Smartphone growth in China probably hasn’t peaked… yet

IDC reported this week that the Chinese smartphone market has experienced its first slowdown “after nine consecutive quarters of explosive growth.” The world’s biggest smartphone market saw 90.8 million smartphones shipped during the fourth quarter of 2013, according to the market research firm, marking a 4.3 percent decline from the 94.8 shipments in the previous quarter.
IDC notes that the slide can largely be traced to two short-term developments: China Mobile flipped the switch on its TD-LTE network on December 18, and supporting 4G handsets didn’t fully hit the market until the last several weeks. Also, the rise of large-screen handsets (or phablets) prompted carriers to slash subsidies on smaller phones, “triggering distribution channels looking to clear out those stocks.”
I don’t think the growth in the Chinese smartphone market has peaked quite yet — the country is just beginning to enter the 4G era, and many users are still on 2G networks, so we’ll continue to see feature phone users convert to more sophisticated handsets. And the ultra-competitive low end of the smartphone market will continue to push prices down, making those devices more attractive to late adopters. But smartphone penetration in China is likely to reach 90 percent or even 95 percent by the end of the year, so the boom times are definitely coming to an end. I think we’ll see another spike or two this year, but it may not be long before India becomes the hottest smartphone market in the world.