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vivo challenges Lenovo-Motorola, Xiaomi, Oppo as 5G Ramps in Mexico

by David Kerr | Jul 15, 2021

The already competitive Mexican smartphone market today saw a fresh injection of energy with the entry of Vivo. Vivo is already active in 10 European markets and has recently ramped up activities in Columbia, Peru, Chile.

Mexico is the biggest market to date which vivo has targeted in the region to date but the grand but challenging prize of Brazil remains untapped. 

Exhibit 1: Handset Shipment Share 2018-2020 Select CALA Markets


The Mexican handset/smartphone market has seen dramatic changes over the last few years. Shipments peaked back in 2015 above 38M units before dropping off to the 29m level in 2018/2019.

Like most markets around the world, Mexico suffered due to the horrendous Covid-19 spread and subsequent lockdowns in 2020. Our Smartphone Strategies service forecasts the market is on track for 24-25M units shipped in 2021.

Mexico is predominantly a replacement market with over 95% of device sales going to already experienced existing customers. 

Existing handset owners who are on their 3rd, 4th, 5th device or more are who are familiar with the features and capabilities offered by multiple oems and realize there is little significant technology differentiation. Mexican buyers like all consumers have established preferences and attitudes towards existing brands both from their smartphone offers and their broader experience with TV, computer, audio/video and household appliance products.

In terms of dynamics in this predominantly replacement market there are two major disruptors
1. Geopolitics and the ban by the US government on Huawei purchasing technology from US companies (Qualcomm and Google most notably). This politically inspired ban has lead to the demise and inevitable retreat of Huawei both globally and in the Mexico market. At its peak in Q1 2019, Huawei captured over 21% share of shipments and was within a whisker of catching top placed vendor Samsung.

2. LG decision to exit the smartphone business entirely after many years of struggling to gain scale and profitability despite excellent innovation. At its peak LG was a strong second place in Mexico with a near 15% share before falling back  to very low single digits in 2020.  

Exhibit 2: Mexico Handset Vendor Share Q1 2021 and Q1 2019

vivo has ambitious plans for Mexico with a 10% share target noted as a goal but that will take time given their late start.  Traditional leaders Samsung and Motorola as well as newer challengers like Xiaomi will be strong competitors. Xiaomi has vacuumed up significant portions of the Huawei and LG volume since its entry. Xiaomi had a huge Q1 2021 in volume terms  and is neck and neck with Apple for third place in Mexico.

Check out our quarterly vendor share tracking for 60 countries in Q1 2021 here. 

Who will be most impacted as #vivosmartphone enters, #lgelectronics disappears and #Oppo #xiaomi build presence?

Vivo's product portfolio needs to be tailored to the unique demands and price tier distribution of the Mexican market.

Our recent consumer insights work in Mexico finds:

30% of smartphones bought by respondents (1000 smartphone owners online) were priced at $200 or less.

Another third report spending USD $200-399 for their current smartphone

A healthy 17% claim to have spent $600 or more on their current smartphone.

Of course, Apple and Samsung dominate the high end and premium tiers in Mexico as they do in most markets except China. The potential for vivo or Oppo or Xiaomi or anyone else to command premium prices as relatively unknown brands is a big question. SA has profiles and distribution of each vendor volume by price tier which can be accessed through a custom project engagement.

Success in Mexico will require vendors to offer both compelling value in the mid tier and aspirational products in the high end.

Targeting the existing base of LG users and Huawei owners for replacement has been a key pillar for Lenovo-Motorola and Xiaomi and more recently Oppo. How big is the installed base of these orphaned LG and Huawei customers and who can win them remains a relevant question. However, spoiler alert, the sum of Huawei and LG owners who have yet to replace is not big enough to support all the vendors chasing the volume.

5G will be table stakes through the mid tier in short order. For 2022, we forecast 5G will capture one third of shipments already!  Check out our forecast of 5G shipments for 88 countries in our Device Technologies service here. and 5G value share, revenue and ASP by vendor.

Key questions which the SA smartphone team can help deliver for Mexico and 88 other markets include:

- What % of handsets/smartphones sold are under USD $200? $200-399? $400+
-  Which brands have the largest market share in each price tier?
- What purchase channels are growing/declining overall? By vendor?
- What is the brand awareness, consideration and willingness to purchase for existing and new OEMS?
- What are the brand image and characteristics of top competitors in the local market?
- What are the replacement intentions and likelihood of repeat purchase?
- Which segments of the market offer the best opportunities (Brand Lovers, Technos, Aspiring Status, Value maximizers, Budget Utility?
- How will the nascent 5G market and broad line up of devices across price tiers change the competitive dynamics?

We anticipate a bruising battle in Mexico in the coming 6-8 quarters and stand ready to support client decision making and understanding of the changing landscape. 

Reach out to us if you want to discuss smartphone/handset vendor positioning in key countries, by price tier, by 4G/5G generation, by distribution channels, by Gen Z

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