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Grey Handsets: Market Analysis and Forecasts

Abstract

Overview

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Grey handsets are not recognized or licensed by government regulators and employ fake International Mobile Equipment Identity (IMEI) numbers. Producers of these devices generally do not pay value-added taxes and, therefore, profit illegally from their participation in the market.

This report provides a global assessment of the grey handset ecosystem, in addition to considering the wider legitimate handset industry. A study of the industry's history, value chain and market dynamics is presented. The report also provides detailed market forecasts for grey and legitimate handset shipments from 2012 to 2016, at a global, regional and country level. Historical figures for 2010 and 2011 are also provided.

Driven by a growing popularity amongst cost-conscious consumers demanding high-end features at affordable prices, ARCchart expects the grey market will continue to grow over the next two years, eventually peaking in 2013, with nearly 150 million shipments. In conjunction with legitimate handset shipments, we expect grey handset shipments will witness a decline from 2013 onwards.

Topics of coverage include:

  • History of grey handsets
  • Industry dynamics
  • Grey handset value chain
  • Competitive advantages over legitimate handsets
  • Emerging trends
  • Grey smartphones
  • Health and safety concerns
  • Innovation and innovate products
  • Regulator attempts to curtail the market

Companies and organisations mentioned, discussed or reviewed include:

  • Apple
  • CK Telecom
  • HTC
  • Longcheer
  • Longyu
  • MediaTek
  • Motorola
  • Nokia
  • Qualcomm
  • Samsung
  • SIMCom
  • Spreadtrum
  • Texas Instruments
  • Tianyu (K-touch)
  • Wingtech

Answers and opinions are provided with respect to the following essential questions:

  • When will the grey handset market peak?
  • What are the factors driving the grey market?
  • How are grey manufacturers able to evade authorities?
  • Will Europe and North America see much grey handset penetration?
  • What proportion of the overall handset market will be grey?
  • Which country will be the largest market for grey devices?
  • How will the arrival of LTE impact the grey handset market?
  • What are the factors preventing regulators from a large scale crackdown?
  • Which region will experience the fastest grey handset growth in the coming years?

Table of Contents

A. INTRODUCTION

  • A.1 A History of the Grey Handset Market
    • The Concept of 'Shanzhai'
    • MediaTek's "Total Solution" Chip
    • The Rise of Grey Handsets
  • A.2 Innovation & Innovative Products
  • A.3 The Grey Handset Value Chain
    • Chipset Manufacturers
    • System Integrators aka Grey Manufacturers
    • Independent Design Houses
    • Component/Tool Suppliers
    • Distribution Channels
  • A.4 Competitive Advantage over Legitimate OEMs
    • Marketing & Promotion Advantage
    • Size Advantage

B. INDUSTRY DYNAMICS AND KEY TRENDS

  • B.1 Issues Faced by Grey Handsets
    • Problems with Lawful Interception
      • Missing or Fake IMEI Number
    • Consumer Dissatisfaction
      • Grey Handsets as Counterfeit Originals
      • Inferior Reliability
    • Health & Safety Concerns
    • Lost Revenue Opportunities
      • Loss of Tax Revenue
      • Loss of IP Royalties
      • Loss of Operator Revenue
  • B.2 Emerging Trends
    • Penetration into Western Europe and North America
    • Prospects for LTE Handset
      • The TD-LTE Advantage
    • Move to the Market High-end
  • B.3 Government & Regulatory Crackdown
  • B.4 Issues Preventing a Large Scale Crackdown
    • Duplication of IMEI Numbers
    • Economics
    • Consumer Apathy
    • Widespread Adoption of Open OS Platforms
      • Grey Smartphones
    • Expanding Geographic Distribution of Facilities
      • Shrinking Facility Size

C. MARKET SIZE AND FORECASTS

  • C.1 Grey Handsets Market
    • When Will the Market Peak?
    • Regional Breakdown
    • Top Grey Handset Shipments Countries
    • Device Breakdown
  • C.2 North America Market
  • C.3 Asia Pacific Market
  • C.4 Western Europe Market
  • C.5 Middle East & Africa Market
  • C.6 Eastern Europe Market
  • C.7 Latin & Central America

List of Figures

  • Figure 1 - Innovation in the grey handsets industry
  • Figure 2 - The grey handset value chain
  • Figure 3 - Survey results of grey handsets health and safety considerations
  • Figure 4 - Global grey handset shipments: 2010 - 2016
  • Figure 5 - Global grey handsets and legitimate handset shipments compared: 2010 - 2016
  • Figure 6 - Global handset market breakdown, by grey and legitimate handset: 2010 - 2016
  • Figure 7 - Grey handset shipments by region: 2010 - 2016
  • Figure 8 - Grey handset market share, by region: 2011
  • Figure 9 - Grey handset market share by region: 2013.
  • Figure 10 - Grey handset market share by region: 2016
  • Figure 11 - Global grey handset shipments, by top ten countries: 2011
  • Figure 12 - Global grey handset shipments, by top ten countries: 2016
  • Figure 13 - Global grey handset shipments, by devices type: 2010 -2016
  • Figure 14 - Global grey smartphones as a proportion of total smartphone shipments: 2010 -
  • Figure 15 - North America grey and legitimate handset shipments: 2010 - 2016
  • Figure 16 - North America grey handset shipments, by country: 2010 - 2016
  • Figure 17 - Asia Pacific grey and legitimate handset shipments: 2010 - 2016
  • Figure 18 - Asia Pacific grey handset shipments, by top 5 countries: 2010 - 2016
  • Figure 19 - Asia Pacific grey handset shipments, by country: 2010 - 2016
  • Figure 20 - Western Europe grey and legitimate handset shipments: 2010 - 2016
  • Figure 21 - Western Europe grey handset shipments, by top 5 countries: 2010 - 2016
  • Figure 22 - Western Europe grey handset shipments, by country: 2010 - 2016
  • Figure 23 - Middle East & Africa grey and legitimate handset shipments: 2010 - 2016
  • Figure 24 - Middle East & Africa grey handset shipments, by top 5 countries: 2010 - 2016
  • Figure 25 - Middle East & Africa grey handset shipments, by country: 2010 - 2016
  • Figure 26 - Eastern Europe grey and legitimate handset shipments: 2010 - 2016
  • Figure 27 - Eastern Europe grey handset shipments, by top 5 countries: 2010 - 2016
  • Figure 28 - Latin & Central America grey and legitimate handset shipments: 2010 - 2016
  • Figure 29 - Latin & Central America grey handset shipments, by top 5 countries: 2010 - 2016
  • Figure 30 - Latin & Central America grey handset shipments, by country: 2010 - 2016
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