Like in many developed economies, operators drive the Canadian smartphone market. More than 85% of smartphone sales take place through operators. Operators also dictate the market dynamics for smartphones. For example, incentives given by operators result in previous-generation flagships dominating the best-selling smartphones list. The Chinese brands, looking to enter this market, need to forge strong relationships with operators to be successful. Let’s take a closer look at the dynamics of the Canadian smartphone market:

• Apple dominates: Despite a global decline in sales, Apple managed to hold more than 40% market share. In the 18-34 age group, people prefer using Apple phones because of attributes like brand image, build quality, smooth interface, and more. In the >35 age group, people are open to both Samsung and Apple.
• Operator driven market: In Canada, the market is operator driven with Bell, Rogers, and Telus being the leaders. More than 85% of smartphone sales happen through these operators. Further, there is an increase in easy installment plans (EIP) in Canada, which makes all new flagships more accessible to the customers. Apple, Samsung are the key OEMs on operators’ platforms. Huawei has tripled since Q1 2018 due to operator tie-ups, but the further growth looks doubtful given the escalating trade tensions between the US and China.
• Expensive data plans: The data plans in Canada are expensive, almost two times or even more those in the US, which are already on the costly side on a global basis. Apart from the dominance of network operators, a big reason for costly data plans is the low population of Canada, which results in a higher per capita cost for spectrum and infrastructure roll-outs. Data rates are crucial for choosing operators and the ones who provide cheaper plans end up attracting more customers.
• Average Selling Price (ASP): Canadians have a relatively high disposable income. ASP for devices lies somewhere between US$580-US$600. This is where the sweet spot for the market lies in terms of price bands.
• Large-screen preference: Canadian users have shown an interest in large-screen phones. Phablets have been in demand. There has also been a shift to bezel-less phones. More than 75% of the phones sold in Q4 2018 were phablets.
• Expanding RAM: 2GB had been the RAM preference in the Canada market till Q3 2018. But now we see that sales for phones with 3GB and 4GB RAM are increasing. The demand for more RAM demand is because apps and games are demanding larger memory and RAM.
• Dominant offline market: People in Canada prefer buying phones from the stores rather than ordering online. When asked, over 55% expressed a preference for visiting stores (mainly operator stores) to purchase phones.

Seeing the potential of the market, new players have entered. Chinese brands like Xiaomi and Vivo are yet to get significant traction in the market. Aggressive pricing, tying up with the right operators, and targeting the right segment can help them gain market share and challenge the incumbents.