Local mobile brands wrestle for market share

For the longest time, a lot of the local brands have made a killing in the phone market in the Philippines. At one time, 3 out of the top 5 mobile brands came from local Pinoy brands (in terms of units sold).

Local mobile brands thrived and succeeded because they offer much cheaper handsets than the global counterparts and since Filipinos are very price-sensitive, the ones who offer the best price for a reasonably good device gets the consumers attention and their wallet.

Locally-branded smartphones were so popular that many other smaller local players got into the same business as well. Most of them would just outsource everything from their suppliers in China (normally referred to as ODM or original device manufacturers). There are a lot of them suppliers in Shenzhen offer already finished devices and just add your own brand or logo into them.

But I digress.

In the last couple of years, a lot of global and regional brands have entered the Philippines knowing really well the potential of the market.

The likes of Asus, OPPO, Motorola, and Vivo are just some of the bigger examples. Newer entrants also include Xiaomi, Gionee, and Meizu with the most recent ones are Nokia by HMD and HTC.

Almost all of them offered equally good and competitively priced units in the Php15,000USD 256INR 21,669EUR 243CNY 1,862 range and the sub-Php10,000 price points, a category which the local brands dominated for the longest time. For now, these Filipino brands continue to command a bigger share in the sub-Php5,000 price point but that category has very low margins, despite being a volume driver. Of course, there’s the sub-Php1,000 feature phones as well.

This inevitably increased the number of handset choices for the consumers for each price point. And to be noticed the brands need to put a lot of marketing money on the table. The ones with the bigger budgets get the advantage.

The regional and global brands are also more recognizable compared to the local names, along with it is the level of trust and confidence a lot of consumers consider when they spend for a new product purchase.

The individual market share has spread out across a dozen brand names, margins grew thin as competition grew stronger. What used to be a simple, lucrative business for a few players have become very diverse, challenging and constantly problematic game for many.

Customer support, distribution, marketing, channel support, inventory management and many others became a more serious concern. A strong competitive environment can really bring the best (or worst) out of each player and this is what is happening in the local landscape now.

We’ve already seen the signs. A few players have backed out of the market, not of their own volition but because of natural selection. The remaining players — the ones with a tighter ship, has good product selection and position as well as a responsive strategy — will come out as the big winners. And that is good for us consumers.