Downward Trend
It has been 7 years since Brazil, one of the two major contributors to the growth of the global smartphone market along with China, saw smartphone sales decline.
According to the IDC and KOTRA on July 20, the Brazilian smartphone market showed its first downward trend after a 7 year boom. In 2014 alone, the market grew 56 percent year-on-year, leading to 54.5 million in smartphones sales.
The Brazilian mobile phone market, which led the rapid growth in the global market, saw 4.86 million smartphone sales in April of this year, down 1 percent from a year ago. In May, only 3.89 million units were sold, a year-on-year-reduction of 16 percent.
However, some in the industry think that a downward trend in the market may be a temporary one, since there were Mother's Day and Lovers' Day in April and May, which probably contributed. Otherwise, the sale of consumer electronics goods and IT products normally surge during the period. The IDC growth estimate for the Brazilian smartphone market was 5 percent in the second quarter of 2015, but a year-on-year contraction of 12.2 percent is expected.
A decline in smartphone sales after steady growth in Brazil is mainly attributable to the country's economic recession, reduced income, and employment uncertainty.
As the former market leader Brazil is downsizing, the global smartphone market's focus is likely to shift away from premium models towards mid to low-end ones.
In particular, Korean smartphone makers are expected to face a crisis after showing good performance in Latin America. Samsung Electronics accounted for 29.5 percent of the smartphone market in Latin America during Q1 2015, down 10 percent or more compared to the same period last year, according to Hong Kong-based market research firm Counterpoint Research. LG Electronics, which was the second-most-popular smartphone vendor in the region, also experienced a decline in market share within a year, from 14 percent to 10.9 percent. The combined share of the two Korean companies amounted to 52.4 percent in Q1 2014, but the figure for Q1 2015 was 40.4 percent. Therefore, it is urgent for two Android phone makers to come up with measures to address the problem.
In contrast, a shift in the center of gravity for the global smartphone market is predicted to become a golden opportunity for Chinese firms that mainly produce entry-level and mid-range smartphones. Xiaomi recently entered the Brazilian mobile phone market by showcasing the Redmi2, a mid-range model, in line with the current market environment. The Chinese company decided to produce Android phones in Brazil for local consumption by asking Foxconn to assemble their products in the country. Even though the weight of Chinese mobile phones in Brazil is still low, a continued economic slump is forecast to sharply increase the number of consumers looking for cheaper mobile phones produced by Xiaomi and others.