Demand for medium to low-priced phones in Smartphone market in Korea is also increasing. Trend of consumers prefering premium phones is rapidly changing.
While Galaxy Grand Max brought a storm last spring to the market, Samsung Electronics’ new medium to low-priced phone called Galaxy A8 is also receiving a lot of attention. Era of medium to low-priced phones is starting as improvement of medium to low-priced phones’ performance, increase of consumers’ burden on expensive cellphones, and manufacturers’ strategies of expanding share interlock each other.
SK Telecom started selling Galaxy A8 at 4000 agencies and stores and T World Direct starting from 24th. Galaxy A8 has the best performance and function out of medium to low-priced phones that were released this year, and one can purchase it at a price somewhere between $256 (300,000 KRW) and $342 (400,000). It received lots of attention even before the release because it is thinnest Galaxy (5.9 mm). It raised its popularity because Gold Model was temporarily out of stock during reservation admission period (21st to 23rd).
A person affiliated with SK Telecom said that customers’ reactions to it is better than expected at a performance view compared to price because it has 16 million-pixel camera, 3050 mA/h battery, and etc. That person also said that release of this phone is being welcomed in distribution network because they are finally able to recommend in a long time a premium medium to low-priced cellphone.
Galaxy A8 is the highest model out of Samsung Electronics’ Galaxy A, E, J models that are its medium to low-priced line-up. Including Galaxy A5 and A7 and Galaxy Grand Max in early 2015, Samsung Electronics continuously released medium to low-priced models including Galaxy J5 recently. LG Electronics helped expanding the market as it also released Band Play, Magna, Volt, G Style-O, and Bello (Global).
Galaxy Grand Max that was released in last January was the one that brought the medium to low-priced phone storm. Its factory price is $273 (319,000 KRW), and one can purchase it at about $85 (100,000 KRW) if he or hse used $34 (40,000 KRW) rate. More than 700,000 copies were sold as people were takling about its premium specifications and functions such as 13 million-pixel camera. Even after release of Galaxy S6 and G4, it received lot of popularities as it held 1st or 2nd place every week in sales volume.
One Netizen from a cellphone information sharing site called Ppomppu evaluted this product by saying that Galaxy Grand Max has a really nice sense of touch and it is very satisfactory. Netizen also said that it is a perfect prodcut for parents because its battery lasts very long.
Galaxy Note 3 Neo, which its factory price is $512 (599,000), is in short supply as its subsidy maximum restriction was lifted after 15 months from its release date. It is not due to its inexpensive price, it has premium functions as it was manufactured based on Galaxy Note 3.
Percentage of premium phones, which was about 96% of all of top 10 2012 sales, went down to 80% recently according to KT Economy Management Research Center.
There are many reasons why people like medium to low-priced phones. After implementation of Mobile Terminal Distribution Act, customers who felt burned about purchasing expensive cellphones are moving to medium to low-priced phones. As medium to low-priced phones with similar functions like premium phones appear, it seems that minds of customers who thought they had no choice but to change to medium to low-priced phone due to high price of premium phones are now thinking that these phones are quite serviceable.
Competition of market shares in manufacturers is another background in expansion of medium to low-priced phones. Although profitability of medium to low-priced phones is lower than premium phones, it is a field that manufacturers cannot give up if they want to expand their shares. Not just Korea but to to go after global market, strengthening medium to low-priced phone line-up is a must. A reason why Samsung Electronics manufacturerd Galaxy A8 is to compete against Chinese manfacturers.
In ‘Change of Factory Price and Manufacturer Strategy Proposal’ report, researcher Jung Yeon Seung of KT Economy Management Research Center said that low-priced phones will remain strong for awhile due to standardization of increase in cellphone functions, strenghtening of low-priced phone line-up, and improvement of low-priced phone’s subsidy in Mobile Terminal Distribution Act.
Demand for medium to low-priced phones in global market is also increasing as rising Smartphone markets such as India and Indonesia are growing because demand for medium to low-priced phones is high unlike advanced countries where markets are fully developed.
“Global Smartphone market in last second quarter grew about 11.6% and this is not just due to premium phones. Fact that medium to low-priced pohnes were steadily and abundantly sold in many major markets had a greater impact. IDC manages more than 200 Smartphone brands, and many of them are focused on medium to low-priced models.” Research Manager Anthony Scarsella of IDS said that more Smartphone brands are putting their focus onto medium to low-priced phones.
Staff Reporter An, Hochun | hcan@etnews.com