Almost half of China's brand vendors of entry-level to mid-range VR (virtual reality) devices and smartphones have been forced to quit the markets, as the price gaps of their products with higher-end models have narrowed significantly to undermine their competitiveness, according to industry sources.
The sources said that with global tech giants actively promoting VR applications, including head-mounted display (HMD) devices and VR/VR glasses, related VR products stand a chance of replacing smartphones as the next-wave mainstream products in the mobile device market. At the moment, main products in the sector include low-end VR boxes, standalone VR devices and high-end VR devices as those offered by HTC, Oculus and Sony.
The sources disclosed that many China firms were rushing to join the retail market for simple VR headsets and boxes after Google Cardboard was launched in 2014. As of January 2016, there were as many as 350 China-based brand vendors engaged in retail sales of such products, particularly VR boxes.
Although China now still commands nearly 50% of the global market supply of VR boxes, the sources continued, the number of China's brand vendors of budget-priced VR boxes and headsets has sharply shrunk to 190 now for failing to survive the changing market scenarios, in that all-in-one VR devices boast a growing variety of functions and ever-improving performance while the prices of high-end VR products have also been on the decline.
The withdrawal of those players without core competitiveness from the VR market will make the VR industry get on a healthy development track, as it will help to balance the market supply and demand to enhance market stability, industry insiders said, adding that the VR industry is marching toward a stable growth stage with continuous declines in VR headset prices, increasing VR experiences by consumers and the availability of more VR titles.
On another front, China's brand vendors of lower-end smartphones are also plagued by the same woes facing those of budget-priced VR devices. As cost/performance ratio and brand image are key consumer concerns in buying smartphones, and first-tier vendors as Huawei, Oppo, Vivo and Xiaomi Technology boast strong cost competitiveness for volume production, the market leeway left for vendors of entry-level models has suffered a drastic shrinkage. Statistics showed that the number of online smartphone brand vendors has decreased to around 120 for the moment from over 200 seen in September 2016, according to industry sources.
The sources said that although the global smartphone market is getting mature, vendors are still optimistic about the future market prospects, given the smartphone replacement to be accelerated by the official commercialization of 5G networks in 2020 and the continuous technological advancements and applications for smartphones.