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Handset Makers Adopt Android, Push Advanced 3G and 4G Smartphones, Business and Industry Trends Analysis

For 2016, analysts at Gartner reported that 1.9 billion mobile phone units were sold worldwide.  The company also forecasted 1.9 billion unit sales for 2017.

Upstart competitors have been growing in the mobile handset business, particularly Micromax in India and Xiaomi in China.  However, this is a very difficult, highly competitive business.  Profit margins can be very thin outside of Apple’s enormously profitable iPhone business.  Microsoft took a serious leap into the realm of hardware with the $7.9 billion acquisition of Nokia’s handset business in April 2014.  However, by mid-2015, Microsoft was so disappointed in the results that it wrote off nearly all of the value of that acquisition and announced 7,800 layoffs in this unit.

A booming firm in China called Xiaomi Corp. is a dark horse in the handset manufacturer race, with shipments rising from 300,000 units in 2011 to 60 million in 2014.  Growth slowed, with the firm selling 53 million units in 2016, however, its first quarter 2017 sales grew by 25.5% compared to the same quarter in 2016.  Xiaomi’s phones are full-featured but sold at near cost.  The company is shipping its phones worldwide, with English versions bearing the brand “Mi.”  Meanwhile, India’s Micromax, the largest smartphone vendor in India, is also making its phones available to Western consumers, with prices ranging from less than $30 to more than $200.

In China and around the world, phone prices are dropping because of intense competition.  Prices are expected to fall further for basic models.  In early 2014, Firefox web browser company Mozilla announced that new smartphones running its Firefox OS on Spectrum chips could retail for as little as $25.  Inexpensive phones are also packing more power than in the past.  Thanks to plummeting chip prices, even low-end smartphones can feature fast processor speeds and reasonably large amounts of memory.

Phones are also featuring larger screens, especially in China.  Large screens had been slow to catch on in the U.S. until the launch of the very popular Apple iPhone 6.

Google forced transparency and open software on the cellular market in one bold act during 2007, with the launch of its Android wireless device operating system.  Android is readily usable, at no fee, by any or all of the world’s manufacturers.  At the same time, it is open to the world’s software and mobile app developers, free of charge.  Google’s highly successful strategy was to offer an open platform for mobile devices that is flexible and free, thus setting itself up to be the leader in mobile search and related services.  The result is that Google is the envy of all other mobile search providers and all other mobile operating system creators.  For the first quarter of 2017, Google’s Android remained the most popular smartphone operating system worldwide.

Google’s Android and Apple’s iPhone put additional competitive pressure on Microsoft in the mobile arena.  Microsoft offers its Windows mobile operating system, which combines potential access to its Office suite of applications, Xbox LIVE gaming and a wide array of apps.  However, Microsoft is running far behind Apple and Android in the mobile market.

 

 


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