Some time ago, Omdia unveiled the anticipated shifts in market share across different phone price segments for the years 2025, 2026, and 2027.

As illustrated in the following chart, the share of models priced under $200 has dwindled from 41% to 26%, representing a 15-percentage-point decline. Notably, models under the $100 price point have seen a more dramatic decrease, dropping from 13% to just 3%, a 10-percentage-point fall.

In stark contrast, the proportion of high-end models is on the rise, with phones priced above $800 increasing from 21% to 28%.

This transformation underscores the growing challenges faced by low-end phones. On one front, escalating storage costs have prompted manufacturers to proactively cut back on orders. On the other, price hikes have propelled low-end phones into the higher price brackets, effectively reclassifying them as non-low-end.

Omdia is not alone in its assessment; Counterpoint's forecast paints an even gloomier picture. It projects that while 570 million units of phones priced under $200 will still be sold in 2025, constituting roughly 45% of global phone sales, this figure will plummet to 340 million units by 2030, marking a 40% decrease and accounting for only 28% of the market.

This translates to a staggering 230 million-unit drop in sales over five years, with phone prices steadily climbing and low-end models becoming increasingly scarce and difficult to market.

Evidently, the phone industry is undergoing a significant realignment of market share, shifting away from the low-price entry-level segment towards the mid-to-high-end spectrum, resulting in a profound structural transformation.

This shift poses a dire threat to manufacturers like Xiaomi, which have traditionally focused on low-end models.

Take Xiaomi, for instance, with an average phone price hovering around $150. Despite having high-end offerings, Xiaomi has historically depended more on low-end models to drive sales volume. A contraction in the low-end phone market, akin to a downturn in the entire air conditioning sector, would have far-reaching implications. The potential repercussions are easily imaginable.

This predicament is not unique to Xiaomi; it also affects Transsion, OPPO, and VIVO. OPPO, for instance, has Realme, while VIVO has iQOO. These brands predominantly rely on low-end models to capture market share overseas, with Transsion placing an even greater emphasis on the low-end segment.

Similar to Xiaomi, these manufacturers boast numerous high-end models but may lean more heavily on low-end offerings for sales volume. With the low-end market space shrinking, what strategies should they employ?

Looking ahead, these manufacturers must either make a concerted effort to penetrate the higher-end market and boost sales in the over-$200 segment or brace for a decline in overall sales. Whether this will trigger a market reshuffle remains to be seen, but I am convinced that domestic brands will bear the brunt of this impact.