According to IDC’s Asia/Pacific Quarterly Mobile Phone Tracker, a total of 26.8 million mobile phones were shipped to the Philippines in 2014. The share of smartphones increased to 47% in 2014, up from 24% in 2013.
Smartphone shipments to the Philippines registered a healthy 76% growth year-over-year (YoY), with the surge being fuelled by budget offerings from local vendors. While feature phones still made up majority of the mobile phone market in 2014, the past months saw both local and international vendors increasingly shifting their focus toward smartphones. Prices of smartphones continue to drop as component prices drop and original equipment manufacturers (OEMs) are able to produce cheaper smartphones.
“The narrowing price gap between smartphones and feature phones made smartphones more palatable to budget-conscious Filipino consumers, leading to the faster adoption of smartphones in 2014 compared to previous years,” says Jerome Dominguez, Market Analyst at IDC Philippines.
Sub-PHP4,000 (US$90) smartphone models accounted for more than 58% of smartphone shipments to the country last year.
“Catching up on the smartphone craze, the Philippines is now the third largest market for smartphones in Southeast Asia, coming after Indonesia and Thailand,” adds Dominguez.
The Philippines is also the fourth country in Southeast Asia to ship more smartphones than feature phones, after Singapore, Malaysia, and Thailand. The 3rd quarter of 2014 was the first time in the Philippine market where smartphone shipments surpassed those of feature phones, marking the onset of a new era.
Although most smartphone vendors grew in volume terms in 2014, the local vendors are the ones that managed to gain market shares year-over-year. Local vendors grew from 49% in 2013 to 57% in 2014. Chinese vendors, on the other hand, dropped slightly from 16% to 15% in 2014. Due to stronger competition from local and Chinese vendors last year, the share of global vendors also dropped from 35% to 28%.
Three local smartphone vendors made it to the top 5 smartphone vendors in the Philippines (in unit shipment terms) in 2014. Cherry Mobile was the top smartphone vendor last year, while MyPhone and Torque ranked 3rd and 5th, respectively.
Daniel Pang, Senior Research Manager of the Client Devices group at IDC Asia/Pacific comments, “The success of local smartphone players is an offshoot of heavy marketing, celebrity endorsements, and price-competitive offerings. Branding is critical in the Philippines. The thriving local vendors are those that not only offer budget-friendly smartphones, but also produce strong ATL campaigns and are endorsed by popular celebrities.”
Among the Chinese vendors, Lenovo has the biggest share in the Philippines, snagging the 4th spot in the top 5. Although gaining traction in other regions, Chinese vendors that just recently branched out of China (e.g., OPPO, Xiaomi) have yet to gain ground in the country given limited brand awareness. This may change this year as these new entrants ramp up their marketing efforts.
Samsung still leads the pack of global vendors, followed by LG Electronics. As a newcomer to the smartphone market, ASUS also gained considerable share last year. The decline of Sony and Blackberry contributed to the drop in the overall share of global vendors in the Philippine smartphone market.
IDC remains bullish about the Philippine smartphone market in 2015. Smartphone shipment is expected to grow 20% year-over-year. Feature phone shipments, on the other hand, are expected to decelerate by 20% this year as more vendors shift their focus to making smartphones. IDC also expects smartphone prices to continue to go down as vendors further push the price limits for smartphones to the sub-PHP2,000 (US$50) price level.