US carriers are not interested in building handset OEM brands

Chinese handset OEMs own more than 43 percent of smartphone market share. Yet, in the US it is 18 percent.

    There is no doubt that Chinese smartphones are quite popular in India, Russia, and Africa, but if we look at American market then it still seems distant dreams to mark their presence there.

    US carriers are not interested in building handset OEM brands

    "Globally, Chinese handset OEMs own more than 43 percent of smartphone market share. Yet, in the US it is 18 percent," Jeff Fieldhack, Research Director at Counterpoint.

    The Post says that ZTE and Alcatel have cracked the top five, breaking through with solid volumes within prepaid channels. Motorola (Lenovo) remains a niche but well-known vendor within Verizon. Others have been relegated to the US open channel with very limited growth prospects. Why is it so difficult for OPPO, Vivo, Huawei, and others to grab a foothold in the US?

    "There are many barriers for new players in carrier-controlled markets. Carriers continue to hold the power in the US controlling over 70 percent of sales. US carriers are not interested in building handset OEM brands," Fieldhack said.

    US carriers are not interested in building handset OEM brands

    The US smartphone market is dominated by Verizon Wireless with 147.2 million subscribers (Q2 2017), AT&T Mobility with 138.8 million subscribers (Q3 2017) and T-Mobile US with 70.7 million subscribers (Q3 2017).

    US carriers are concerned that young handset OEMs are not fully paying for all required IP. These carriers are concerned that they will have to deal with embargos and lawsuits if there is litigation following new OEMs they have ranged. The US market has grown into an all-or-nothing market. Spend big on marketing campaigns or a device will be drowned out by the major launches.

    US carriers are not interested in building handset OEM brands

    Most importantly, the US market is a mature smartphone market and over 50 percent of subscribers have purchased multiple Apple & Samsung smartphones. So, to become a top 5 OEM in the US market will take the hardware, heavy marketing, and a strong value offering to switch a subscriber from another OS and/or another OEM ecosystem.

    To crack the US market will take a multi-year plan and will take a considerable amount of patience. It is not reasonable to believe a new OEM will be ranged in all or even two of the major carriers the first attempt. It will take a multi-year approach to slowly grow the support and R&D teams needed to grow in small channels and move into the more expensive, competitive, and larger sales channels.

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