MANILA, PHILIPPINES — Up to four million smartphones were shipped to the Philippines in Q2 2017, posting a year-on-year decline of 10%, according to market intelligence firm IDC (International Data Corporation), with the release of their Asia/Pacific Quarterly Mobile Phone Tracker report for Q2 2017.

The smartphone market declined compared to last year’s number due to downscaled local vendors, except Cherry Mobile and Cloudfone, as they face tougher competition from Chinese vendors.

“Oppo and Vivo disrupted the smartphone retail space through cash-rich marketing, aggressive sales promoter incentives and previously unseen levels of retailer support,” Jerome Dominguez, market analyst for client devices at IDC Asia-Pacific.

“This challenged the traditional vendor-dealer relationship smartphone vendors have been accustomed to, and while leading vendors have been able to adapt, smaller players with less marketing and merchandising budget on their disposal were unable to do so, thus suffering drops in market shares.”

The rise of Oppo and Vivo further affirmed the importance of combining an expansive sales and distribution approach with strong marketing and advertising strategies to capture consumer mindshare.

To preserve brand equity among consumers, leading global and local vendors who have previously cut down on marketing spend back in 2016 were seen to divert their resources to funding actively on integrated marketing campaigns this year.

Local vendor share of the smartphone market was down to 41% in Q2 2017 from 49% during the same period last year. Despite the heightened competition from Chinese smartphone vendors, local vendors in the Philippines remain better standing relative to local vendors in neighboring Southeast Asia countries, reflecting the still solid affinity of Filipinos for homegrown smartphone brands.

Local vendor shares of the smartphone markets in Indonesia, Thailand, Vietnam and Malaysia were now down to 19%, 11%, 6%, and 1%, respectively.

Global vendor shares of the smartphone market in the Philippines remained flat at 27% compared to a year ago, with only Samsung as the only strong performer. Meanwhile, Chinese vendor shares jumped from 15% to 22% YoY.

Top 5 vendor highlights

1. Cherry Mobile maintained its lead in the smartphone market, with below $50 smartphones still driving its volume high. In response to heavy promotions from global and Chinese vendors, it further beefed up its marketing spend with more notable ad placements and airtime on popular noon-time shows.

2. Samsung came in at second, with the J series making up majority of its shipments for the 1st half of 2017. It also laid more focus on improving above-the-line marketing and sales promoter incentives in light of the rapid rise of Chinese vendors.

3. Oppo finished as the third biggest vendor as its growth was related to aggressive approach in marketing, merchandising and sales. Along with Samsung and Vivo, it has also benefited from its partnership with Home Credit, allowing it to offer its smartphones at 0% interest instalment without the credit card requirement, which made its offerings more accessible to mass market consumers.

4. Cloudfonee ends at the fourth position. Its marketing and promotions focused on sports events given its partnerships with NBA and PBA. Its aggressive play on the below-$25 segment drove its volume for the quarter.

5. Vivo takes the fifth position, growing 66% quarter-over-quarter. The Stephen Curry endorsement further helped cement its brand presence on the local scene. Roadshows were also aplenty, with Vivo Perfect Selfie Tour covering most of the major malls in Manila and other key cities.

Tough fight for Cloudfone

Amidst tough competition from foreign brands, smartphone and technology provider Cloudfone made it into the coveted Top 5 biggest smartphone brands in the country. Cloudfone now owns the 4th spot in the list of leading smartphone brands in the Philippines, keeping pace with global and other local brands.

The IDC attributes Cloudfone’s growth to its marketing and promotion efforts focused on sports as mentioned above. The local smartphone also bring big global brands to the people as well by partnering and collaborating with the likes of the NBA, Microsoft, Google, Star Wars, Marvel, and Disney. These efforts have allowed Cloudfone to successfully cross over from consumer electronics into the lifestyle space.

“We have always believed that Filipinos are discerning of real value. That is the driving force behind our motivation to offer premium features and high quality without the hefty price tag usually associated with high-end smartphones,” said Eric Yu, chief executive of CellPrime, the company that owns the Cloudfone brand.

Aside from ranking 4th place in the latest IDC Report, GFK, another market research group, also came out with a report that shows Cloudfone recorded a 39-percent revenue growth and a 21-percent market share (in their target price band) from January to April 2017 as compared to the same period last year.

“These 3rd party reports show we are on track in our aim to make Cloudfone the leading local mobile-phone brand in the Philippines in 3 years’ time. We are inspired to use this momentum to positively disrupt the market with our new phone line-up with superior features comparable to other brands, delivering quality and durability without breaking the bank,” said Yu.

No further growth

IDC expects the smartphone market in the Philippines to stay subdued in the third quarter of 2017 due to increase in component prices, weaker Philippines peso, and impending exits of a number of smartphone vendors.

Shipments are expected to pick up during the last quarter of the year as pre-Christmas buying season encourages healthier smartphone uptake.