Phone pirates 'upgrade' to make copycat tablets
Updated: 2011-08-17 13:57
By Zhang Zhao (China Daily)
Apple's iPad has more than 70 percent of the tablet market in China, but its share is dropping in the face of fierce competition from other brands and "white boxes". [Photo / China Daily]
Falling prices for real smartphones is putting such pressure on copycat cell phone makers that many are moving into China's tablet computer market.
Apple's iPad continues to dominate with more than 70 percent of the market, but its share in China declined 5.14 percent in the second quarter of this year, according to a report by Analysys International, a provider of information and services for China's IT market.
Part of the drop is due to the array of legitimate competitors lined up against Apple in the booming tablet sector, including personal computer giants such as Lenovo, Asus and Acer, and global telecommunication equipment makers ZTE and Huawei.
But the southern city of Shenzhen is home to more than 1,000 tablet computer manufacturers, many of them smaller companies making copycat products commonly known in the industry as "white boxes".
Research by consulting firm DisplaySearch shows that 1.9 million white box tablet computers were sold in China in the first quarter of this year, more than triple the figure of the previous quarter.
But increasing sales does not mean a promising market ahead for pirate companies, said Yang Qun, an analyst with Shenzhen Warring Strategy Public Relations Consultants.
"Most of the tablet computer makers in Shenzhen today were previously making copycat cell phones," said Yang. "They have the same approach to tablet computers as how they did (to cell phones)."
"The only thing they do is to launch a price war and then everybody is stuck in the mud."
In Huaqiangbei, an area in Shenzhen known for its many consumer electronics shops, one white box tablet computer with a seven-inch screen and Android operating system is priced at only 359 yuan ($56).
Many others are priced between 400 and 600 yuan.
But a similar Samsung tablet costs more than 2,500 yuan. And even those made by Chinese companies such as ZTE and Huawei are also priced around 2,000 yuan.
"A tablet computer costs at least 290 yuan at the factory. Adding the distribution costs, it won't have any profit if it is priced below 400 yuan," according to the Southern Metropolis Daily, which cited an industry insider who "has close relations with tablet computer makers".
"The copycat products have no advantages in brand and distribution compared with branded products. And the low cost of the hardware means they do not have satisfying performance," said Yang. "When the branded products reduce their price, the copycat products will be elbowed out of the market."
Yang said makers of knockoff products actually have another choice - narrowing their target market and developing their own brands.
"I know one such company that integrated a cell phone's function into a tablet computer," he said. "It is five times more profitable than ordinary copycat products and its price is only one-fourth of a Samsung."