Instability has been about the only stable characteristic of China's smartphone market over the past few years and new data point to two interesting developments.
First is that Oppo has risen to the top of the country's market share ranking with 16.6 percent, narrowly ahead of Vivo, which has almost doubled its share, according to Counterpoint Research. The second development is the market's increasing concentration among leading brands.
Oppo and Vivo were relatively unknown a couple of years ago, overshadowed by the noise and hype of Xiaomi and the size and weight of Apple and Samsung.
Backers of the two companies may be popping the champagne and swapping high-fives over their prescient investments. Annoyed at the blanket coverage devoted to Xiaomi, supporters of Vivo have whinged to me privately about their dance partner not getting more time in the spotlight. With its doubling of market share in the past year, no doubt I'll be hearing from them before the week is out.
Enjoy it while it lasts. It's true that the gains for Oppo and Vivo validate the thesis that Xiaomi wasn't the only name in town, and that these underdogs would one day rise to the top. So far there's little proof that they can stay there. I don't see Xiaomi ever retaking, and holding onto, the top spot in China. And for the sake of its $45 billion valuation, let's hope I am wrong. It's unlikely Vivo or Oppo will stay there for the same reason: differentiation.
Android smartphones are too standardized for any one brand to clamber to the top simply through cool design and buckets of marketing money. The PC market is proof enough of that. Only through investment in R&D and unique technologies will a handset maker be able to differentiate its products in a way that's not easily copied in the following product cycle, and keep them on top for a significant period. The alternative method is through M&A, the model that Acer employed to climb the notebook charts (and then crash, spectacularly).
The other notable trend borne out by the Counterpoint data is a fall in the "other" category. A decline in this figure points to greater concentration among the top tier, a natural and usually healthy trend in any market. As this share shrinks, the chances for any new player to pop up and steal the No. 1 spot diminishes.
With these two developments, it's becoming even more imperative to get to the top, and to build the walls that will keep you there.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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Tim Culpan in Taipei at firstname.lastname@example.org
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