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China's smartphone market slows down

The dream is over after first decline in nine quarters

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The juggernaut that is the Chinese smartphone market slipped a gear for the first time in 27 months in 2013's fourth quarter, declining 4.3 per cent from the previous three months, according to IDC.

The bean counter’s Asia/Pacific Quarterly Mobile Phone Tracker revealed that 90.8 million units were shipped in the last quarter in China, compared to 94.8 million in 2013 Q3.

The slowdown can be blamed in part on the late switch-on of China Mobile’s 4G network on December 18, which meant 4G handsets couldn’t reach the market in decent numbers until Q1 2014, IDC said.

However, the analyst was confident that good times would continue in the Middle Kingdom – where inexorable rise growth in the past nine quarters has enabled it to become the largest smartphone market in the world.

“There will certainly be future drivers to unlock further smartphone growth in China, as Apple demonstrated with its China Mobile tie-up in January, and the massive device migration to come of phones only supporting 2G and 3G networks to devices supporting 4G networks,” said analyst Melissa Chau in a canned statement.

“However, we are now starting to see a market that is becoming less about capturing the low-hanging fruit of first time smartphone users and moving into the more laborious process of convincing existing users why they should upgrade to this year’s model.”

This slowdown is likely to have a knock-on effect on other markets, as largely domestic Chinese handset players like Xiaomi, Oppo, BBK and, of course, Lenovo, look to expand outside of the Middle Kingdom, she added.

In the future, growth will come from emerging markets such as India, although even coupled with other fast-growing countries such as Indonesia, it’s unlikely to be able to fully take up the slack from a slowing China.

As Chau told El Reg when discussing the Lenovo-Motorola deal recently, we’re likely to see more consolidation in the industry as a result, with “the big players who have scale and work on lower margins pushing out the smaller guys”. ®

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