Mobile Phones in Hong Kong, China

PROSPECTS

High penetration of smartphones and lack of innovation results in limited upgrading to new devices

Smartphones continued to record declining demand in 2019, following a negative trend that began at the end of 2014 and is predicted to continue into the forecast period. High smartphone penetration in households and longer replacement cycles due to flagship brands extending their lifecycles means that consumers are postponing new purchases, particularly as the unit price continues to increase yearly; therefore, mid-income Hong Kongers are increasingly taking broken phones to be repaired rather than replace them with a new one.

Increasing polarisation amongst price tiers

Polarisation within smartphones is evident in Hong Kong with demand for both premium and budget devices, leaving mid-priced phones lagging, with the latter suffering from the perception that their functionality is trickling down to budget smartphones. Affluent consumers purchase premium flagship devices that offer greater functionality such as wireless charging, are waterproof and offer designs that are unlikely to be seen amongst mid-tier smartphones.

Unit price hike due to increases from flagship brands and higher specs

The average unit price of smartphones continued to rise in 2019 and is predicted to continue this trend into the forecast period. This is linked to the leading smartphone brand iPhone raising its prices by 40% between the iPhone 8 and the iPhone X.

COMPETITIVE LANDSCAPE

Huawei sales rocked by US trade war

Huawei smartphones had recorded strong retail volume growth between 2016 and 2018, moving up the rankings and gaining share. The brand offered a wide range of phones from the economy end to high-end flagship models to suit all tastes and budgets.

Leading brand iPhone continues to suffer declining demand as consumers fail to justify high price for lack of innovation

Leading smartphone brand iPhone continued to suffer from strong declining retail volume share and sales in 2019 in Hong Kong. Lack of innovation in the later generations of iPhones, despite significantly increasing unit prices, is pushing consumers away from iOS devices including both the Mac portfolio and smartphones.

Asus moves to target gamers with ROG smartphone

Although retail volume sales continued to decline for Asus in 2019, the company claims that its revenue has increased due to the higher margins for its gaming phone options. The Asus ROG smartphone has captured the interest of local gamers by specifically targeting this consumer group, positioning itself as a high-functioning smartphone with superior specifications.

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