China smartphone shipments see first decline in two years: IDC

Smartphone shipments in China, the top market in the world, experienced its first slowdown in the fourth quarter of 2013 after the market recorded 9 consecutive quarters of explosive growth during the past two years.
Written by Cyrus Lee, Contributor

Shipments of smartphones decreased 4.3 percent quarter-on-quarter to 90.8 million in China during October and December, from 94.8 million units of the previous three months in 2013, research firm IDC said in a report on Thursday.

It is the first drop-off since the second quarter of 2011. IDC attributed the decline to a number of factors including the introduction of Mobile's 4G TD-LTE network in China on December 18, which would translate into supplies of 4G handsets not able to reach the market fully until 2014 Q1.

The increasing popularity of phablets and channel inventory also enabled Chinese operators to cut smartphone subsidies on phones with smaller screens, which triggers distribution channels looking to clear out those stocks, according to the report.

Melissa Chau, a senior research manager with IDC, noted the world has increasingly looked to China as the powerhouse to propel the world’s smartphone growth, who said the latest data was the first hiccup in an otherwise stellar growth path.

"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," said Chau.

She expects future drivers to unlock further smartphone growth in the country after Apple tied-up with China Mobile in January and the massive device upgradation to 4G networks.

As smartphone shipments will face more moderate increases in China, emerging markets like India, which now significantly lags behind, will become the next growth highlights in the future, IDC expects.

Chinese smartphone players are expected to expand more actively in the international markets this year after they’ve mapped out plans in the domestic market and had started testing out overseas since 2013, according to IDC.

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