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China’s 400 little-known phone makers take on Samsung, Apple

Eric Pfanner (via NYT/ AFR) | July 8, 2013
Huawei, a Chinese company with revenue of $US35.8 billion last year, has big ambitions for international markets.

By contrast, sales of phones priced at less than $US200 are expected to surge to 400 million units this year, from 234 million last year, with a further jump to 685 million in 2015, the firm says. The low end is growing faster because prices of smartphones have fallen so much that hundreds of millions of Chinese consumers are now able to replace old-fashioned feature phones that lack mobile data capabilities.

"The question for Samsung and Apple is whether they are equipped to compete in the developing markets, especially China, where the growth is going to happen," said Pete Cunningham, an analyst at Canalys.

Some of these phones are simply knockoffs of handsets from Samsung or Apple, often housed in cheap plastic shells or offering less memory, lower-resolution screens or inferior cameras. Last year, one Chinese brand, Goophone, introduced a clone of the iPhone 5 for $Us150, even before Apple released the iPhone 5 in China.

It bears a resemblance to Apple's phone, but the Goophone i5 is different in an important respect - it runs on a version of Google's Android software.

GLOBAL CHALLENGE
The challenge for the Chinese makers is to go global. Coolpad began selling its Quattro 4g in the United States through MetroPCS, a mobile network operator. It drew mixed reviews in the United States, but it sold for less than $US100 under some promotions.

Huawei, a Chinese company with revenue of $US35.8 billion last year, has big ambitions for international markets. In June, it introduced a phone called the Ascend P6 in London. The P6 includes many Apple and Samsung-style features, all packed into a thin 6-millimeter case. The Ascend P6 lacks the ability to use the fastest new mobile networks, so-called 4G technology, but it costs much less than an iPhone 5 or a Galaxy S4. In China it costs about $US430.

Huawei said it planned to sell the phone in 100 countries, including China and many European markets. But, at least for now, it will not sell it in the United States, where the company has been labelled a security risk by Congress because of allegations - vehemently denied by the company - of possible links to the Chinese Army.

APPLE NEEDS TO...
Analysts have been predicting that Apple will need to start selling a cheaper phone, though the company has been typically silent about its plans. If Apple wants to maintain its share, it "will have to move down market," said Mark Newman, an analyst at Sanford C. Bernstein in Hong Kong.

Apple has been negotiating with China Mobile to sell iPhones. If it succeeds in landing the largest wireless carrier in China, the company should easily increase its sales volume.

 

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