According to a new study conducted by ABI Research, Tier 2 mobile handset vendors shipped around 80.5 million units last year, representing only a small fraction of the global total.
These Tier 2 vendors are competing against the Tier 1 giants of the industry, which together control about 70% of the global market. Brand recognition and differentiation also present challenges.
Says industry analyst Michael Morgan: “Most Tier 2 handset vendors are Chinese, Korean, and Japanese. Many have tried to expand beyond their home regions through international partnerships (often leveraging existing infrastructure deals), but with mixed results. Some have succeeded, but often a variety of factors, intensified by global recession, is forcing vendors to retreat to their home bases,”
“They’re in the bunker now, but within the next two years they’ll have to come out, because in every region except Japan, the big players – the Nokias, Motorolas, and Samsungs – will be coming in with a vengeance.”
Emerging markets are the most probable territories for additional uptake of Tier 2 handset products because they are still experiencing high growth in mobile penetration, despite current global economic conditions.
Meanwhile at the bottom end of the scale, the ultra-low-cost handset (ULCH) market may not be as logical an opportunity for these smaller players as one might think. Many Tier 1 producers such as Nokia, Motorola and SonyEricsson already supply ULCHs on very small margins, Making it hard for Tier 2 companies to compete.
The ABI Research document, entitled “Tier Two Handset Vendor Analysis” provides a high-level snapshot of nine Tier 2 vendors, mostly focused on their home markets of China, Korea, and Japan, which have aspirations to grow in India, the US, Europe and Latin America.
