Chinese companies drive commoditisation of smartphone market

Seven years after Apple's iPhone revolutionised the mobile-phone industry, the global market is shifting gears once again, led by aggressive Chinese companies bent on conquering the world with boatloads of low-cost Android-based smartphones.

These companies are benefiting from the rapid evolution of smartphone technologies, cheaper components, expert electronics contract manufacturers on the mainland and a vast domestic market of budget-conscious consumers to build scale and compete head-on against Apple, Samsung Electronics and the other major global brands.

Computer kingpin Lenovo, red-hot start-up Xiaomi, telecommunications equipment manufacturing giants Huawei Technologies and ZTE Corp, and consumer electronics firms Coolpad Group and TCL Communication Technology lead this pack of ambitious Chinese mobile handset suppliers, according to a report by Bernstein Research.

Alberto Moel, a senior analyst at Bernstein, called them the "Gang of Six".

"They compete in the extremely difficult Chinese market, where they beat each other up to come up with the same thing, but cheaper," Moel said. That focus on the mass market, however, seemed justified because "pretty much all the [industry] growth is in lower-priced smartphones", he said.

Based on the latest smartphone industry estimates, it appears to be a good strategy to build market share. Technology research firm IDC estimated that Huawei and Lenovo were the world's third and fourth-biggest smartphone suppliers, respectively, in the second quarter with a combined 12.3 per cent market share. They were behind Samsung and Apple, but ahead of LG Electronics.