Study: Small OEMs Struggled In Q1 2017 Due To Price Hikes

Some smaller original equipment manufacturers (OEMs) in the world struggled and underperformed in recent quarters due to a number of reasons endangering their position in the global phone market, a recent study conducted by Strategy Analytics revealed. According to the latest data, many of the so-called "microvendors" have lately been experiencing issues with a broad range of troubling trends, including constantly and rapidly increasing component prices that are jeopardizing their relatively young operations that aren't developed to a degree that would allow them to weather those price hikes without major consequences. Likewise, due to the fact that they're second-tier phone vendors that only account for approximately 11 percent of the global smartphone market, the majority of those companies was unable to bring their sales to a level that would help them compensate for the losses incurred by the increasing prices of phone components, industry watchers at Strategy Analytics believe.

Regardless, some smaller OEMs are still playing a significant role in the market, especially with the rise of online distribution channels. While their operations aren't profitless, troubles in recent quarters will likely lead to an increasing number of consolidations in the smartphone industry in the near future, the report states, without providing an approximate time frame to accompany that prediction. Apart from an overall performance decline of smaller phone vendors worldwide, another Q1 2017 trend that suggests more consolidations in the industry are on the horizon is the continuing growth of major OEMs, Strategy Analytics claims. While more than a hundred microvendors posted an eight-percent decline in performance in the first quarter of the year compared to Q1 2016, the 30 largest smartphone manufacturers in the world grew by eight percent year-on-year during the same period. When smaller members of the market are struggling and the already large ones continue to grow, consolidations are the most likely outcome, Strategy Analytics predicts.

While all microvendors combined experienced a decline during the first quarter of this year, some of them have still managed to thrive during this period, the report reveals. The likes of Reliance Jio, Lefeng, INNJOO, and Xiaolajiao have all posted above-average growth in the three-month period ending March 31 and these companies will likely continue operating like they have so far in the immediate future, though it remains to be seen whether they manage to maintain their performance in the long term.

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