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LAST WORD: The Two Smartphone Markets
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The Two Smartphone Markets

Which One Are You?

By Mike Cormack


PHONE 06I've just recently bought my first ever Chinese brand mobile phone. It's a Huawei P9 phone and I'm very pleased with it: my previous model was a HTC One M8, which was okay, if marred by a few annoying flaws, like the inferior camera and the way that scrolling downwards (for example when reading lengthy news articles) would too easily swipe left or right, so that you then went onto a different page. The Huawei phone though has no such flaws (or none that I've managed to identify as yet). It's thin, the screen moves crisply, stores plenty music, has a dual-lens camera and a great display that makes reading a pleasure.


PHONE 06 hlAs I update my phone every two years, the latest models always seem impressive, but this is just a sign of how fast the technology is developing. I've never been what marketers call "an early adopter", the kind of person who always has to have the latest phone, or computer. Nor do I need the top of the market – or, more accurately, I can't justify to myself paying the top market prices for whatever difference in performance. I prefer to let a consensus build and then survey my friends and family to see what they recommend. Smartphones are too expensive an outlay to come away disappointed or unable to do the functions you really need. I have a cousin who works in tech who does buy up all the hottest items, and I can still vividly remember his frustration when he bought an Amiga CD32 (okay, this was a long time ago) and realized that it was a piece of junk.


My wife on the other hand is a dedicated iPhone fan. Though she's Chinese, she displays no nationalism when it comes to tech products. She sticks to Asus when it comes to laptops, and is now on her fourth iPhone. (A sneaking part of me thinks it just because they're small enough to fit in her jeans pocket). She likes the convenience, the style, and the usability of the iPhone. She's happy to pay a premium to get a high-end model that she knows will be good quality. Yet, oddly, she is utterly indifferent to camera quality and hard-drive capacity (neither using her phone for music or photography – I know, crazy!), caring only for reliability and usability. She also has no interest in downloading all the latest apps, which is odd, because she's a software engineer. But then she just wants to use things, not to have to work on them. So the iPhone is perfect for her.


PHONE 03It's funny that I end up buying a Chinese phone and my wife prefers a US company. But tech products carry no flag. They either fulfill user expectations, or they don't. I'm old enough to have seen former favourites fall by the wayside when their products got sloppy, such as Amstrad and Commodore in the 1980s (despite the Commodore 64 still being the biggest selling home computer model ever – oh, how I loved mine), and Sega in the 1990s. The tech market moves fast and it's ruthless. Products live or die based on their merits. And on that level it is good to see a Chinese tech product getting it right.


Huawei, accordingly, is no longer content with the domestic market: it's now gunning for dominance of the international smartphone market. Already the world's third largest manufacturer, it's aiming to rise rapidly in developed markets. In the UK, for example, it has gone from ninth (1.3%) of sales volumes, to seventh (2.1%) in the last year, and is aiming for 20% within the next five years. That's some serious ambition. The goal is clear, and the strategy simple: just make some great phones at lower prices than everyone else. (No-one said it would be easy).


PHONE 02In our own way, my wife and I personify the two different markets for smartphones: one will pay more for perceived superior quality (however defined), while the other is happy with however much phones have advanced in the period since their last purchase, and just wants a good deal. The former make up, I would guess, maybe 20% of the market, the latter the remaining 80%. But here's the thing: that 20% of the market generates 80% of the profits: a true Pareto Principle in operation.


So while Huawei and Samsung and HTC are scrapping it out for dominance of the mass market, Apple's ascendancy over high-end phones means it makes far more doing far less. Hence, though it would be good to see Huawei demonstrate that China can build a great smartphone company, the really impressive move would be to knock the iPhone off its perch, which would mean making a fantastically brilliant smartphone for which everyone would go crazy. That's the real goal for any phone manufacturer.


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