THE International Data Corp. (IDC) recently reported that the habits of Filipino gadget users are fast-changing, which resulted in reshaping the local market
Based on IDC’s latest Asia/Pacific Quarterly Mobile Phone Tracker and Asia/Pacific Quarterly Personal Computing Device Tracker, smartphone shipments declined 7 percent to approximately 15 million units in 2017, while tablet shipments posted a 30-percent year-over-year (YoY) drop to 1 million units. On the other hand, personal computer (PC) shipments in 2017 amounted to around 2 million units, showing flat growth of 1 percent YoY.
In his presentation, Jennsen Ooi, IDC Asia-Pacific senior market and client devices analyst, said smartphone shipments recorded its first decline since its introduction into the local market, as there were less first-time buyers and the aggressive competition posed by top brands, such as Samsung, Oppo and Vivo, resulted in some vendors being ousted from the market.
He also mentioned that tablets sales continued to drop as users found them not too practical, following the introduction of smartphones with bigger screens in the market.
In its report, IDC said Cherry Mobile emerged as the market leader with a 23-percent market share followed by Korean brand Samsung (17 percent) and Chinese brand Oppo (12 percent). Vivo and Asus were the two brands that made it to the top five with an 8-percent and 5-percent market share, respectively.
Ooi said the key to Cherry Mobile’s dominance in the local market was their pervasive presence in provinces. “Cherry Mobile’s affordable smartphone models below the P5,000 level was a sure hit among Filipinos in the provinces,” he said.
“The marketing people of Cherry Mobile know the situation on the ground. They can develop market presence whenever the situation calls for it. For instance, if a town is celebrating its fiesta, Cherry Mobile is going to be present,” added Jubert Daniel Alberto, head of operations, IDC Philippines.
Ooi added demand for fourth-generation smartphones (4G) also grew with a 54-percent share. Being a price-sensitive market, he pointed out that ultra low-end smartphones dominated the market with 59-percent share, while low-end and midrange smartphones made up 35-percent market share.
He noted that Chinese brands, such as Oppo and Vivo, were major factors behind the growth of the low-end and midrange segments in 2017.
“Heavy marketing campaigns and lucrative sales promoter incentives enabled these brands to strengthen their mindshare in the local market, increase their shipments and grow their respective market shares. The assault of these brands affected the sales of some of the players, resulting in them reducing their supplies, which ultimately impacted overall smartphone shipments,” Ooi said.
He also noted that the Philippine smartphone market indicated that end-users are shifting to handsets with higher specs and better features. From a screen-size perspective, phablets (5.5” to 7”) recorded significant growth in the recent years, accounting to about a quarter of smartphone shipments in 2017. “As mobile content continues to grow, smartphones have become the primary device for basic productivity and everyday media consumption, and this fuels the need for larger screens and higher specs,” Ooi said.
On the other hand, slate tablets (7” to 11”) have also experienced decline in sales because they cannot offer the same practicality that phablets provide.
Sean Paul Agapito, associate market analyst at IDC, said traditional PCs continued to grow due to increased education-related purchases and the growing traction of eSports in the country, among others. “The small-medium enterprise sector is going to be the next frontier of PCs,” he said.
Over the past five years, he said the Philippine market has been growing at a compound annual growth rate (CAGR) of 3 percent, while its Asean neighbors have been dropping at CAGRs of around -3 percent to -12 percent. He attributed the trend to slow technology adoption, but in the past few years, the mobility trend and large millennial Filipino population are also boosting traditional PC adoption to even higher levels.
“Despite smartphones having drawn away a portion of consumer demand in the recent years, desktop and notebook PCs remain viable personal computing devices, especially for heavy workloads and higher-level entertainment,” Agapito explained.
Nevertheless, the average selling price of smartphones in 2017 grew to $134, a 13-percent YoY increase. Ultra low-end smartphones (less than $100) still hold the lion’s share of the market, accounting for 59 percent of all smartphones in 2017 compared with 67 percent in 2016. Meanwhile the combined share of low-end ($100 to $200) and midrange ($200 to $400) smartphones grew to 35 percent from 28 percent in 2016.