TMCnet News

Case to the future [China Daily: US Edition]
[October 06, 2014]

Case to the future [China Daily: US Edition]


(China Daily: US Edition Via Acquire Media NewsEdge) US-based electronics protection case maker banks on China's burgeoning smartphone demand for growth How many times have you accidently dropped your mobile phone on the ground? If you find your hands are too slippery to hold on to the phone, buying a protective case for your gadget might be a good idea. But how much are you willing to spend on a phone case? According to the United States-based electronics protection case maker OtterBox, paying $60 for the 360-degree protection of an iPhone 6 seems to be a reasonable offer.



The Fort Collins, Colorado-based firm is sniffing business opportunities in China as more Chinese customers are buying smartphones worth more than 5,000 yuan ($814).

"We are confident of capturing at least 5 percent of the Chinese smartphone market in the coming years," said Stephen Nisbet, managing director of OtterBox Asia Pacific. "We have received several queries from Chinese consumers and I think it is an opportune time for us to tap opportunities in the world's largest smartphone market." The 15-year-old company is opening its first office on the Chinese mainland in a busy business district in Beijing soon.


Unlike most of its peers, the US company can consider itself lucky, considering that it hardly faces any competition from Chinese companies in its niche area of operations. The high-end smartphone case market is dominated by multi-national firms like Spigen SGP and other fashion brands. Chinese phone case companies are present mostly in the low-end market, where the profit margins are slim.

OtterBox is already the largest maker of smartphone cases in the US. The company targets high-end smartphone owners with cases featuring waterproof, shockproof and other functions. Most of these features enable the devices to withstand extreme conditions.

But not everyone needs to make phone calls standing in a sandstorm or playing Candy Crush while parachuting. OtterBox had to expand its target customer base to remain profitable.

It has introduced a range of products that can help the smartphone weather everyday situations such as falling into water, dropping on the concrete floor etc. With fashionable designs on case surfaces, OtterBox has also managed to win hearts and customers.

The "clumsy" smartphone users are what OtterBox is really eyeing, said Nisbet.

"They know the value of technology in their hands and they want to protect it. That's the customers we want," he said. Most of the smartphone brands that the company serves include Apple Inc, Samsung Electronics Co Ltd, BlackBerry and LG Electronics.

Perhaps, what really looks promising for OtterBox is the huge craze among Chinese customers for smartphones. After surpassing the US as the leading consumer of mobile phones in 2012, every step China has taken has rewritten the history of smartphones.

By the second quarter of this year, the total number of smartphones in use in China had reached 630 million, higher than the rest of the top five markets combined, said Groupe Speciale Mobile Association, an industrial group of global mobile operators and telecom companies.

Juxtaposed against the 1.3 billion Chinese population, the adoption rate for smartphones is set to climb further in the years to come, the association said.

Tian Zheng, an analyst at local research company Analysys International, said: "The incredible smartphone demand has created a tremendous market for global vendors, but we are seeing local brands quickly eroding market share from overseas giants such as Apple Inc and Samsung Electronics Co Ltd." Chinese shoppers will buy more than 400 million new smartphones this year and the amount is on track to break 500 million by 2016, according to Analysys International.

OtterBox's sales target appears to be formidable as its goal of reaching 5 percent of the Chinese smartphone users translates into sales of roughly 25 million cases every year, based on current market forecasts. With the price for a midrange Otter-Box case being around $40, it would mean a sales revenue of over $1 billion.

However, on the face of it, that seems to be more of a long-term goal as most of the overseas companies that OtterBox has partnered with are losing ground to local smartphone vendors in China. To offset this, the company needs to supply more products to local brands like Xiaomi and Huawei, said sources.

According to Analysys International, South Korean electronics giant Samsung and US California-based Apple are the only two overseas brands that made it to the top 10 smartphone makers list from April to June. The combined shipments of the two companies' accounted for less than a quarter of the total shipments and have been shrinking steadily. According to Nisbet, Otter-Box will build phone cases for Chinese smartphone maker Lenovo Group Ltd's soon-to-be-released next generation flagship device later this year.

"I think we have to be ready to learn from local partners such as Lenovo," Nisbet said. Accessories made by OtterBox will also be sold in Lenovo's rapidly growing retail stores across the nation. Nisbet hoped the well established retail channel of Lenovo will boost smartphone case sales.

Lenovo was the largest smartphone maker in China during the last quarter, beating longtime leader Samsung and rising star Xiaomi, according to industry research firm IDC.

The top priority for Otter-Box would be to further strengthen its ties with Lenovo, Nisbet said.

"I hope the OtterBox-Lenovo partnership would be an example to show the local vendors what a valuable partner we can be and how we can help Chinese device manufacturers grow their businesses," he said.

Nisbet expressed confidence that OtterBox will have the opportunity to engage in more meaningful relationships with other Chinese device makers in the future.

"We are learning how to make the right product for this market, how to have the right partnerships and how to be a good partner as well." The company also kicked off the online sales of its smartphone cases in China, by teaming up with online retail websites like Tmall.com and JD.com.

"The online sales (in China) far exceeded our expectations," said Nisbet. "That's an indicator that Chinese customers are aware of our brand and product. Now we have to find a good way to get our products out to the customer through retail channels." The company also needs to evolve strategies to ensure that the right product reaches the right customer and to make the whole process a seamless transaction through online shopping.

"We've really taken time to understand that. But having good partners in China has made things much easier for us," he said.

[email protected]   Xiang Xuzhou and his girl friend opened a studio to make cellphone cases in Nantong, Jiangsu province after graduating from a university in July. Their DIY cellphone cases, which show strong individuality, are warmly received by young customers and enabled them to earn good money.  Provided to China Daily   Characteristics of OtterBox products (from right to left): The Symmetry series cases have a streamlined design that delivers protection from falls and shock. The stylish case is among the lower-end products, but still cost around $40 each. The Defender series features a three-layer protection that withstands falls, bumps and shocks. A built-in screen protector prevents scratches. The Commuter series enables smartphone owners to put cash and credit cards on the back of the phone. The Preserver series features 2 meters for 30 minutes waterproof capabilities.  Provided to China Daily (China Daily 10/06/2014 page9) (c) 2014 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

[ Back To TMCnet.com's Homepage ]