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China overtakes US as world’s biggest smartphone market

Nokia faces do or die in Middle Kingdom

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The number of smartphones sold in China has outpaced that in the US for the first time, according to analyst house Strategy Analytics.

In the third quarter of 2011 Chinese smartphone sales rose 58 per cent, with 23.9 million units shipped. By comparison, US smartphone sales slid down seven per cent to 23.3 million units. The US still far outpaces the Middle Kingdom in terms of the value of handsets sold, but that too looks certain to change over time.

“In revenue terms there’s still a long way to go before China overtakes the US in smartphones,” Linda Sui, analyst at Strategy Analytics told The Register. The key driver in China was the under-30s middle class youth market, she said, who were flocking to buy handsets now that they had the money to do so.

According to Strategy Analytics’ data, Nokia is the most popular single brand of smartphone in China, with 6.8 per cent of the market, compared to Samsung’s 4.2 per cent. The bulk of this is down to Nokia’s legacy of Symbian smartphones, which still hold a considerable position in the market. The next year or so, during Nokia’s transition to Microsoft’s Phone 7 platform, will be crucial to the Finnish company – but its market position depends as much on European tastes as those of China.

“If consumers in the European Union really like Nokia’s new handsets, then Chinese consumers will take a lead from that,” Sui explained. “Domestic demand is, to an extent, driven by the styles that sell in the EU and North America.”

Local firms like Huawei and ZTE are also building up strong regional followings among Chinese consumers, and are usually sold at a much lower cost than western handsets. Research by the analysts has shown a strong local suppliers market is preventing any one manufacturer becoming dominant.

In terms of desirability, however, there is just one handset, Apple’s iPhone. The cost of the handset may be beyond most Chinese consumers, but it is still seen as the device that typifies the market.

“Even though the models are really too pricey for the mass market, people know what is smartphone and how to use it thanks to Apple,” Sui said, “The iPhone is kind of a catalyst for the Chinese smartphone market.” ®

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