Analysts dim on prospects, believe device will be remote for smart home
Home appliance producer Gree Electric Appliances Inc is gearing up for a foray into the smartphone market as its first phone has gained two key official licenses, enabling the air conditioner maker to join an already-crowded arena, Chinese media outlets reported on Wednesday.
The Zhuhai-based company received an Internet access certificate and the China Compulsory Certificate (3C) for its upcoming Android smartphone which features a 5-inch display, according to domestic news portal 163.com.
The 3C certificate, issued by the Certification and Accreditation Administration, took effect on February 3, while the Internet access license was issued by the Telecommunication Equipment Certificate Center under China's Ministry of Industry and Information Technology on March 27, according to searches done by the Global Times Wednesday on the respective government bodies' websites.
Dong Mingzhu, president of Gree, said at the Boao Forum that the smartphone will hit the market in half a year's time and Gree had been working on its smartphone for two years, Guangzhou-based newspaper Nanfang Daily reported Tuesday.
Dong was quite confident about her company's smartphone business and even said Gree can easily beat Xiaomi Technology Co, the top local smartphone maker by sales, according to the report.
However, experts do not see much advantages for Gree in the fiercely competitive local smartphone market.
Gree has been over-dependent on a single product, the air conditioner, which has seen quite slow growth in recent years, Liang Zhenpeng, a Beijing-based independent home appliance industry analyst, told the Global Times Wednesday.
The sluggish air conditioner market cannot meet Gree's revenue growth target of 20 billion yuan ($3.2 billion) each year, therefore it has to find another market with growth potential, according to Liang.
Gree's yearly net profit growth rates from 2012 to 2014 were 40.92 percent, 47.3 percent and 29.84 percent respectively, with 2014 seeing the lowest increase in the three years, the company's annual earnings reports showed. The net profit in 2014 was 14.1 billion yuan.
Meanwhile, the Chinese smartphone market is full of strong players that dominate different price ranges, said Liang.
Xiaomi ranked No.1 in Chinese market with 12.5 percent of market share, followed by Samsung with 12.1 percent and Lenovo 11.2 percent, according to data US consultancy company IDC in a report released on February 17.
According to domestic tech news portal mydrivers.com's report on Wednesday, Gree's smartphone's original equipment manufacturer is Shenzhen Zowee Technology Co and the price will be no more than 1,000 yuan.
Gree could not be reached for comment by press time.
Despite the phone's fairly low price, analysts are still pessimistic.
"Gree has no technical advantage or experience in smartphone designing, manufacturing or selling," Liang said, noting there is little chance for the home appliance maker to win in the market where demand is prone to shrink.
The Chinese smartphone market had risen steadily from 2011 but dropped from 579 million units in 2013 to 452 million units in 2014, according to data released by China Academy of Telecommunication Research in January.
Gree may not expect its smartphone business to be a cash cow but regard it as a remote device for its smart home plan, Wang Jun, an analyst at consulting company Analysys International, told the Global Times Wednesday.
Smart home refers to a home equipped with a variety of networked devices with a smartphone working as a remote, according to Wang.
Mydrivers.com report also said that the highlight of Gree's smartphone is to control home appliances through applications on the phone.
Liang echoed Wang's view and said many appliances manufacturers are making inroads into the smart home sector so developing a phone will be crucial for Gree in its smart home strategy.
Gree's smartphone may have an opportunity among the firm's home appliance users if the phone can be successfully combined with its products which have already won a big market share, Wang said.
