LAS VEGAS The winners and losers are becoming clearer -- and the gaps between them wider -- among Chinese smartphone manufacturers. And even the successful ones cannot afford to become complacent. Demand growth appears to be slowing worldwide, and Apple is gearing up to release a new iPhone model later this year.
This year's Consumer Electronics Show, the industry's biggest trade show, ended Jan. 9. Chinese companies were a major force at the show -- roughly 1,100, or about 30%, of the more than 3,600 businesses that took part in the trade fair were from China.
Even among the many rising stars from China, Huawei Technologies shone particularly brightly at the latest celebration of all things high-tech.
"This smartphone strikes the perfect balance between high performance and long battery life, enabling people to stay connected and be more productive in every facet of their lives," said Kevin Ho, head of the handset division at Huawei's consumer business group, as he held up the Huawei Mate 8 smartphone during a presentation at CES.
The phone's selling points are its large display and long battery life. A large screen normally means a shorter usage time due to higher power consumption. But the typical smartphone user would be able to use the Huawei Mate 8 for up to 2.36 days without recharging, according to Ho. By comparison, Apple's iPhone 6s Plus, which has a similar screen size, would last only up to 1.53 days, Ho noted, stressing his product's superiority. Furthermore, the Huawei Mate 8 only needs 30 minutes to recharge enough for a day's use, thanks to its proprietary rapid-charging technology.
Huawei said its global smartphone shipments grew 44% on the year to top 100 million units in 2015. The company increased market share in industrialized nations, such as Spain, Finland and New Zealand, as well as in Costa Rica and other Latin American markets. It held a 9.7% global market share as of September last year. In China, accelerating sales growth has pushed up its market share to 16%.
WIDENING GAP "The winners in the Chinese smartphone market are Huawei and Vivo," said an executive of an electronics parts manufacturer that supplies virtually all Chinese smartphone makers. "Huawei has been boosting sales in Shanghai and other big cities, while vivo has been gaining ground in second-tier cities," he said. He sees the gap between popular and unpopular brands widening in China.
Vivo Communication Technology's lineup includes a handset that is only 4.75mm thick, one of the thinnest in the world, as well as a model that features high quality sound. Just like Huawei, Vivo has been expanding its share by focusing on upmarket models that sell for around $500 and make the most of its advanced technical expertise.
"Both Huawei and Vivo demand cutting-edge parts," the executive of the parts maker said.
Meanwhile, things have not been so great lately at Xiaomi. The company stormed the Chinese market not long ago with the popularity of its mass-market smartphones priced at around $100, but consumers' appetite for such products has apparently waned. Some blame Xiaomi's downfall on the delay in the release of a new handset that features a new processor. Industry insiders point to a broader issue -- Xiaomi has lost credibility due to its inability to deliver on time.
ZTE, a long-running Chinese smartphone maker, has also lost its edge. The company unveiled two ultracheap smartphone handsets at CES, but it is uncertain if those new products will be successful enough to help the company regain its market position.
GAME CHANGER Their recent business performance aside, all Chinese players realize they will be in for a tough battle against a company that did not even show up at CES -- Apple. Its iPhone product life cycle suggests that the iPhone 7 will be released this autumn, since the company has been introducing a major update every two years. The information technology giant did unleash the iPhone 6s last year, but with only minor updates, in line with its existing timetable.
"People are saying the iPhone 7 will be a game changer," an official of a Japanese consumer electronics maker said at CES. Although Apple was absent, conversations with Japanese insiders invariably turned to the next iPhone.
Rumors suggest that Apple is throwing all of its cutting-edge technologies into the iPhone 7. One frequent prediction was that the handset will support the 4K video image standard.
In the first quarter last year, Apple became the No. 1 smartphone seller in China for the first time. If the iPhone 7 is as good as everyone expects, even the winners in the Chinese smartphone market will likely be unable to defend their market share.
Global smartphone demand is expected to barely increase this year, at around 1.43 billion units. The second straight year of single-digit growth is a marked slowdown from years of double-digit expansion. Slowing market growth is becoming increasingly apparent, particularly among advanced economies.
Amid the situation, Steve Koenig, senior director of market research at the Consumer Technology Association, contends that emerging markets will hold key to continued growth of smartphone sales around the globe.
For instance, India is drawing the attention of Chinese smartphone manufacturers as a promising growth market. Due to the slow progress in telecommunications infrastructure development, smartphones have yet to gain popularity in India. But things will likely change, since the country plans to introduce fourth-generation technology to upgrade the country's mobile phone networks, most of which are based on second-generation technology. Once the upgrade is made, new networks will be able to support large-volume data transmissions, creating an environment where smartphone sales can take off. Huawei is interested in exporting base stations, as well as smartphone handsets, to India.
NO SECOND CHANCE? "We want this to be accessible to a large audience," Jeff Meredith, vice president of Lenovo's mobile business group, said. "This was not designed as a niche device."
He made the comment while announcing the company's plans to release a novel smartphone this summer. The handset, the first of its kind in the world, will be able to recognize its surrounding space and objects in three dimensions, akin to the way the human eyes see, by utilizing multiple built-in cameras and sensors. With plans to incorporate Google's 3-D mapping technology, the new Lenovo smartphone will likely allow users to experience augmented reality, through a video game, for example.
This is exciting news for Lenovo. But if past examples in the mobile phone market are anything to go by, odds of the company returning to its former glory may be slim, even with the help of the cutting-edge technology. No mobile phone maker that has fallen from a leading position has ever returned to prominence again.
A case in point is Canada's BlackBerry, formerly known as Research In Motion. The company's namesake device was once all the rage among corporate executives and government officials, but it has been edged out by the iPhone.
Finland's Nokia was unable to regain the dominant position it once enjoyed, and sold its mobile phone business to Microsoft.
In the case of Lenovo, the company itself has never been a major mobile phone company, but its mobile phone business is based on Motorola Mobility, which Lenovo purchased from Google. U.S. telecom giant Motorola was once a leading figure in the mobile phone world. Its Razr handset proved to be hugely popular, but the company lost ground through a series of missteps -- notably its decision to offer sizable discounts -- that led to the sale of Motorola Mobility to Google.
Including how Lenovo's new handset will be received by consumers, industry watchers from around the world will likely be spending a lot of time monitoring Chinese smartphone makers' performance in 2016.