Smartphone sales slipping
A lack of new technology, a saturated smartphone market and uneasy consumer confidence in Chinese smartphone maker Huawei may shrink the overall local smartphone market by 4% in 2019.
The replacement cycle for mobile phones may rise from 18 to 24-36 months, according to estimates by Total Access Communication (DTAC).
One week after Huawei's struggle with the US and losing its Android OS licence, sales are down by double-digit rates, say retailers and mobile operators.
But gaming smartphones and related devices, as well as mobile bundling at special prices from operators, might stimulate demand, said Thailand Mobile Expo organiser M Vision Plc.
"We estimate that in the second and third quarters, local smartphone sales will slow down because of a lack of new models and it is the low season," said Arkapong Linpisarn, head of partnership and hybrid channels at DTAC.
According to IDC, local smartphones sales in the first quarter still grew with over 3 million units sold, driven by flagship models like Samsung's Galaxy S10 and Huawei's P30.
"After one week of trade war issues, Huawei device sales dropped by two digits, and users are asking to switch brands, in particular to P30s as Thais panic in reaction to the news," Mr Arkapong said. "DTAC has inventory for 30-45 days and we are confirming orders on a weekly basis."
DTAC aims to increase postpaid users to 7 million by the year end, up from 6.2 million currently, and it aims to become the second-ranked player again soon.
In the first quarter, DTAC's new net add for postpaid was 120,000, while mobile leader Advanced Info Service (AIS) was 200,000. This is the first time that True had new net adds below 100,000 in the past few years, Mr Arkapong said.
"Bundling data packages with devices will be a continued strategy to boost new users, and this makes DTAC still grow in terms of device sales by at least single digits in contrast to the overall industry, which is expected to contract 4% in terms of value and unit sales in 2019 as Apple's iPhones have also seen a drop in sales since the fourth quarter of 2018," he said.
Suthida Mongkolsuthree, chief executive of Synnex, a Huawei distributor, acknowledged the decline in Huawei phone sales.
Opas Cherdpan, managing director of M Vision Plc, said the Thailand Mobile Expo, which will runs through June 2 at Bitec, is growing in size, expanding this year from 20,000 to 27,000 square metres.
The event in partnership with AIS is capitalising on the growing mobile gaming trend, driven by the popularity of e-sports.
The expo will expand more into mobile-related activities other than smartphones, such as earphones and gaming smartphones that will be second devices for users and cost over 10,000 baht. For the first time, the event will feature gaming notebooks and computers priced at 30,000-100,000 baht.
"We're seeing a saturation in the smartphone market and a lack of confidence in Chinese smartphones, which is why we need to find new growth opportunities in e-sports and artist management," Mr Opas said.
M Vision expects 3 billion baht in sales from the event, with 20-30% coming from gaming devices.
Narathip Wirunechatapant, chief of marketing at Jaymart Plc, noted a slowdown in Huawei sales but did not disclose the numbers or which brands customers switched to.
Jaymart itself has a campaign that allows users to return their phones if they are not satisfied and charges a 10% fee, he said, and some customers are switching from Huawei.
In the second-hand market, some dealers could slash the price of Huawei's flagship phone by as much as 8,000 baht.
Samsung for the first time is giving an aggressive 5,000-baht voucher to buyers of its flagship smartphone, and Huawei is discounting its own flagship model by 20% to attract new buyers at the mobile expo.
Huawei Thailand declined to comment when asked whether its domestic sales were dropping.
Mr Narathip said smartphone vendors are trying to offer trade-in schemes, cash back and instalments to reduce the smartphone market decline, which could be as much as 3-4% or 17 million units, while value will remain flat at 100 billion baht.