Mobile Phones in Vietnam
Category Briefing | 07 Jan 2015
HEADLINES
In 2014, sales of mobile phones reach 15 million units, following 12% volume growth
Smartphones registers volume growth of 49%, while feature phones records a volume decline of 1%
in 2014
Smartphones volume sales reach five million units in 2014
Fierce competition among various smartphone manufacturers gives consumers more choices at
better prices
The mobile phones category is set to register a 14% volume CAGR over the forecast period
TRENDS
The technological boom in Vietnam, with the rise of affordable 3G and free mobile text and call
applications such as LINE and Viber, greatly contributed to the rising popularity of smartphones. Although
feature phones are much cheaper in terms of unit price, consumers are increasingly willing to purchase
smartphones, which are considered to offer greater convenience and functionality. With the abundance of
free mobile applications, smartphone users can use their phones for a range of purposes such as playing
games, reading the newspaper, listening to music, and navigation by GPS.
Android is the leading smartphone operating system, accounting for a 67% volume share in 2014,
followed by iOS with 21% and Windows with 9%. There are two major reasons for Androids dominance.
Android is an open source operating system which opens up to a huge number of new free applications
developed every day. With the largest library of free mobile applications, Android is chosen by some of the
biggest manufacturers in the smartphones category, such as Samsung Vina Electronics Co Ltd, HTC Corp and
Sony Electronics Vietnam Ltd. After the sale of Nokia Microsoft in 2014, Nokia phones continue to use
Windows as the main operating system. However, Nokia also developed new phone models X, X+ and XL
running on Android. Android smartphones have a relatively lower average unit price in comparison with iOS,
which is another reason for the dominance of Android. Although Windows phonesare available at a variety of
different prices, it is limited in the number of applications available, which translates as a considerable
disadvantage.
As significant numbers of Vietnamese are very used to using cracked software, many are unlikely
to be willing to pay for iOS applications. Consequently, jailbreak represents an important solution for many
iPhone users in Vietnam. The technique creates deep intervention into the iOS security barrier to allow the
installation of expensive, often non-Apple, applications for free. A jailbroken phone cannot be officially
updated by Apple. If a user updates a jailbroken phone using iTunes, it is possible that the software will
become corrupted and the phone may become unusable.
In comparison with all other consumer electronic categories, mobile phones has the most even
balance between rural and urban split. The share of rural mobile phone sales is 44% in 2014, compared to
56% for urban sales. This reflects the fact that the average unit price of mobile phones is affordable to
consumers in both urban and rural areas. As mobile network providers Vinaphone, MobiFone and Viettel
expanded their 3G coverage to remote rural areas during the review period, smartphone consumption in
rural areas also rose. In addition, the unit price of smartphones fell by 11% in 2013, with a further reduction
of 6% in 2014, making this product type more affordable to consumers in the countryside.
Most consumers purchase mobile phones without a contract. However, in the review period, the
percentage of mobile phones sold with a monthly subscription increased to reach a share of 5% in 2013 due
to the growth of iPhone, collaborated with several telecommunications companies such as Vinaphone and
MobiFone to give consumers discounted phones if they sign a 2-year service contract with the
telecommunications company.
Prepaid mobile service packages tend to be more popular in Vietnam because users can easily
control the monthly cost and can top-up their credit by mobile cards that are widely available across the
country. In terms of frequent 3G usage, both post-paid and prepaid services have the same ownership cost.
With a package of around VND50,000-200,000 per month, smartphone users can have unlimited 3G
connections of various speeds depending on the monthly price. Besides 3G, WiFi connections are widely
available for free in public places and shops in Vietnam, which further supports smartphone consumption. In
general, the cost of mobile data services is unlikely to impose any restrictions on the categorys growth.
Electronics and appliance specialist retailers remains the dominant distribution channel
for mobilephones, while other channels such as direct selling and homeshopping remain insignificant.
Established consumer behaviour strongly contributes to the distribution trend. The majority of Vietnamese
ride their own motorbikes, which allows them to easily stop at any physical store to look at and try a variety
ofmobile phones. Although volume sales via internet retailing is still small, this channel continued to post
strong volume growth in 2014. It is due to the fact electronics and appliance specialist retailers tried to
expand their online stores.
COMPETITIVE LANDSCAPE
In 2013, Nokia Corp continued to hold the largest volume share within the mobile phones category
at 43%, followed by Samsung Vina Electronics Co Ltd with 30% and Apple Inc with 5%. In terms of
smartphones, Samsung Vina Electronics Co Ltd led the competitive landscape with a 34% volume share,
followed by Apple Inc with 19% and Nokia Corp with 9%. Nokia Corps renowned prestige in the traditional
feature phones category helped the company to retain its leading position within mobilephones as a whole.
However, in terms of smartphones, Samsung Vina Electronics prevailed with a variety of smartphones
models running on the Android and Windows operating systems. Meanwhile, most Nokia smartphone models
run on Windows, while all iPhone models run on iOS. The diversifying strategy, together with the products
clever features and slick designs, supported the positive performance of Samsung Vina Electronics Co Ltd in
2013.
Within the feature phones category, second-ranked Samsung Vina Electronics Co Ltd recorded
strongest volume gain to reach a share of 29% in 2013. However, Samsung Vina Electronics Co Ltd remained
a long way behind Nokia Corp, which was present with a 55% volume share. Within the smartphones
category, Apple Inc saw the strongest volume share increase to reach 8% in 2013. It is thanks to the growing
distribution of iPhone in 2014. In addition, the majority of consumers believed that possessing an iPhone was
a way for them to raise their social status, which contributed largely to Apple Incs good performance in
2014.
The competitive landscape of mobile phones was dominated by multinational brands during the
review period, mainly because of the consumer trust in prestigious global brands. However,
the mobile phonescategory in 2014 is seeing a greater penetration of domestic smartphones brands such as
Q-Mobile, Mobiistar and FPT F-mobile. With a competitive pricing strategy that sees it offer products from
only around VND600,000 to in excess of VND3 million, these local brands have started to establish stronger
presence, with more sales being generated largely among the lower- to lower-middle income segments.
In July 2014, MobiFone was officially handed over from Vietnam Posts and Telecommunications
Group (VNPT) to Ministry of Information and Communications according to Decision 888/TTg. This event was
the most notable event within the telecom provider competitive landscape in Vietnam in 2014. The
management transfer is mainly to support a healthy competitive environment in the country. Stronger
competition among key mobile network providers creates more competitive mobile phone services in terms
of price and quality, which in turn is supporting sales of smartphones in 2014. As 3G yields better coverage
and performance at a lower cost in comparison with that which was offered at the start of the review period,
more consumers are purchasing new smartphones in order to enjoy free text message and call applications
which require 3G/WiFi connections to function.
PROSPECTS
Over the forecast period, mobile phones is expected to witness a significant value CAGR of 24% at
constant 2014 prices. Within this category smartphones, with a value CAGR of 35%, is expected to play a key
role in driving the future performance of the overall mobile phones category. Meanwhile, the
feature phones category is expected to post a negative value CAGR of 18% at constant 2014 prices. The
increasing functionality of smartphones, in addition to falling unit prices, is expected to result in strong
growth, which is set to negatively impact the performance of feature phones going forward.
Unit price will be the key competitive strength of feature phones as this format struggles to survive
in the context of stronger competition from smartphones over the forecast period. The
feature phonescategory is set to register an 11% annual decline in average unit price at constant 2014
prices over the forecast period. This price drop is expected to bring down the average price of
feature phones to around VND805,800 in 2018, attracting lower-income workers in both rural and urban
settings. Consumers from this segment, with limited budgets, are most likely to continue buying
feature phones.
Towards the end of the review period, there had been no official announcement relating to the
launch of 4G from the big telecom operators such as Vinaphone, MobiFone or Viettel. However, the
key mobilenetwork providers are likely to launch 4G during the forecast period, which is expected to lead to
offer of new 4G smartphone models. Furthermore, with the penetration of 4G, 3G products are expected to
remain present be offered at declining prices, a situation that will account for the rising usage of 3G
smartphones over the forecast period.
Over the forecast period, the mobile phones category is expected to see little change in terms of the
rural versus urban split. The share occupied by urban centres is expected to remain higher than rural
locations, with anticipated volume shares of 58% and 43% respectively in 2018. As the average unit price
of mobile phones will remain affordable to the average Vietnamese consumer, the gap between rural and
urban sales will remain relatively small compared to other consumer electronics categories.
Tablets with cellular functionality are not expected to present any major competition to smartphones
over the forecast period; in fact, it is more likely to be the other way around. A smartphone is basically a
smaller version of a tablet with cellular functionality, which makes it more convenient in terms of carrying it
around in comparison with a tablet. Although some tablets are equipped with cellular functionality, and
therefore offer a greater competitive advantage, they are not expected to replace smartphones over the
forecast period due to their bulkier format. On the other hand, phablets format that offers a better balance
in terms of screen size and processing speed, is expected to continue to attract growing numbers of gamers.
Over the forecast period, Android and iOS are expected to be the leading operating systems for
smartphones in Vietnam. The iPhone will continue to be regarded as the most desirable high-end
smartphone available in the country, both in terms of brand image and functionality. Many wealthy young
consumers in Vietnam purchase iPhones as a status symbol. However, Android-based phones will continue to
account for a dominant share of retail volume sales, as multiple leading international brands will adopt this
operating system, making Android-based phones accessible to middle- and high-income consumers alike.
Mobile phones is expected to see an upturn in the number of available domestic brands over the
forecast period. Although key players such as Nokia, Samsung and Apple will continue to dominate,
localmobile phones are expected to achieve better brand awareness and sales thanks to increasingly
efficient marketing strategies, slick designs, good functionality and quality at an affordable price. Consumers
from the low- to lower-middle-income segments are expected to become more willing to try local brands such
as FPT F-mobile, Q-Mobile, or Mobiistar thanks to their positive reputations in terms of quality and
professional customer service.
CATEGORY DATA
Table 1 Sales of Mobile Phones by Category: Volume 2008-2013
'000 units
2008
2009
2010
2011
Feature Phones 5,624.5 7,160.0 8,720.8 9,754.3
Smartphones
94.1
238.7
563.4
1,449.6
2012
2013
9,982.5
2,077.1
10,092.3
3,342.5
'000 units
Mobile Phones
2008
2009
2010
2011
2012
2013
5,718.5 7,398.7 9,284.2 11,203.8 12,059.6 13,434.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 2 Sales of Mobile Phones by Category: Value 2008-2013
VND billion
2008
2009
2010
2011
2012
2013
Feature Phone
s
17,495.0 19,961.8 20,600.5 19,302.7 16,754.7 14,275.0
Smartphones 730.5
1,690.9 4,195.6 11,475.3 15,574.8 22,381.0
Mobile Phones 18,225.5 21,652.7 24,796.1 30,778.0 32,329.5 36,656.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 3 Sales of Mobile Phones by Category: % Volume Growth 2008-2013
% volume growth
2012/13
2008-13 CAGR
2008/13 Total
Feature Phones
Smartphones
Mobile Phones
1.1
60.9
11.4
12.4
104.2
18.6
79.4
3,453.6
134.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 4 Sales of Mobile Phones by Category: % Value Growth 2008-2013
% current value growth
2012/13
2008-13 CAGR
2008/13 Total
Feature Phones
Smartphones
Mobile Phones
-14.8
43.7
13.4
-4.0
98.3
15.0
-18.4
2,963.7
101.1
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 5 NBO Company Shares of Mobile Phones: % Volume 2009-2013
% retail volume
2009
2010
2011
2012
2013
Nokia Corp
Samsung Vina Electronics Co Ltd
Apple Inc
LG Electronics Vietnam Co Ltd
Sony Electronics Vietnam Ltd
HTC Corp
Research in Motion Ltd
Others
Total
53.1
22.0
0.2
4.0
0.1
0.8
0.5
19.3
100.0
53.2
23.2
1.0
3.8
0.2
0.9
1.0
16.5
100.0
49.2
25.3
1.5
4.1
1.2
1.2
1.6
15.8
100.0
46.4
28.1
2.9
4.2
1.6
1.2
1.1
14.3
100.0
43.2
30.1
4.7
4.5
2.0
1.6
1.1
12.8
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 6 LBN Brand Shares of Mobile Phones: % Volume 2010-2013
% retail
volume
Company
2010 2011 2012 2013
Nokia
Nokia Corp
Samsung Vina Electronics Co
Samsung
Ltd
iphone
Apple Inc
LG
LG Electronics Vietnam Co Ltd
Sony
Sony Electronics Vietnam Ltd
HTC
HTC Corp
Blackberry
Research in Motion Ltd
Sony Ericsson Sony Electronics Vietnam Ltd
Others
Others
Total
Total
53.2
49.2
46.4
43.2
23.2
1.0
3.8
0.9
1.0
0.2
16.5
100.0
25.3
1.5
4.1
1.2
1.6
1.2
15.8
100.0
28.1
2.9
4.2
1.6
1.2
1.1
14.3
100.0
30.1
4.7
4.5
2.0
1.6
1.1
12.8
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 7 Distribution of Mobile Phones by Format: % Volume 2008-2013
% retail volume
2008 2009 2010 2011 2012 2013
Store-Based Retailing
- Grocery Retailers
-- Discounters
-- Hypermarkets
-- Supermarkets
-- Other CE Grocery Retailers
- Non-Grocery Retailers
-- Electronics and Appliance Specialist
Retailers
--- Telco-Operated Stores
--- Other Electronics and Appliance
Specialist Retailers
-- Mixed Retailers
-- Other CE Non-Grocery Retailers
Non-Store Retailing
- Direct Selling
- Homeshopping
100.0100.098.5
0.1 0.2 0.2
0.1 0.2 0.2
99.9 99.8 98.3
96.8
0.2
0.2
96.6
95.8
0.2
0.2
95.6
94.7
0.2
0.2
94.5
99.9 99.8 98.3 96.5 95.5 94.4
0.9 1.3 3.3 5.6 6.8 7.7
99.0
-
98.5
-
94.9
0.0
1.5
0.0
90.9
0.0
3.2
0.0
88.7
0.1
4.2
0.0
86.7
0.1
5.3
0.0
% retail volume
- Internet Retailing
Total
2008 2009 2010 2011 2012 2013
1.5 3.2 4.2 5.3
100.0100.0100.0100.0100.0100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 8 Forecast Sales of Mobile Phones by Category: Volume 2013-2018
'000 units
2013
2014
2015
2016
2017
2018
Feature Phone
s
10,092.3 10,011.6 9,741.3 8,942.5 7,717.4 6,420.8
Smartphones 3,342.5 4,973.6 7,226.7 10,247.5 14,172.2 19,104.2
Mobile Phones 13,434.8 14,985.2 16,968.0 19,189.9 21,889.6 25,525.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 9 Forecast Sales of Mobile Phones by Category: Value 2013-2018
VND billion
2013
2014
2015
2016
2017
2018
Feature Phone
s
14,275.0 13,307.3 11,457.9 9,297.2 7,068.0 5,173.8
Smartphones 22,381.0 31,288.6 43,053.1 58,293.9 77,647.5 101,718.2
Mobile Phones 36,656.0 44,595.9 54,511.0 67,591.2 84,715.5 106,892.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 10 Forecast Sales of Mobile Phones by Category: % Volume Growth 2013-2018
% volume growth
2017/18
2013-18 CAGR
2013/18 Total
Feature Phones
Smartphones
Mobile Phones
-16.8
34.8
16.6
-8.6
41.7
13.7
-36.4
471.6
90.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 11 Forecast Sales of Mobile Phones by Category: % Value Growth 2013-2018
% constant value growth
2013-18 CAGR
2013/18 TOTAL
Feature Phones
Smartphones
Mobile Phones
-18.4
35.4
23.9
-63.8
354.5
191.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 12 Sales of Mobile Phones by Type of Contract: % Retail Volume 2008-2013
% retail volume
Monthly Subscription
Pay as You Go
Phone Only
2008
0.4
99.6
2009
2010
2011
2012
2013
3.3
0.6
96.1
4.3
0.6
95.2
5.3
0.5
99.5
1.3
0.5
98.2
94.7
% retail volume
Total
2008
100.0
2009
100.0
2010
100.0
2011
100.0
2012
100.0
2013
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 13 Sales of Mobile Phones by Rural vs Urban: % Retail Volume 2008-2013
% retail volume
2008
2009
2010
2011
2012
2013
Rural
Urban
Total
45.8
54.2
100.0
44.2
55.8
100.0
45.6
54.4
100.0
43.7
56.3
100.0
42.9
57.1
100.0
42.5
57.5
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Table 14 Sales of Smartphones by Operating System: % Retail Volume 2010-2015
% retail volume
2010
2011
2012
2013
2014
2015
Windows
iOS
Android
Symbian
BlackBerry OS
Others
Total
4.1
17.0
22.3
39.6
17.0
2.4
11.5
48.6
25.2
12.4
10.3
17.1
63.1
3.2
6.3
10.0
18.7
66.8
9.3
20.1
66.6
9.0
21.4
66.1
4.5
4.0
3.5
100.0
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources
Note: 2014 and 2015 data is forecast
