Nokia smartphones struggle versus domestic vendors in China

IDG News Service – Nokia’s Lumia smartphones struggled to lift the Finnish handset provider’s market share in China, while domestic vendors ZTE, Huawei Technologies and Lenovo overtook Apple in smartphone shipments in the second quarter, according to research firm Canalys.

The Finnish company, which once dominated China’s smartphone market, launched its new Lumia devices in the country in April, offering them with Microsoft’s Windows Phone 7.5 OS. But the new smartphones failed to make up for the vast swath of market share Nokia’s Symbian devices once had in the country, said Nicole Peng, a research director with Canalys.

Nokia had a 6% market share at the end of the quarter, falling out of the top five smartphone vendors, with its shipments down by 47% year-over-year. Affecting the Lumia’s appeal was Windows Phone 7.5, which many consumers in China are still unaccustomed to, Peng said.

“I think it takes time for consumers to understand Windows Phone and to get used to it. Right now Android is seen as the default operating system,” she said. “There’s a long way for Microsoft in China to be able to catch up to the demand in applications. They have to make sure they can attract local developers.”

China’s smartphone shipments reached 42 million in the second quarter, a year-over-year increase of 199%, according to Canalys. Android accounted for 81% of all smartphones shipped to the country during the quarter.

Samsung Electronics led the Chinese smartphone market with a 17% share. behind the South Korean company was ZTE with a 12% share. two other Chinese vendors, Lenovo and Huawei, both had market shares at around 10%. Apple, meanwhile, came in as the fifth largest smartphone vendor with a 9% market share.

The three Chinese smartphone vendors introduced many new handsets during the quarter, often making them available at mass market prices starting at $110 when purchased without a contract, Peng said.

“In Q2, there was almost every day a new device announced. the speed is really amazing,” she said. “I think for this year, you will see that domestic vendors will drive most of the growth,” she added, pointing to how local Chinese vendors continue to drive down prices for new smartphones.

Samsung and Apple, however, could see smartphone sales rise in the country over the course of the year. Samsung, which has one of the widest portfolio of smartphones, saw its second-quarter shipments supported by high sales of its Galaxy Note and Galaxy S II handsets in the country. the Samsung Galaxy S III, which launched at the end of the quarter, will increase the company’s shipments during the third quarter, Peng said.

Apple’s smartphone shipments, while steady, were down when compared with the first quarter, when the company launched its iPhone 4S in the country. Rather than buy an iPhone 4S, some Chinese consumers want to wait for Apple’s new iPhone 5, which could arrive in China later this year, Peng said.

Taiwanese vendor HTC saw smartphone shipments grow year-over-year by 389%. it benefited from launching more smartphones designed for the Chinese market which were offered by all three large mobile carriers, Peng said. Its market share was however less than 5%.

Nokia smartphones struggle versus domestic vendors in China


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