Smartphone demand continues unabated

Despite Thailand’s high smartphone penetration rate, the country’s handset market continues to grow thanks to replacement demand, says global market research firm Canalys.

The smartphone segment above 16,600 baht was the fastest-growing, jumping 51.4% year-on-year in the second quarter this year. This segment represented 14.1% of the smartphone market for the period, up from 12.9% year-on-year.

“The high-end category was the highest-growth segment, as users look for devices that offer better experiences,” Lucio Chen, market research analyst at Canalys.

Apple, Samsung and Huawei were the leaders in this price segment. Growth in this category was affected by heavy subsidies for post-paid connections.

The market for low-end devices (below 6,600 baht) grew 36.7% year-on-year in the second quarter, but lost market share, falling from 61.4% in 2016 to 60.4% this year.

The market for mid-range phones (6,600-16,600 baht) grew by 38.3%, with its share remaining flat at 25%.

Mr Chen said free handset campaigns by local operators drove up volume in the low-end segment in 2016. The campaigns were aimed at accelerating 4G adoption and increasing the smartphone base, but have declined this year.

Samsung is struggling to sustain its leading position. Oppo overtook Samsung in the mid-range segment for the second quarter, he said.

Oppo’s strategy of targeting young consumers and investing heavily on ads featuring selfie cameras is paying off.

Canalys forecasts smartphone shipments into Thailand will grow from 14.8 million in 2016 to 20.6 million in 2017 and 23.3 million in 2018.

The market researcher estimates smartphone base penetration will rise from 67% in 2016 to 73% in 2017 and 79.6% in 2018.

Despite the high penetration rate there is much room for growth in the Thai smartphone market, as basic phone users move to more expensive models, said Mr Chen.

The demand for larger screens and higher capacity has been driven by the growing popularity of online entertainment, shopping and social media.

Mr Chen said 2018 will be a “very different year”.

Users that were offered free operator-branded smartphones will soon be switched to better models and more well-known brands, providing an opportunity that vendors in the low- to mid-price brackets will capitalise on, he said.

Xiaomi recently entered the market with a strong focus on value-for-money devices.

Nokia has also returned through partnerships with local operators. These new players will intensify the already fierce competition as the replacement cycle shortens, said Mr Chen.

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