From 700-plus in 2017 to 250 in 2023: What led to the exit of 450 companies from the global smartphone market

The global smartphone market has grown and shrunk at the same time. As for how? While the market has seen huge growth (except for the past few quarters) in the smartphone shipments, the number of players/companies in the segment has fallen. According to Counterpoint, at its peak in 2017, the global smartphone market had 700-plus brands. In 2023, the number of active brands in the segment are reportedly down by two-thirds to almost 250. The report claims to be tracking sales of these brands across more than 70 key countries.
There are a number of factors that led to this decline, including the rise of Chinese smartphone brands, lack of required R&D spending by local brands and more. “A maturing user base, improving device quality, longer replacement cycles, economic headwinds, supply-chain bottlenecks and major technological transitions such as 4G to 5G have gradually whittled down the number of active brands and their volumes over the years,” said the report. A maturing smartphone user base, better R&D innovations by big brands, expansion of competing bigger brands and tough macroeconomic conditions have been the key drivers for this market consolidation trend.
Fall of “local kings”
The decline in the number of active brands has been largely of local brands. While the number of global brands has remained mostly consistent, most local brands that operated in lower price bands have exited the market. These brands are from regions that have fragmented markets across wide geographies, like Asia-Pacific, Latin America and Middle East & Africa. These local smartphone brands, once known as “local kings”, like Micromax in India and Symphony in Bangladesh, lost significant share over the last five years.
One of the biggest reasons behind their decline has been failure to keep pace with the rapidly evolving smartphone industry. ” …small brands have struggled to keep up with big brands across many fronts. While big brands have continued to invest in R&D, manufacturing and capacity building, small brands have been largely dependent on white-label devices,” said the report.
The small brands capitalized on the market’s transition from 2G to 3G/4G, benefitting from strong entry-tier demand, particularly in Africa, Asia and Latin America. However, as the market matured, there is now a greater demand for better specifications and design, brand value and ecosystem integration.
Fierce competition from growing Tier-1 Chinese brands
The rise of Chinese brands like Xiaomi, Oppo and Vivo further accentuated the decline of small brands. Chinese brands have been able to introduce significantly better smartphones at aggressive price points, providing customers better value for their money.
The Covid-19 pandemic further accelerated this decline. As component shortages due to the global economic slowdown, multiple headwinds affected smartphone brands across the board. For big brands, it has been relatively easier to shore up profit margins in this market environment. But small brands struggled to keep operations running.