percent share in the first half of 2018.
Gartner attributes these Chinese firms’ success to products with superior price performance, better retail strategy in online and shops, while featuring aggressive marketing in traditional and social media channels.
“Chinese mobile phone users are more attached to their devices than their global counterparts, integrating their work-personal lives, and they have exceptionally high adoption of mobile payments, online shopping and social apps during their 24/7 digital lives,” said Angie Wang, a senior principal analyst at Gartner.
“Future market growth will be driven by upgrades and both product quality and customer experience are key in the eyes of these upgraders. Investing in tight integration of artificial intelligence, hardware and software for delivering customized experience will be key to capturing growth, especially in premium segment.”
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