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Smartphone commoditisation on the horizon

by Mark Tyson on 17 May 2012, 10:52

Tags: iPhone, Samsung (005935.KS), Nokia (NYSE:NOK), HTC (TPE:2498)

Quick Link: HEXUS.net/qabgtv

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Market analysts Gartner Inc. have published a new report concerning the mobile phone market, looking at sales and trends of mobile devices then extrapolating their findings to bring us reasoned predictions.

Headline figures from the report are that sales of mobile phones worldwide declined by 2 per cent in Q1 2012. Also that Samsung branded Android phones were 40 per cent of all Android phones.

 

Looking deeper into the report Gartner analyst Anshul Gupta thought “The first quarter, traditionally the strongest quarter for Asia – which is driven by Chinese New Year, saw a lack of new product launches from leading manufacturers, and users delayed upgrades in the hope of better smartphone deals arriving later in the year.”

Principal research analyst Annette Zimmermann expects Q2 sales to improve with new phones and OS versions coming to market. “The arrival of new products in mature markets based on new versions of the Android and Windows Phone operating systems (OSs), and the launch of the Apple iPhone 5 will help drive a stronger second half in Western Europe and North America.”

Indeed while mobile phone sales dropped smartphone sales are still growing, up nearly 45 per cent year on year. However the news isn’t that good for most manufacturers in the crowded Android market. Anshul Gupta explained; “At the high end, hardware features coupled with applications and services are helping differentiation, but this is restricted to major players with intellectual property assets. However, in the mid to low-end segment, price is increasingly becoming the sole differentiator. This will only worsen with the entry of new players and the dominance of Chinese manufacturers, leading to increased competition, low profitability and scattered market share.”

So while Samsung are making their Android phones special or differentiated to help their sales at higher, more profitable prices other companies will have to try harder to be anything other than me-too products which are more or less the same, only able to compete by cutting prices/margins. Sony, HTC, Motorola and LG should have the resources to differentiate their smartphones, but they need to try harder it seems. Concerning other smartphones; Apple’s iPhone is still going strong (96 per cent growth in Q1 thanks to Asia). The Microsoft/Nokia partnership smartphones are at a critical moment in their attempt to break through, so it will be interesting to see how they have impacted the market this time next year.



HEXUS Forums :: 10 Comments

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It's no great surprise really - it's really hard to differentiate yourself when everyone is running almost exactly the same software, so your main differentiator becomes hardware.

Before i post anything though what i write here has to be taken with the knowledge that I really don't like Android as a mobile OS (particularly/mainly the UI/UX parts of it which are awful imo), and I await the day that it's replaced with something that doesn't feel like a linux beta build..so it's all a little biased ;)

Hardware only becomes interesting to those at the higher end of the market (geeks) and an insignificant minority of non-geek purchasers. So where else can you innovate? Really it comes down to the UI front end that gets slapped on to Android to make it slightly more user friendly, but again here the same problem crops up in that only the larger players can afford to invest in this. Even then, only HTC have successfully differentiated on this via HTC Sense (Which has been in development and available in various guises for around 10 years now).

So, it's tough out there if you are working with Android..I don't really have an answer - Microsoft will have this issue eventually if/when Windows Phone becomes a success (Something that is unlikely, especially if they keep forgetting to market it outside of the USA). Apple don't have the problem as cleverly they have kept the iOS IP to themselves and have not fallen into the trap of licencing it (for free!) to anyone who wants it.

You know what i would actually like to happen, given that android is here as a platform to stay - get google to remove the default UI. Force manufacturers to differentiate themselves from one another by creating a unique front end, which is actually what 99% of end users really care about. I guess this would cause problems for the smaller suppliers in the chain..but if there is one thing that would help android as a platform, it would be a polished UI that doesn't have that cheap linux feel to it that every single version I have personally played with, has.
Spud1
Before i post anything though what i write here has to be taken with the knowledge that I really don't like Android as a mobile OS (particularly/mainly the UI/UX parts of it which are awful imo), and I await the day that it's replaced with something that doesn't feel like a linux beta build..so it's all a little biased ;)

You know what i would actually like to happen, given that android is here as a platform to stay - get google to remove the default UI. Force manufacturers to differentiate themselves from one another by creating a unique front end, which is actually what 99% of end users really care about. I guess this would cause problems for the smaller suppliers in the chain..but if there is one thing that would help android as a platform, it would be a polished UI that doesn't have that cheap linux feel to it that every single version I have personally played with, has.
I agree with some of what you're saying (apologies for the editing) hardware does only push buttons for the geeks/nerds - i.e. few men-in-the-street are bothered if a particular device is quad core, amoled v's s-lcd, etc.

The problem is that there's very few Android manufacturers* doing anything innovative with the platform - so what we get is a series of very similar devices. Heck, look at the <£200 board at CPW or P4U from a distance and it's darned difficult to tell what's HTC, Samsung, etc. In which case, as you say, the differences come down to the UI, (and I'm going to vehemently disagree that the stock ICS feel is poor - I like it). And not just at the low-to-mid end either - take the recent Galaxy S3 announcement and the vast majority of the sales pitch were for UI features.

(*Honourable mention for Asus - PadFone is unlike anything else)

There's a fascinating flame war on xda-developers at the moment between S3 adherents and HTC One X loyalists. Both excellent devices, but there's some real excitable fanboy-type arguments which seem to come down to that the S3 looks like it was designed after a drunken lunchbreak and the HOX is of poor quality.

Doesn't bode well actually, with Android folks fighting each other; RIM dying slowly; Nokia/Microsoft apparently deciding that Lumia/WP7 are so good that they don't need to push them; and Apple being their usual snotty, writ-flinging selves.

In closing I'll also argue that the … ahem … “eccentric” behaviour of old Android devices is on the wane and modern mainstream ones are just as easy to drive and good to look at as their iPhone/iPad based competition.
is anybody else thinking that WP7.5 hasn't a hope in hell of succeeding? 1.9% of the market and declining…I said this months ago, it's just too little and too late for both Nokia and Microsoft.

I believe there is still time for people to make nice and yet different Android devices. My next phone will be an Xperia Mini Pro because I love the hardware keyboard…I can type/txt etc. so much faster using one and whilst it's not a multi-core beast it's still small enough to pocket yet powerful enough for most apps
3dcandy
is anybody else thinking that WP7.5 hasn't a hope in hell of succeeding? 1.9% of the market and declining…I said this months ago, it's just too little and too late for both Nokia and Microsoft.
I said that the moment the news broke that Nokia hired a Microsoft stooge as CEO.
3dcandy
is anybody else thinking that WP7.5 hasn't a hope in hell of succeeding? 1.9% of the market and declining…I said this months ago, it's just too little and too late for both Nokia and Microsoft.

See http://apebox.org/wordpress/rants/391/