After fighting it out for your phones, Chinese firms now eye smart TVs

NEW DELHI: After slugging it out in the cut-throat smartphone market, Chinese companies Xiaomi, One-Plus and Motorola-Lenovo are now competing in the smart television segment with ultra-budget and premium models.
Sector watchers say these firms are strategically placed to capitalise on the brand recall among consumers and to leverage their distribution and online channels, along with their existing manufacturing facilities.

“As content consumption increases, every company wants to grab the maximum screen time of users, more so since TV is the second largest category after smartphones which has the most viewership,” said Tarun Pathak, research director at Counterpoint Research.

He was referring to the advent of high-quality streaming services such as Netflix, Hotstar and Amazon Prime which have emerged as a key factor in favour of handset manufacturers, as well as in pushing sales of large-screen smart TVs.

“With almost similar supply chain, the barriers to entry in the segment are low for handset brands,” said Pathak.

Smartphone makers have already begun to taste success in the new segment. Market leader Xiaomi has taken the pole position in the online smart TV segment within a few quarters of its entry while newer players, One-Plus and Motorola-Lenovo, are attempting to gain a foothold amid competition from older brands such as Samsung, LG and Sony.

“It is a natural extension for us… it’s technologically easier for smartphone players to get into smart TVs,” said Prashanth Mani, managing director of Lenovo Business Group and Motorola Mobility.

The government’s recent move to remove import duty of 5% on open cell LCD (liquid crystal display) television panels, which account for 70% of the cost of assembling televisions in India, has also created an opportunity that smartphone makers want to capitalise on.

“TV is the next big opportunity as smart homes and connected devices ecosystem will grow rapidly in 5G era,” said Vikas Agarwal, India head for OnePlus, which launched its premium smart TVs in India last month.

Smartphone assembly requires high-precision touch panels, efficient power management and a near SLR camera experience, which makes the process a complex exercise. Smart TV, in comparison, is an adjacent diversification and an easier one on the research and development complexity scale, with far fewer components, said analysts.

They also pointed to the higher margins in the smart TV segment, compared to the low single-digit margins offered by smartphones, as several players have priced their phones equal to or less than the manufacturing cost.

“For smartphone brands, TV represents a whole new equation and avenue to maximise their revenue potential,” said Prabhu Ram, head of the intelligence group at Cybermedia Research.

International Data Corporation (IDC) India estimates the smart TV segment in India to be about 40% of the total TV shipments, which grew 55% on-year in the April-June quarter this year. This is set to expand as more players enter the market.

“Increased availability of electricity than a decade ago, far cheaper data tariffs, easy finance options and competitively priced models have also propelled the market opportunity,” said Mani.