The difficulties faced by US and Korean mobile phone brands in Emerging Markets should come as no surprise to those who listen to their users. Consumers in Emerging Markets are more concerned about technical specs and value for money than they are about brand and cachet.
Consumers have been telling us this for years, but the smartphone’s transition from status symbol to commodity has evidently been faster than many have realised.
With fewer and less tangible incremental differences from one generation of smartphone to the next, replacement is becoming less and less frequent, impacting growth. Although the number of smartphones in the hands of EM consumers will doubtless continue to increase for some time, brands such as Oppo and Vivo are producing high tech products at more affordable prices, thus commoditising the market.
We believe that the real opportunity in Emerging Markets lies with those providing services on the screens of those smartphones. There’s a burgeoning variety of those services, from online retailing, travel and education to video gaming, payments, banking, and other financial services.
These platforms, apps and mini-programs often transform the way that existing industries operate, or even enable entirely new ones. At the same time, they appear set to bring positive change to more and more consumers’ lives for years to come.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of Trinetra Investment Management LLP and are subject to revision over time. Trinetra is authorised and regulated by the Financial Conduct Authority in the United Kingdom.