Beijing, Hong Kong, Seoul, Taipei, London, Boston, Toronto, New Delhi – December 10, 2021

The mid-to-high-end segment is increasingly becoming more important for Chinese OEMs as consumers continue to upgrade their smartphones. Higher-value phones also offer more profitability for OEMs, which are witnessing a decline in shipments due to the shrinking of China’s smartphone market.

Over the past year, vivo has made significant progress in China’s mid-to-high-end segment. Its market share in the $500-$599 price band (wholesale price) has risen from 10% in September 2020 to 20% in September 2021. This was driven by the strong performance of the vivo X70 Pro, launched in September. vivo continues to move up the value chain with relentless efforts in research and innovation in camera technology, including entering a strategic partnership with optical technology leader ZEISS.

Counterpoint Research expects China’s smartphone market to see flattish growth in 2021. It is a challenging market for all OEMs, especially given the hardware situation. With a slow market size growth rate, leading OEMs tend to move into the game of revenue and average selling price (ASP).

Further, Chinese OEMs are no longer pleased to be crowned as the “king of affordable”, which means domination in the $157-$314 (CNY 999-CNY 1,999) retail price bands. They are hungry to grab more share in the $470 (CNY 3,000) and above segment. We can call the $470-$630 (CNY 3,000-CNY 4,000) retail price segment the entry premium segment and a strategic territory for all Chinese OEMs.

In Q3 2021, vivo, with all the efforts of strategic portfolio planning and continuous channel evolution, took the leading place in the $500-$599 segment, driven by the outstanding performance of X series.

vivo launched its S series in April 2021, aiming to free the X series from the $470 (CNY 3,000) and below segment. Before that, the X series had blurring boundaries. While it was supposed to be a higher segment series, it was still present in the $470 (CNY 3,000) and below segment. To the market, the X series was meant to increase vivo’s ASP but failed. The S series came at the right time because it was not only different from the Y series, which had already impressed the market with its entry-level products, but also let the X series focus on the premium segment. The restructuring strategy has proved to be a success.

As we may recall, the $500-$599 entry premium segment used to be dominated by Huawei. HONOR, which has been carved out of Huawei as a separate company, sees Apple as a role model, which its CEO George Zhao has admitted publicly a few times, and will definitely launch products in this segment. Xiaomi’s Q3 2021 earnings brief also states that the company is performing well in the premium segment. Therefore, the $500 and above segment will be the next battlefield for all Chinese OEMs.

With the ASP of the Chinese mass market expected to continuously increase in the coming two years, the mid-tier S series holds great strategic importance for vivo.

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Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts: 

Ivan Lam

Mengmeng Zhang

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