2 June 2016
Dialing up Mid-market Competition
Vietnam’s smartphone market is booming, with big-brand, high- performance phones taking the lion's share. The sector’s growth, however, is being driven by the more modestly priced handsets, mainly from a new generation of highly competitive market entrants.
According to a recent survey by the international market research company International Data Corporation (IDC), smartphones now account for 51 per cent of the total Vietnamese mobile phone market. In the last quarter of 2015, 3.3 million smartphones were sold in the country, at an average price of US$183, with many phone providers discounting high-performance smartphones soon after their initial introduction. During the same period, the net value of smartphone imports totaled US$607 million.
The number of lower-priced imported smartphones is also on the rise. IDC projects that the domestic smartphone market will grow from 15 million units (with a total value of US$2.4 billion) in 2015 to 28 million units (worth US$3.6 billion) by 2019. Foreign companies will continue to dominate the market despite concerns over warranty compliance.
High-grade Smartphones Lead the Market
According to figures from IDC, Samsung and Apple were the most popular smartphone brands in Vietnam in 2015. In total, Samsung took 35.6 per cent of market share in Q2 of 2015, up from 30.1 per cent in Q4 of 2014. This consolidates its lead position in the market, partly because it is the only brand to offer 24/7 customer service in Vietnam.
The iPhone accounted for the second-highest level of revenue, with 24 per cent of market share. While this represents an 11 per cent drop compared to the last quarter of 2014, IDC maintained the fall reflected the impact of the grey market on sales of official products. Vietnam remains a viable market for Apple, which last year launched Apple Vietnam LLC.
With a reputation as the phone for businesspeople, Taiwan's HTC is still the brand that most Vietnamese entrepreneurs prefer. The company's total revenue for the first quarter of 2015 was US$1.3 billion, an increase of 22 per cent compared with the same period in 2014. The after-tax profit was US$11.6 million in Q1 2015. Figures to September 2015 also indicate that the company's overall turnover continues to increase.
For Sony, 2015 appeared to be a turbulent year for its Vietnamese operation. According to the company, high-grade smartphones, notably the Xperia series, will now be prioritised over its mid- and lower-range models, sectors that are not considered to be the Japanese company's strong points.
Mid- and Lower-range Smartphones Driving Growth
Despite the market focus on top-range, high-performance smartphones, mid-range models remain hugely competitive in the Vietnamese market. "As a result of the rapid fall in prices, the penetration rate of smartphones has increased,” said Vo Le Tam Thanh, IDC's Market Analyst Specialist. “In fact, the cheaper smartphone segment is the main source of market growth. Six out of 10 smartphones distributed in Vietnam now cost below US$150."
"Mid-grade phones are proving their worth, with strong product performance, a wide choice of designs, and a number of unique features," said Nguyen Minh Huy, a technician with one of Ho Chi Minh City's largest mobile networks.
Among the more notable manufacturers in the mid-range segment is Oppo, a Chinese mainland smartphone producer, and Asus, a Taiwanese computer hardware and electronics company.
Oppo is now among the fastest-growing smartphone brands in Vietnam. In Q1 2015, Oppo had 10.4 per cent of the mid-range market share, putting it behind the two big players, Samsung and Microsoft, which command 35.2 per cent and 24.2 per cent respectively, and exceeds the combined turnover of Apple and Asus in Vietnam. Its success is seen as being down to its aggressive promotional activities, along with a policy of targeting more remote areas to increase market share.
In 2013, Asus' market share in Vietnam was almost zero. By 2014, however, the success of its super-cheap Zenfone series – the Zenfone 4 is priced at under US$90 – saw the company emerge as a significant player. By the end of Q3 2015, this early success had resulted in spectacular growth, with Asus ranked as the second-largest smartphone vendor in the mid-range sector (after Samsung's 14 per cent market share).
Several well-known mainland smartphone brands also have a significant presence in the Vietnamese market. The two most notable players are Shenzhen-based Huawei and Beijing's Lenovo.
"In Vietnam, Microsoft continues to challenge global trends, while the market has become highly competitive compared to many other countries in the region,” said Daniel Pang, Head of IDC's Consumer Equipment Research Group. “Microsoft's business strategy is taking a lead in terms of the more affordable products, while Apple and Samsung still dominate in the premium segment."
Taking a wider view, Nguyen Thanh Phong, owner of a mobile phone outlet in Ho Chi Minh City, said: "Mobile phones are still an attractive market, with many old and new brands prospering in Vietnam. In particular, 2015 proved a good year for those mid-range phones priced over VND3 million [US$150]."
For more market opportunities, please visit: http://research.hktdc.com/.