July 7, 2013


Smartphone Makers Hit By Rising Competition (EVA DOU AND MIN-JEONG LEE, 7/07/13, WSJ)

"The whole high-end smartphone industry is slowing, which is not just an HTC problem," said Barclays analyst Dale Gai. "It's a saturated market." 

That means the battle for these high-end customers is getting fiercer--and more expensive. HTC is more than doubling its marketing spending this year in its attempt to counter Samsung, even as its revenue has fallen from last year. Samsung, sitting on a growing pile of cash, is expected to spend increasingly to market its products this year after spending a total 13 trillion won in 2012, up 38% from a year earlier.

High smartphone penetration rates in developed markets such as North America and Western Europe are leading to slower growth for high-end models, analysts say. Though premium models are most profitable for mobile-phone makers in general, they may have to look to cheaper models for growth, targeting emerging markets where growth potentials remain high, they said.

Apple is widely expected to launch a lower-cost version of its iPhone later this year, people familiar with the situation told The Wall Street Journal earlier. While Samsung and HTC have long made midrange phones, both are expected to bend their premium line down to more price-conscious customers. Samsung has already announced the stripped down version of its flagship Galaxy S4 Mini, while analysts say HTC has a smaller version of the One in the works, though HTC declined to comment on coming products.

"The mid and entry-level smartphones are quickly picking up share, and are getting quite powerful in their capabilities," said CK Lu, an analyst at Gartner in Taiwan. "Basically, a year ago, you didn't have many choices in low-end smartphones. But now in the China market, you can buy a 5-inch smartphone for around US$200."

Posted by at July 7, 2013 7:13 AM

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