Beijing, London, San Diego, Buenos Aires, New Delhi, Seoul, Hong Kong – March 5, 2021
OPPO has risen through the ranks to become the number one smartphone brand in China for the first time in January 2021, according to Counterpoint Research’s Market Pulse Service. OPPO’s market share reached 21% in January followed by Vivo at 20% and Huawei, Apple, and Xiaomi at 16% each. OPPO’s sales grew 33% month-on-month (MoM) and 26% year-on-year (YoY) during the month.
Exhibit 1: OPPO’s Rise in China
Commenting on OPPO’s feat, Varun Mishra, Senior Analyst at Counterpoint Research noted, “OPPO has been successfully able to reposition its product lines in 2020. The rebranding of the Reno series and launching a more capable device at a lower price point than its predecessor helped OPPO capture the affordable premium segment. The strong momentum of the A series in the mid segment strengthened the product portfolio for OPPO and it was able to cater to the 5G demand in China across a wide price band. This was further helped by the decline of Huawei.”
Huawei’s Decline and Spinning off HONOR as a Separate Brand
Huawei along with HONOR has been constantly losing its share in the Chinese market due to component shortages following US sanctions, and fewer new launches. Its inventory for key components has been depleting and it will not be able to source 5G smartphone components. Over 65% of devices sold in China in Q4 2020 were 5G capable. Any absence of 5G models reduces the addressable market size for Huawei in China while the absence of Google services does the same for 4G devices.
To make the most of its depleting inventory of components, Huawei has shifted its focus more towards the premium segment, only selling products with higher margins. This has further left a gap in the mid segment of the market.
Due to insufficient supplies, the distributors in China are also scaling down their Huawei operations and shifting to other brands. OPPO’s growth was in part also driven by Huawei’s decline, a trend that also benefitted Xiaomi and vivo. Xiaomi is benefiting the most from the decline in Huawei’s online share, while OPPO and vivo have been capturing the offline segment. At its peak, Huawei had more than 10,000 retail and experience stores across China. This number has been decreasing since Q4 2020.
Huawei has also spun off HONOR as a separate brand. With HONOR now being considered as a separate brand, it further reduces Huawei’s market share in China.
Huawei’s declining trend will continue in 2021, with other OEMs gaining share from the gap created by its decline.
Reno 5 Series – A Successful Rebranding Strategy
The new Reno 5 series (Reno 5, Reno 5 Pro and Reno 5 Pro +) has been the best-performing Reno series since its rebranding by OPPO.
Compared to the Reno 4, the Reno 5 comes with a better camera, screen, chipset, charging standards and 5G capability, to name a few. These are significant upgrades, but the launch price of Reno 5 in China was 10% lower than that for Reno 4. This also helped OPPO gain initial momentum.
The price reduction and a higher specification device as compared to the previous series were able to cater to the gap left by Huawei in the mid segment as well. The move also explains OPPO’s strategy to capture the affordable premium segment in China through its 5G portfolio.
Exhibit 2: Reno 5: Significant Upgrade at a Lesser Price Than Reno 4
OPPO A Series – Capturing the Affordable 5G Segment
5G devices are increasingly finding their way into the sub-$300 price band. Close to one-third of the 5G devices sold in China in January were below the $300 mark. OPPO has been able to capitalize on this demand through its affordable A series. The A72 5G has been the best-selling 5G device in the segment since November 2020. OPPO has been able to gain share from Huawei’s Nova and Enjoy series as well.
Driven by the combination of the A-series and Reno series, OPPO emerged as the largest 5G smartphone brand in China in the sub-$600 price segment.
Going forward, in 2021, OPPO will focus on expanding its market share not only in China but also in the high-end Western European market. In emerging markets like LATAM and APAC, it will continue to focus on low- to mid-end products. It has also showcased new form factors like rollable displays, which for now seem to have a lot of potential. OPPO could include this in its flagship lines in future.
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
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