Oppo smartphones from China may be expanding their share of international markets with high-end 5G devices
Oppo is the latest of Chinese brands to make an effort and enter the high-end segment so as to get out of the domestic price rivalries, but it is happening against the background of overall decrease in the sector because of coronavirus.
The fifth largest smartphone vendor in the world, Oppo launched a 5G flagship phone in early March, setting the starting price at 5,499 yuan (US$784). The company’s most expensive phone ever, Find X2 series shows its unrelenting ambitions in China’s high-end handset sector, 80% of which now belongs to Huawei.
Oppo’s local rival Xiaomi had just taken a similar step, and it is part of a strategy to promote the brand in established international markets while Huawei has to deal with major obstacles in international sales. The problems are caused by being placed on a US trade blacklist, which prohibits the company from using Google mobile services.
Guangdong-based Oppo has previously focused on smartphones in the low and middle price range, and used fun marketing strategies that targeted smaller-city urban youth. The new flagship phones also demonstrate the company’s plans to expand its geographical footprint from Asian developing markets to Europe, where an average user has more to spend on a premium model.
Counterpoint research company data shows that more expensive smartphones have gained popularity in 2019, and the sale of models priced at US$800 to US$1,000 leaped 60% year on year in Q3, accounting for 20% of all devices sold.
“The high-end is a growing segment and we have to enter that market,” Oppo VP Alen Wu said in a media interview after Oppo live-streamed the product launch under conditions of nationwide restrictions on traveling and large-scale meetings due to the coronavirus outbreak. “The Find series will be the main models in our higher-end segment and we will have a new generation of [the series] every year.”
The Find X2 series is 5G-compatible and features an optical in-display fingerprint sensor and a small hole-punch cutout for the selfie camera, which places it in the same league as Huawei’s and Xiaomi’s high end models. The two companies have both recently unveiled their 5G models.
“[Oppo’s] specifications on paper are definitely competitive,” stated Nichole Peng, VP of mobility research at Canalys. “The move to the high-end is not merely a pricing strategy but also demonstrates the company is gaining confidence in their technological know-how … they will face the ultimate test from high-end consumers though who are constantly looking for the full package of user experience.”
The Find X2 models are on sale in 30 countries and regions besides mainland China, and they are also capable of taking a part of the international market share from Huawei. The latter’s numbers were significantly hit by the US ban on the phones using Google mobile services, including popular apps such as Google Maps, Gmail and YouTube.
Bryan Ma, IDC’s VP of client devices research, claims that Huawei’s lack of access to Google software is a great chance for other Android players in global markets, including western Europe. “Oppo is doing high-end phones not only to show off its engineering abilities, but also because it helps the company’s efforts in markets like western Europe where its brand is still not as well-known,” claimed Ma. “It helps keep the brand from being pigeonholed into a reputation for focusing on lower-end products.”
Oppo was initially founded as a low-priced handset manufacturer under BBK Electronics. Eventually it grew to become the #5 global smartphone brand, establishing a strong presence in lower-tier Chinese cities and developing markets, such as Southeast Asia.
The company is known for its showy advertising campaigns with movie stars and music celebrities who endorse the brand, which runs both online and offline in places like shopping malls, high-street billboards and airports. This public exposure has definitely helped Oppo gain a strong footing, particularly in smaller Chinese cities and rural areas. In Europe, however, Oppo is yet to gain recognition.
Oppo’s Wu said the Find X2 flagship will seek to gain a foothold in China, countries of the Asia-Pacific region and western Europe, and will expand to Romania, Portugal and Mexico, among other markets. Oppo stated that it is cooperating with major European mobile sector players, such as Vodaphone, Orange, Deutsche Telekom and Telefonica, to deploy its 5G handset.
“Oppo’s challenge is in building out its channels in mature markets like Europe,” said Ma. “Its overseas success thus far has largely been in developing markets like India and Southeast Asia where channels are fragmented with lots of small offline retailers.” Oppo’s data states that since last September over 50% of its smartphone shipments have been directed outside mainland China, and the company anticipates that the overseas sales segment will grow as it enters new markets. On the other hand, Oppo, Xiaomi and Vivo have faced tougher competition at home since Huawei has been making extra efforts to boost domestic sales because of being blacklisted by the US and losing international partners.
Oppo’s domestic sales dropped 20% in 2019, as IDC informs. Two major research firms, Canalys and Strategy Analytics, concede that domestic smartphone shipments in China will decrease 50% in Q1 from 2019 due to the coronavirus pandemic, while IDC predicts a 30% slide.
Oppo’s Wu states that 80% of the company’s handset manufacturing had been restored by early March, after a number of its lines had been refitted to produce surgical masks in the beginning of the virus outbreak, but he expects shipments this year to be steady at approximately 340 million to 360 million units.
Another step Oppo is taking is to expand its product range from exclusively smartphones to the Internet of Things (IoT) devices, which would include smartwatches and TVs.
“We see [diversified consumer demand] rising with the development of 5G, AI, and cloud and big data technologies over the past two years, so we will have more IoT products ranging from personal mobile devices, devices in the home, to office equipment as well as devices for travel and vehicles,” states Bobee Liu, Oppo VP.Source