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Overseas Expansion Lowered vivo’s ASP in Q2 2017

by Yiwen Wu | Aug 18, 2017

vivo had a mixed quarter in Q2 2017. The vendor soared a +47% annually by volume, but yielded the fifth position to Xiaomi in global smartphone market. Despite of strong growth in revenue, its ASP and operating profit dropped. China remained as its biggest market, and India has become the new growth engine. However, there are shadows behind strong momentum.

Product wise, X9 remained as the star product for vivo, according to our Smartphone Model Tracker Service. However, the newly-launched X9s seems unlikely to beat OPPO R11 and Huawei P10 models. Without major hardware upgrades, price/performance advantage, and aggressive marketing campaign, we don’t think it will stand out and beat predecessor models and competitive offerings from other OEMs, even though the vendor reduced the full retail price of the model.

vivo’s growth in Chinese market has slowed down. The newly launched X9s series would cannibalize its star product X9. The high inventory level on lower-end and premium models indicates weaker-than-expected consumer demand in home market.

Outside China, vivo continued its strong momentum in India this quarter. The well-received entry and middle-end models, the established offline channel, and the generous investment on branding, all deserve credits for vivo’s growth. However, there are some shadows behind glory, especially the political risks brought by the border tension between China and India, the negative impact on tax reform on vivo’s local branding initiatives, and the soaring operating cost behind its aggressive overseas expansion. We recommend the vendors to carefully re-evaluate its brand perception in India and find out more cost-efficient way for local expansion.

Our latest report Q2 ’17 : vivo : Overseas Expansion Lowered ASP was published and WSS clients please click here to access the full report.



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