December 01, 2015 13:13
Korean companies are struggling to stay ahead in the global smartphone market as Chinese smartphones are quickly shedding their cheap copycat image by boosting both quality and prices. This has forced Korean manufacturers to make their products cheaper.
Huawei, the world's No. 3 smartphone maker in terms of sales, unveiled the Nexus 6P smartphone in conjunction with Google in September. In the past, Nexus phones had only essential functions and were priced cheaply, but Huawei's Nexus has a premium metallic frame and comes with ultra high-definition cameras and other high-end functions.
Google rolled out two Nexus phones this year, one in collaboration with Huawei and one with LG, and the Huawei Nexus is up to US$220 more expensive than the LG Nexus.
China's Lenovo acquired Motorola from Google last year and has been rolling out mass-market models under the Lenovo brand and high-end models under the Motorola label.
Xiaomi's Hongmi Note 3, which was unveiled late last month, costs only between 899 and 1,099 yuan (US$150-200) but has a metallic frame, fingerprint recognition and a 4,000 mAh battery.
Korean manufacturers, meanwhile, are lowering their prices in a bid to defy growing competition.
Samsung released its flagship large-screen premium smartphone, the Galaxy Note 5, here in August and set the price in the W800,000 range, lower than all the other predecessors. LG also set the price of its new V10 smartphone unveiled in October in the W700,000 range.
Both Korean giants have also introduced a range of cheaper models to stay abreast of the Chinese competition.
But those strategies resulted in declining profits despite bigger sales in the third quarter.
LG suffered a W77.6 billion loss in the smartphone business in the July to September period although it sold 800,000 more smartphones than the previous quarter. It sought to make up for anemic sales of its strategic G4 model by boosting sales of mid and low-end models.
Samsung, the world's leading smartphone maker in terms of sales volume, saw its profit drop by W360 billion despite sales rise by W550 billion.
"As the smartphone technology gap narrows between manufacturers, there is virtually no difference now between Korean and Chinese smartphones," said Lee Byung-tae at the Korea Advanced Institute of Science and Technology. "Manufacturers need to differentiate themselves by increasing the variety of smart products, such as wearable devices that can be used in conjunction with smartphones."
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