Apple’s iPhone 14 series launch on September 7 has made a big impact on the markets for new smartphones globally. We are seeing a high demand for the Pro models in particular. The secondary markets have also been impacted, with older iPhone models losing some value.

According to Counterpoint’s Refurbished Smartphone Tracker, Apple is the leader in refurbished smartphones globally and in the US. The older iPhone models like the 8, X and 11 series make up the majority in the US secondary market. The iPhones’ average selling prices (ASPs) in the refurbished market are going through a transition wherein the older models are quickly losing value due to the newer models on sale. 5G has a big part to play here. As more and more consumers opt for 5G packages, shipments of new 5G smartphones are overtaking 4G handsets in the US. Consumers looking to buy a refurbished iPhone would most likely want to use the saved money on a good 5G plan. This is reducing the demand for 4G LTE iPhones. With the economy in the doldrums, some consumers might opt for the iPhone 13 series in the secondary market instead of a new iPhone 14 series.

Source: Counterpoint Research Refurbished Smartphone Tracker

Note: Refurbished iPhones considered were in Grade A condition

We tracked the refurbished iPhone prices before the 14 series launch and after the launch. Normally, there is a loss of value for certain older iPhone models after a new launch. However, the loss of value for 4G iPhones like the 8, 11, X and XR series has been much greater. Unlike the 6 and 7 series, these models are still selling well in the US market. There is one factor contributing to this accelerated reduction and that is 5G. Until 2021, 4G devices held on strongly and so they sold well. Now, with 12 and 13 series models in the market and a healthy upgrade cycle, consumers are looking to get a 5G compatible smartphone to utilize higher speeds in the US.

Pre-launch

The refurbished smartphone pricing situation for Apple pre-launch was quite good. 4G devices still held on to their values even as 5G had become prominent across the country. The 11, XR and 8 series were still among the top sellers in H1 2022, retaining a high ASP. 12 and 13 series refurbished iPhones’ supply had also been quite low due to low churn.

Post-launch

With the iPhone 14 series launch, the prices for much older models like the 8, 11 and XR series have gone down by about 22%. As these models make up most of the refurbished smartphones, the overall ASP for iPhones in the US secondary market is bound to either stay flattish or go down in the coming months. Q4 2022 will be a deciding factor in this case. With models like the iPhone 12 Mini, 13 Pro and 13 Pro Max being discontinued, many consumers might look to the secondary market. And with strong deals on the 14 series iPhones, the collection of the iPhone 13 series is bound to go up, promising a good supply in the US market.

While the iPhone 13 series prices in the secondary market have gone up considerably after the iPhone 14 series launch, the trade-in supply for the iPhone 14 series is bound to come from much older iPhones like the X and 11 series. A big factor that could cause this is the extended ownership period. Consumers in the US are holding on to their smartphones for an average of 3 years and 7 months now, which is quite high compared to previous years. The ownership duration is bound to stay at this level for some time.

What we can look forward to  

The US refurbished smartphone market ASPs are quite fluid. iPhones depreciate a few % points each quarter. While the refurb pricing for the iPhone 13 series is quite high right now, we could see the ASPs for this series come down after Q4 2022. We could also witness the phasing out of the 8 and X series in 2023, which will result in an increase in ASPs. While new iPhone prices have plateaued, it is difficult for refurbished iPhones to get any lower. It is up to the consumer to weigh the pros and cons based on personal and economic factors.

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There are many other reasons at the country level as well, but there is one undeniable factor that would not have made this growth possible – smartphones. According to Counterpoint Research’s Southeast Asia Smartphone Tracker, key Southeast Asian countries’ (Indonesia, Thailand, Philippines, Malaysia and Vietnam) smartphone shipments in 2021 were back to 2019 levels.

Gaming smartphones continue to see an increase in demand. During the festive season in Q4 2021, gaming smartphones saw a 270% YoY increase. The affluent gamer demographic is growing exponentially, and this trend is likely to increase with all the focus that gaming is getting in these markets. Along with consumer interest, there is an increased focus on e-gaming from governments and industry players across the ecosystem. Currently there are more than 102 million active smartphone gamers in the 5 key Southeast Asian countries and this number is bound to increase in the coming years.

Source: Counterpoint Research Southeast Asia Smartphone Tracker

Indonesia, Malaysia, Thailand, Vietnam, Singapore, and the Philippines are the six most significant countries for mobile gaming in Southeast Asia. Whether they are small quick games to pass some time or more engaging strategy and shooter-type games, the gamer consumer base has gone up in the region just as fast as smartphone adoption over the last two years.

Factors pushing gaming growth over the last two years:

• Investments in internet penetration, especially in Tier 2 and Tier 3 cities.
• Increased focus on 5G infrastructure growth and adoption.
• Consistently growing demand for smartphones, gaming smartphones in particular.
• An effective way to pass the time when stranded at home during pandemic lockdowns and restrictions. For many people, less work or no work is a motivation to play on smartphones.
• An escape from ongoing volatility in macroeconomic factors like inflation, sustained COVID-19 repercussions, war situation in Europe and other more country-level factors.
• Widening choice with multiple gaming genres (like strategy, shooting and e-sports) across multiple platforms (mobile, PC, console and even television).
• Types of games all the way from casual to elaborate heavy-duty games that make a player a full-time earning pro-gamer. Some countries in this region also promote international gaming tournaments.

Connectivity and Ecosystem Initiatives:

 Connectivity has played a vital role in increasing online gaming in the region. Fixed broadband connections have seen tremendous growth in the last two years along with a jump in new subscribers. Tier 2 and Tier 3 cities in the key SEA countries have seen some major growth as well. Broadband, whether fiber or fixed wireless, makes up more than 38% of the base in these key SEA countries. 5G connectivity is being improved starting with metro and Tier 1 cities. 4G connectivity is being increased throughout these countries as well. All this has played a major role in pushing the gaming culture irrespective of geography, age, gender, or economic background of the user.

OEMs have understood that a good gaming experience is supposed to be a necessity even for the casual gamer and not just the heavy-duty gamer.

Esports is big in the Philippines. realme, one of the top smartphone brands in the country, has partnered with the national team SIBOL for esport tournaments. realme itself has its pro-gaming tournament ‘Realme Mobile Legends Cup’ in the country.

Infinix is an upcoming brand in most Southeast Asian countries. Its focus on gaming models has led to the brand being considered for low-range to mid-range smartphones for gaming. Gaming smartphone biggies like Asus have said that the gaming smartphone business is not yet profitable for them, but they are still sticking to their image and launching more gaming phones.

Operators like Dtac in Thailand are offering gamers a specialized package with maximum speed and special internet lanes to make sure excess usage does not result in lags.

Top semiconductor companies Qualcomm and MediaTek have been focusing on the gaming consumer for a while now with gaming-related chipset versions of their standard offerings. Even chipset makers like ARM have been considering gaming as a motivation behind future tech. ARM recently came out with a gaming-specific chip.

The Changing Ecosystem:

 There is a mix of low-end to high-end smartphone users in each of the SEA countries, but every country shows different characteristics and preferences in gaming genres. Southeast Asia’s consumer base is maturing. Indonesia and Thailand are the region’s largest revenue earners, followed by the Philippines and Malaysia. The Indonesian market is not only the region’s largest but also the fastest growing. In Southeast Asia, the younger population, which used to play smaller games on cheaper phones, is upgrading to mid-tier phones and preferring more heavy-duty games.

It is already established that SEA is a huge gaming market with more potential but there are many factors changing this volatile tech trend currently.

Trends changing the gaming ecosystem:

• Female gamers lead male gamers in many areas of the region. Most avid gamers can be found between the ages of 25 and 60. The bulk of this demographic in the region usually does not have a very high-priced smartphone. This means that even low-range to mid-range smartphones are being used for gaming and not necessarily just for casual games.
• Increase in video content related to gaming, with the rising viewership on online platforms such as Twitch and YouTube, is resulting in marketing initiatives across platforms, apps and games.
• Cloud-based gaming and interconnectivity of gaming platforms are likely to affect device purchases in the coming year. There is an opportunity for consumers to opt for phones with lower specifications. As cloud gaming increases its footprint, gamers will only need a steady, fast internet connection.
• To counter the frequent churn due to higher boredom levels in casual games, more variety is now being introduced in these games. Game makers are investing in research, marketing campaigns and, more importantly, associating with the right players in the ecosystem.
• Consumers are actively demanding the capability to play heavy-duty console and PC games on mobile platforms. This is a big opportunity for smartphone OEMs especially with growth in 5G connectivity.

Gamers and their Smartphones:

Gamers who are invested in heavy multiplayer graphics online games like PUB G make up a smaller portion of the pie in this region. Instead, games like Subway surfer, Mobile legends, Arena of Valor, Roblox and Free Fire are played the most.

Gaming companies are making sure that smartphone versions of their games are available and that the hardware requirements need not be too high to enjoy these games on the mobile phone. Multiplayer gaming platforms on mobiles are nascent in this region as of now but as the telecom sector advances, this gaming preference is set to grow.

5G and Gaming:

5G penetration into gaming will be a slow process for another 2-3 years, especially for major markets like Indonesia. While Singapore is leading the curve in 5G, Thailand and the Philippines are more capable of advancing with 5G in gaming. The future of cloud gaming and multiplayer mobile setups, however, is bound to remain bleak in this region as compared to the West.

The 5G share in monthly smartphone shipments is likely to reach well above 45% by the end of this year. Most gamers, whether casual or professional, will look to include 5G in their gaming experience, especially since there is growth in the smartphone version of games usually played on consoles and personal computers.

The Future of Gaming

Though Southeast Asia has the highest number of gamers in Asia, it contributes the least revenue. The entry point of free games is a crowd puller, but gaming companies and developers are trying to have a stronger revenue model. Ecosystem players have focused on all segments of consumers and made sure that multiple platforms can cater to different demographics based on their convenience and motives. Mobile gaming in Southeast Asia is capable of not just increasing gamer volumes and revenue but also spreading across multiple sectors like retail, e-commerce and sports.

While gamers in Southeast Asia are spread across early teens to senior citizens, the 18-35 age bracket is the one contributing most to the maturing gamer ecosystem.

In the coming months, we will likely see more marketing initiatives on platforms, and gaming business models centered around profit generation, which could be through increased micro-transactions within free game offerings. OEMs, operators, and retail distributors will combine the gaming aspect much more with their offerings.

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The post Southeast Asia Can’t Get Enough of Smartphone Gaming appeared first on Counterpoint.

5G Conundrum

Malaysia is going through an extended negotiation phase in the telecom sector. The two sides here are the government and the four main operators in the Malaysian telecom landscape – Maxis BHD, Celcom Axiata BHD, Digi Telecommunications and U Mobile. These four operators have recently requested a review of the government’s 5G access offer as they want at least a 51% stake in the government-owned 5G agency DNB. They are also looking for a review of the access offer with regard to the pricing plan and network access plan offered by the government. Cost and transparency seem to be a concern here, while control and profit are at stake.

While the government and operators continue to re-pitch propositions and cement their stance on the government-run 5G model, other segments of the industry and consumers are making sure their interests are not affected. OEMs continue to launch 5G smartphones in a country where digital transformation is in full swing, with 28% of smartphone shipments in Q1 2022 coming from 5G-compatible models.

Economy

With a 5% YoY GDP growth in Q1 2022, the country is riding high and promising to show further growth on account of high domestic demand, consistency in external demand and an improved labour market. While the retail industry and offline channels have opened, the manufacturing sector has grown in the first quarter as well. There would have been an added layer of excitement leading to higher achievements had the 5G situation not escalated over the past 18 months. Industrial propulsion is thus limited due to the absence of 5G use cases.

Covid Effect

The country was reeling under its worst COVID-19 resurgence in the second half of Q1 2022, which handicapped a big portion of the offline channel dynamics, leading to much lower shipments. However, April onwards, the country is seeing relaxation in curbs on not only domestic movement but also international travel policies. If supply constraints reduce, we may see much better Q2 and Q3 on account of pent-up demand.

Consumer Front

A big portion of the Malaysian smartphone-using population is tech-savvy. Many consumers have already transitioned to using e-commerce, e-banking, e-finance, digital and social marketing, and other platforms. There are several actively growing consumer sub-genres in the form of gamers, power users, consumers switching from feature phones, and more. At this point, there is a growing frustration as the people have access to 5G devices, they have the know-how and are motivated, but still can’t access 5G. The lack of 5G infrastructure and commercialization is limiting Malaysia’s growth potential in a very important sector — technology.

The Malaysian smartphone market is promising for the region and its consumer base is one of the most versatile with regard to technology. The 5G situation, however, needs to catch up with government and industry momentum. The coming months may see higher volumes for the smartphone market, but it will see an overall development only when 5G is commercialized.

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 Hong Kong, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – February 17, 2022

Thailand went through a challenging time in 2021 with COVID-19 and subsequent economic effects taking a toll on consumer spending habits and overall market sentiments. According to Counterpoint Research’s Southeast Asia Monthly Smartphone Channel Share Tracker, Thailand smartphone shipments grew 3% YoY in 2021 driven by increased 5G transition, more digital transformation in Tier II and Tier III towns and an all-time-high increase in e-commerce purchases.

Talking about the smartphone brands and their performance in 2021, Senior Analyst Glen Cardoza said, “Xiaomi invested comparatively less in marketing initiatives but was one of the brands that achieved the highest shipments ever due to its launches, partnerships in channels and association with ecosystem players like operators. Apple managed much higher volumes in Q4 2021 after the iPhone 13 series’ launch, crossing even the 2020 levels. realme did well with online festive sales and had good YoY growth in Q4 2021. Infinix performed much better on online sale days. Being an online-centric brand, Infinix has aggressively made its presence known on most e-commerce sites.”

Source: Counterpoint Research Southeast Asia Monthly Smartphone Channel Share Tracker, December 2021

The smartphone industry had a good first half in 2021 but Q3 pulled down the shipment levels for most brands due to high COVID-19 infection rates. Supply constraints increased in H2 2021, but brands made sure that Q4 had enough inventory with most channel partners. On the country’s economy, Cardoza said, “Thailand’s tourism industry has always been a major revenue generator, but it has consistently taken a hit over the last two years. Consumer buying behavior has been volatile over 2021. As the year went by, there were worries of declining consumer purchasing power. In contrast, due to Q3 restrictions, Q4 was able to utilize the benefits of pent-up demand. At the same time, the government’s digital economy initiatives did not stop. It made sure that broadband networks continued to expand in all regions and tech expertise reached major industries like healthcare and manufacturing, with the integration of 5G use cases in the pipeline. Even tourism started seeing an increase in domestic visitors. Q4 2021 was a bounce-back for most OEMs with regards to smartphone shipments but brands like Xiaomi slipped in rankings due to acute supply issues.”

Source: Counterpoint Research Southeast Asia Monthly Smartphone Channel Share Tracker, December 2021

The transition to 5G has been a consistently strong trend in this country. Q4 2021 alone saw 49% of shipments coming from 5G smartphones. All main OEMs, led by Apple, vivo and OPPO, actively launched 5G smartphones through 2021. Just like the 5G trend, online shipment share grew much more towards the last quarter as compared to any year. Online shipments increased 27% in 2021 and most of this increase came in H2 2021.

In 2021, more cohesiveness was seen between operators, retail offline channels and e-commerce players, giving a big push to OEM volumes. Moreover, foreign investments continued to pour into Thailand, showing faith in the country’s growth strategy. In 2022, we should see tougher competition between the top five brands. There is also a possibility of increased shipments in the low- and mid-tier price bands as long as component constraints do not hamper production.

Market Summary:

• Samsung was in a tight contest with OPPO in 2021. The brand coordinated with all its operator and retail partners to make sure that not only mid- and premium-end devices were promoted well but also their low-tier partners, including the A series, which worked so well for Samsung through the year. In marketing, Samsung’s partnership with South Korean band BTS was notable.
• OPPO saw an 11% dip in overall shipments in 2021 but still managed to lead the market by a very slim margin with Samsung. OPPO’s Reno series did well in H2 2021
• Online share of shipments hit 26% in Q4 2021, which is the highest for any quarter in Thailand. This means many more consumers opted to purchase their smartphones online due to factors like cost, offers and convenience.
• In Q4 2021, 5G smartphones made up 49% of the country’s smartphone shipments, with the iPhone 13 series launch pushing the numbers.

Note: Xiaomi includes Redmi, POCO and Mi sub-brands. OPPO includes OnePlus.

Feel free to contact us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Glen Cardoza

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press(at)counterpointresearch.com   

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A major objective for the merged behemoth will be to expand into new areas like AI, IoT and cloud computing. For this, it will have to focus on 5G expansion. As AIS is already the first mover in 5G, the merged entity is most likely to pool resources to set up a stronger 5G infrastructure for enterprises and consumers. But this will take time. Two major challenges for TRUE and Dtac here are:

1. Dtac is yet to receive its 5G licence.
2. TRUE’s high current debt.

AIS is way ahead of both its competitors on these aspects and it is quite likely that the 5G subscriber base will widen in favour of AIS in the next one year.

Impact on Thailand’s telecom sector

While the two telecom companies are set to merge with equal stakes, they will be running their operations independently till around the second quarter next year. These operations, however, will be run keeping the merger in mind. As both TRUE and Dtac have similar bases, this effort is expected to be comparatively easy. While a price war is unlikely, operators are most likely to step up their efforts to tap into any unsubscribed remainders in the country, especially in Tier 3 and Tier 4 geographies. Based on how the completion of the merger takes place and upcoming efforts from major competitors like AIS, the overall effect on the Thai telecom sector will most likely be felt in H2 2022.

The race for digital transformation, 5G supremacy and Industry 4.0 is likely to get a boost from this merger. Like Globe in the Philippines, which has asserted its dominance on 5G speed and ventured beyond the national borders, it is possible that the big three operators in Thailand will look to at least start with regional partners. It is more likely for AIS to do this faster than TRUE, Dtac or the merged entity. Current transitions in Thai telecom will last longer.

Government’s stance

The Thailand government’s policies on competition are strict. The merger’s potential of crossing the 50% market share mark could spell a complication for it. Both entities might relook at valuations and other specifics or consider making provisions to deal with it differently. Either way, the transition is not likely to go very smoothly. Time will be of the essence and any delays might translate to a shift in subscriber loyalties.

Impact on consumers

 Consumers in Thailand are among the most tech-savvy in the region. They are in a transition towards better networks, clearer signals, 5G smartphones and 5G packages. This is especially true for those residing in the metros and Tier 1 cities. Any inconsistencies in these upcoming trends might not go in favour of Dtac and TRUE. But AIS stands to gain here. Therefore, it is possible to see a certain proportion of subscribers shifting from TRUE and Dtac to AIS. Within those switching operators, an uptick in 5G subscriptions is possible as a fallout.

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Overall, the US, EU and Japan remain the key investors in Southeast Asia. But this might change with China’s renewed focus on the region. The country has been investing in Southeast Asia across sectors for more than a decade now, with infrastructure projects traditionally bagging more funds. However, China’s influence in the region has increased after the start of its trade tussle with the US. Critical sectors like electricity and telecommunications are now being backed by Chinese investors.

The region’s smartphone landscape went through some volatility after COVID-19. This is when Chinese smartphone OEMs started pulling share from Samsung. Their smartphone share in Southeast Asia has made up a majority for more than a year now. It has increased substantially over the last few quarters. In Q2 2021, main Chinese OEMs made up 75% of the total smartphone shipments.

E-commerce initiatives by Chinese players

Chinese investors have been increasing their stake in the region’s e-commerce companies for some time now. Since 2017, e-commerce has been the avenue of interest for Chinese investment due to its growth potential and near-absence of any geopolitical challenge for China in the region. JD.com, Alibaba and Tencent were among the first Chinese investors to pump capital into e-commerce in this region.

5G initiatives by Chinese players

Some countries in the region depend on Chinese technology and know-how. Indonesia has been dependent on Huawei’s 5G technology for more than a year now. The Philippines depends on Chinese telecom infrastructure know-how. In Thailand, Huawei has an active investment in 5G infrastructure. ZTE is another Chinese player with an active role in digital connectivity in the region. These three countries will look to reduce their overall dependence on Chinese tech in the coming months. Currently, however, their goals are focused on 5G development from an economic standpoint. Some countries like Malaysia and Vietnam have given Chinese 5G assistance the cold shoulder.

5G represents a leap in technological growth and overall data sharing. This is an important factor for Southeast Asian countries to consider while partnering with China. Also, such decisions have the potential to become national security issues.

Many major telecom operators in Southeast Asia are lagging in 5G as they still need to recuperate from heavy 4G investments. This is also an area where Chinese capital plays a big part. In contrast, major Chinese smartphone OEMs are ready with 5G devices.

Manufacturing

Since some of the region’s countries are global manufacturing hubs (especially Vietnam and Indonesia), Chinese players will look to diversify their own production facilities. As production capacities shift out of China, these OEMs will aim at buying a stake in the region from a production and assembly point of view. The absence of geopolitical issues and growth potential of the region will serve as motivations for these players.

The Chinese influence is currently strong in the region but so are the investments from US behemoths like Microsoft and Google. Southeast Asia will continue to see an influx of funding in the coming years as this region is set to witness an improved economic climate, enhanced industrial system and increased maturity of consumers with respect to tech.

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Important factors shaping the Indian market

Importing pre-owned smartphones into India for usage is curtailed by the government. But that does not slow down the players dealing with volumes in the refurb market. Although India is relatively self-sufficient with supply compared to other countries, one of the main challenges is a complex and unstructured chain in the value system.

The brands and models which sold 2-3 years ago are the ones that make up the bulk of the supply in the secondary markets. Therefore, the players do not have control over what brands or models come their way. Similarly, the level of repair or refurbishment differs across volumes. Refurb players then have to take a call on which ones can be taken in and which need to be disposed of to others in the chain.

While brands like Apple have the most demand, they also command a premium price in the Indian secondary market. Unlike others, Indian consumers have also shown an affinity towards Chinese brands like OnePlus, Xiaomi, OPPO and vivo.

The online channel for buybacks and resale activities has been present in the refurbished smartphone market for a while now. Most large players already have online platforms which are promoted well to ensure convenience. This holds true for metro and Tier I cities. However, the strategy to tap rural areas needs to be different. These areas hold a high potential and that is why players are keen to gain volumes at the earliest.

2021 Outlook

• As online sales of new smartphones increase, more consumers choose to trade in their devices, which provides an added supply to the secondary markets.
• Increasing volumes are flowing in from Tier II, III and IV towns. These geographies also represent the highest potential for refurbished smartphone demand.
• Consumers who previously chose to sell to friends/acquaintances or small neighborhood stores are looking at selling to structured businesses with an online presence and doorstep options. This spells value for the consumer in the form of money and convenience.

There is a need to structure the vast unorganized secondary smartphone market in India but currently, players are looking at gaining volumes in a market where the potential is very high.

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While government support in key SEA countries has resulted in a faster rollout of 5G infrastructure, most governments are currently focused on COVID-19 vaccination and jump-starting the economy. In the parallel, Thailand continues to concentrate on advanced 5G utilization, while countries like Indonesia, Philippines and Vietnam are focusing on solidifying their 5G infrastructure and increasing coverage.

Operators

The main operators in the key SEA countries are not only concentrating on increasing their 5G coverage but also making sure they sustain a healthy 4G network. Rural focus is helping them raise subscription levels as well. Their consistent tie-ups with OEMs are giving a push to bundled packages and 5G (especially in metros and Tier I cities). This will continue to increase at a YoY level, even after Q4 2021.

From merging telecom operators in Indonesia to industrial applications being pursued in Thailand, 5G connectivity is growing stronger in this region.

Even consumers who had not considered 5G during their most recent purchase of a smartphone, will consider it strongly in the future.

OEMs

New 5G smartphone launches in the mid-tier price band have been all the rage in this region. The ASPs for these 5G phones will go down for upcoming models from top brands like realme. This will lead to an increase in upgrades.

Brands like OPPO, Xiaomi and realme are adding consumer IoT products, like smart speakers, to purchase deals which is good exposure for their IoT portfolio in these markets. For brands like Xiaomi, the IoT segment makes up 10% of total revenue in some markets.

As the markets open, brands are also increasing their offline footprint. Xiaomi is looking to increase its sales outlets from 38 to more than 100 within this year. The brand is also making sure its after-sales network is geographically widespread. Xiaomi and realme stand out here.

E-commerce

The “9.9” shopping festival saw some big investments and celebrity endorsements on online platforms like Shopee. Other big players across SEA, like Lazada and Tokopedia, also spent on marketing campaigns and tie-ups with brands, events and celebrities.

Online sales are one of the biggest reasons for consumers to indulge in shopping towards the end of the year.

Whether it is ‘live shopping’ on Tokopedia or increasing Korean influence with music groups like BTS, consumers can relate to this association. The main SEA economies may see their highest ever online smartphone shipments in Q4 2021. With COVID-19 infection rates going down in most SEA countries, the only deterrent here is component shortages affecting supply.

Manufacturing

Q3 2021 saw governments in Indonesia and Vietnam giving emphasis to essential items. As infection rates went down in August and September, vaccination for the manufacturing sector was given priority. Starting September, most production facilities in Vietnam resumed normal operations and scaled up to make provisions for Q4 demand.

All the above factors play in favor of a very productive and lucrative smartphone season in Q4 2021. All key SEA countries are likely to show more than 20% growth over Q3 2021 and a healthy YoY increase as well. Indonesia, Thailand and Philippines will show a higher online share in smartphone shipments.

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The post Southeast Asia Perks Up, Boosts Smartphones appeared first on Counterpoint.

Commenting on the 5G status in the SEA, Senior Research Analyst Glen Cardoza said, “Q2 2021 saw the SEA region recuperate from COVID-19 before running into a fresh outbreak in Q3 2021. During this time, OEMs focused on 5G smartphone shipments. Besides, consistent efforts were made by governments and operators in these countries to grow their 5G infrastructure. Key brands like Samsung, OPPO, vivo and Xiaomi increased their 5G share and brought 5G models in the mid-tier as well. The iPhone 12 shipments saw a gradual dip but still managed to have a sizable portion in 5G, especially in markets like Thailand and Vietnam. Xiaomi’s increasing footprint in the SEA is being noticed by the competition and this will show in the 5G models being launched in the next few months. The coming months will see brands like realme push 5G ASPs lower.”

In 2021, all key countries in the SEA have been focused on developing and improving their 5G infrastructure:

Indonesia:

Major operators like Telkomsel and Indosat have their 5G presence in the main cities while others are building on their capabilities as well. The coverage, however, will be limited in 2021. Current 5G networks are offered with 1.8GHz and 2.3GHz bands. Samsung and POCO are currently selling mid- to low-end 5G models while realme is making its mark with the realme 8 series. This country will see its most 5G volumes in the coming months due to the growing consumer base.

Thailand:

5G commercialization and adoption in Thailand has been the fastest in the region, with all 77 provinces being covered by 5G. Smart cities and industrial applications are being pursued. Apple has a much higher representation here, which boosts the 5G share even more. The launch of the iPhone 13 series will only motivate consumers to opt for the latest technology accompanying 5G. With a growing e-commerce footprint, even Tier II and Tier III towns are upgrading to 5G through brands like OPPO, Xiaomi and Samsung. Operators like AIS, TRUE and Dtac are also providing 5G smartphones through their packages.

Philippines:

A growing middle class even outside Metro Manila is increasing consumer interest in 5G. The country’s 5G commercialization is being led by main operators like Globe and Smart. OEMs like realme will lead the 5G charge here apart from strong contenders like Apple, OPPO and Samsung.

Vietnam:

The government is eyeing both consumer and enterprise-level applications where 5G can play a pivotal role. Vietnamese consumers are also very inclined to adopt 5G. The country’s three major telecom operators – Viettel, NPT and MobiFone – have already started 5G trials in the country. Ericsson is working with the Vietnamese operators to build 5G infrastructure. The second half of 2021 may see the official launch of 5G services in Vietnam, though it may take a couple of years to have a countrywide 5G network.

Most SEA countries are currently reeling under high COVID-19 infection rates due to the Delta variant. Even while 5G technology is being given a push, lockdowns and other restrictions along with a sustained component shortage will have the most impact on 5G smartphone shipments. But irrespective of the overall volumes, we see the 5G proportion increasing for the region in the coming months.

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The post iPhone 12 Devices Top List of Best-selling 5G Smartphones in 3 out of 4 Key SEA Markets appeared first on Counterpoint.

Just as in other parts of the world, European countries have been hit hard by COVID-19 when it comes to smartphone sales. Our latest Consumer Lens surveys reveal that many consumers here have opted for reduction in budget for the next smartphone and extension of ownership period before the next purchase. In a silver lining of sorts, a higher than normal growth has been witnessed in online smartphone purchases.

In this article, we cover three big markets in Europe — United Kingdom, Germany and Spain — to understand consumer preferences for the modes of next purchase, based on the Consumer Lens surveys.

Offline vs Online

With ~35% of smartphone sales in the UK happening online, the proportion of online sales has gradually increased since Q1 2020. Interestingly, this growth was sustained even after the physical stores opened following the COVID-19 triggered lockdowns.

Outlets like Carphone Warehouse and Currys PC World stores have been subject to quite a few shutdowns and layoffs. However, the managements of these brands are looking to stay committed to the brick & mortar outlets and their employees. Their recent efforts for boosting in-store sales include:

• Customers choosing to shop from home are given a ShopLive video as a personal shopping experience.
• Retailers like Currys PC World will also offer free recycling of any electrical or electronics item brought in store.

Companies have also realized that consumers would rather buy smartphones from large format stores instead of smaller standalone mobile shops.

A big proportion of consumers in the UK would ideally want to experience the purchase in a more engaged manner. For example, buyers opting for upfront payments are less likely to choose online sources like Amazon.com or Buymobile.com. Our survey reveals that for more than 90% of the respondents, electronic stores and supermarkets are among the first three channel options.

Other countries prefer online modes:

In Germany, 35% of the respondents purchased their current phone online. For their next purchase, online is one of the main channels for 95% of the respondents.

In Spain, this proportion was 30% for current smartphones. For the next purchase, 76% chose online as one of the main channels.

What drives consumers now

UK: Most of the respondents will make their next smartphone purchase at an operator store.

The reason: Convenience, followed by probability of it being cheaper.

Exhibit 1: Reasons for Choosing a  Purchase Source

Interestingly, there are different dynamics at play here:

• Almost 60% of these respondents have a monthly income less than £ 1600.
• More than 40% of those planning to go in for an operator are self-employed individuals.
• Among those opting for full upfront payment, more than 50% are either homemakers or unemployed.

Irrespective of the demographic, most UK consumers still look at the benefits of contract smartphones. Established players like Carphone Warehouse continue to underline benefits like:

• Latest phone ownership without the hassle of upfront full payment.
• Bundling plan charges with phone installments over the period.
• Direct debit options with offers and treats.

Germany and Spain: While operators do not sway consumers in Germany and Spain as much, full upfront payment is the most preferred method. Also, consumers are most likely to choose online retailers like Amazon in these countries. Electronics stores and mass merchandisers like Media Markt, Saturn and Comtech in Germany, and Fnac, Conectrol and Walmart in Spain are also big options.

Key points:

• Germany: 41% choose to pay upfront, with the salaried making up 42% of these respondents.
• Spain: 53% choose to pay upfront, with the salaried making up 61% of these respondents.

For both Germany & Spain:

• Consumers who choose to buy it upfront earn less than €1,900 per month.
• The main motivators for going in for full upfront payment are cheaper deals and better offers.

Bottomline

Average selling prices (ASPs) will decrease as consumers are highly likely to reduce their smartphone budgets. While these budgets reduce, consumers are looking to opt for full upfront payment to reduce a deferred liability.

We also asked the consumers who purchased their current smartphone by making full upfront payment, whether they would buy it the same way next time. A good proportion of such consumers will continue to prefer a one-time payment:

Exhibit 2: Upfront Buyers and Their Next Purchase

COVID-19 effect:

Lastly, we made sure to understand their concern levels with regard to COVID-19 and whether it would affect their behaviour on the touchpoints involved in a smartphone purchase:

For their next purchase, a big proportion of the respondents in all three countries said they were not actively looking to reduce touchpoints during the experience.

It remains to be seen how offline and online channels lure the potential consumers as things go back to the new normal. While there are multiple routes to the end customer, brands and distribution channel stakeholders are likely to sweeten the deal further.

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