Wireless Smartphone Strategies

The industry’s most comprehensive set of critical market statistics and qualitative analysis, tracking and reporting on smartphones.

February 1, 2010 19:02 nmawston

February is here. And that can only mean one thing: Mobile World Congress (MWC). The world's largest wireless trade show takes place in Barcelona, Spain, from Sunday 14th to Thursday 18th. In between eating, drinking and sitting in the sun, I might even do a little work. Which handset players will be important and who should I go visit?

Nokia is a good place to start. Nokia will stage an off-site event called Connecting People. Connecting People is its longstanding theme to connect people and places with devices and contextual services. Nokia will no doubt unveil a new handset model or two, but we don’t expect anything seismic because Nokia will not want its products to get overshadowed by the noise of MWC.

Samsung will be about Bada, the vendor’s new platform which sits on top of a proprietary or Linux kernel. We recommend demoing its new Bada phone, to see if it matches up with Android, Apple and Symbian devices for usability and richness.

LG, like Samsung, will have a big stand at the show. LG is keen to reposition as a credible smartphone player for 2010 and there will be heavy promotion of its Android and Microsoft portfolios. LG is expanding (belatedly) into content and there should be a display of its 3-Screen 3-Way Sync converged-application service for smartphones, netbooks and TVs.

Qualcomm will be found in several smartphones and smartbooks using its high-speed 1GHz Snapdragon processor. The chipmaker will show its roadmap for the next wave of 1.3GHz (8X50A) and 1.5GHz (8X72) Snapdragons, available for commercial launches of devices over the next 6 to 18 months.

The much-hyped Google Android HTC Nexus One will be on show. However, the handset will be of less interest than the business model. I’ll do some discreet research and see if we can get more color on Google’s underlying plans for its direct-to-consumer online distribution strategy.

We will see a few HSPA+ and LTE demos this year. The dongle players, such as Huawei and ZTE, should have such devices on their stands. This will be a double opportunity to see how next-generation technologies are progressing, while examining how the emerging Chinese brands are performing.

That is a partial snapshot of who I will be visiting. How about you? Let me know by clicking on the Comments link.


January 19, 2010 03:01 tkang
At the end of last year Samsung suddenly announced ‘Bada’, their own smartphone platform. Although there are claims that its just vaporware, sorry to say its not making much hype like most vaporware should do. After two months we are still waiting for the real thing. Now we all know what a smartphone O/S is, but what’s a smartphone platform? In the official Bada site, it actually says that the kernel layer can be either Linux or real-time OS (feature phone OS) depending on the configuration. This shows that there will be a shared experience between feature phones and smartphones. So it may not be  inventing a new experience with a new O/S. Confusing nonetheless, I’d say. Why all the mystique and vagueness? In my view the vagueness and uncertainty reflect Samsung’s agony with smartphones. Let me summarize the situation Samsung is in right now. The Situation: - Samsung’s handset ASP had always been 10~30% higher than the industry average but since 2008 they’ve been 10% lower. - Samsung’s operating margin’s are jumping between the 5% and 10% line and it used to be the 10% and 20% line before. - As the No.2 manufacturer of handsets worldwide with 20% market share, Samsung only grasps 3% of the smartphone market. So it all began with the smartphone hype in recent years. Smartphones have been haunting Samsung over the last 2~3 years and even further back when they were experimenting with Palm, Linux and Blackberry (yes, even Blackberry). Samsung’s Bada is a reactive response rather than a proactive or creative move. So it will end up constantly changing as time goes by. I’d say the current facts all point to a direction which is clear though. Samsung’s Bada will be forced to become an upgrade to its legacy feature phones. Whether Samsung intends Bada to become such an upgraded feature phone experience or not, I’m not sure but that’s the only niche that is available in this market right now. As you can see in the chart below there still is a gap between the so-called smartphones and feature phones and with the beginning of the Jet, Samsung has been attempting to bridge that gap. Whether the Bada will be good enough to enter the ranks of smartphones or it will just blur the lines between smartphones and feature phones we’ll have to see the actual product. image Many other feature phone centric vendors will realize that they don’t have much options for the future and this type of feature phone upgrading will be seen again. I think we’ll have to come up with a new definition called the ‘Smart Feature Phone’ or the ‘Simple-minded Smartphone’ soon this year. - Tom Kang

January 19, 2010 03:01 tkang
At the end of last year Samsung suddenly announced ‘Bada’, their own smartphone platform. Although there are claims that its just vaporware, sorry to say its not making much hype like most vaporware should do. After two months we are still waiting for the real thing. Now we all know what a smartphone O/S is, but what’s a smartphone platform? In the official Bada site, it actually says that the kernel layer can be either Linux or real-time OS (feature phone OS) depending on the configuration. This shows that there will be a shared experience between feature phones and smartphones. So it may not be  inventing a new experience with a new O/S. Confusing nonetheless, I’d say. Why all the mystique and vagueness? In my view the vagueness and uncertainty reflect Samsung’s agony with smartphones. Let me summarize the situation Samsung is in right now. The Situation: - Samsung’s handset ASP had always been 10~30% higher than the industry average but since 2008 they’ve been 10% lower. - Samsung’s operating margin’s are jumping between the 5% and 10% line and it used to be the 10% and 20% line before. - As the No.2 manufacturer of handsets worldwide with 20% market share, Samsung only grasps 3% of the smartphone market. So it all began with the smartphone hype in recent years. Smartphones have been haunting Samsung over the last 2~3 years and even further back when they were experimenting with Palm, Linux and Blackberry (yes, even Blackberry). Samsung’s Bada is a reactive response rather than a proactive or creative move. So it will end up constantly changing as time goes by. I’d say the current facts all point to a direction which is clear though. Samsung’s Bada will be forced to become an upgrade to its legacy feature phones. Whether Samsung intends Bada to become such an upgraded feature phone experience or not, I’m not sure but that’s the only niche that is available in this market right now. As you can see in the chart below there still is a gap between the so-called smartphones and feature phones and with the beginning of the Jet, Samsung has been attempting to bridge that gap. Whether the Bada will be good enough to enter the ranks of smartphones or it will just blur the lines between smartphones and feature phones we’ll have to see the actual product. image Many other feature phone centric vendors will realize that they don’t have much options for the future and this type of feature phone upgrading will be seen again. I think we’ll have to come up with a new definition called the ‘Smart Feature Phone’ or the ‘Simple-minded Smartphone’ soon this year. - Tom Kang

January 13, 2010 16:01 Alex Spektor

As usual, this year was a fairly quiet one for mobile phones at CES. Hot consumer electronics products, like ultra-thin 3D TVs, e-books, tablets, and netbooks, all overshadowed phone announcements from the likes of Palm, LG, and Motorola.

clip_image002

But one bit of important news came from an event that was held in parallel with CES. At the AT&T Developer Summit last week, the big news centered on the impending rollout of Qualcomm’s Brew Mobile Platform across the carrier’s messaging phone portfolio – complete with an app store (AT&T App Center) and “standard” 70-30 revenue sharing. AT&T’s target is 90% Brew MP penetration on mid-range featurephones by end-of-2011.

So, who benefits from the AT&T announcement?

Clear winners

  • US Carriers: Presumably, the most compelling apps would be data-enabled, so the development would drive data plan take-up. Verizon Wireless is already requiring a data plan on a number of its messaging phone models, and is rumored to expand the policy to more non-smart devices.
  • Developers: Improved revenue sharing, a unified platform, and a well-supported SDK make developing apps for multiple devices easier and potentially more profitable.
  • Qualcomm: Prior to this announcement, we were predicting the slow demise of Brew. Although it avoided the fragmentation issues of Sun’s Java ME, the relatively closed nature of Brew caused it to have narrow penetration. Breaking in at AT&T is an important win, though convincing Western European operators will remain a challenge.

Mixed impact

  • Consumers: Apps on phones mean a more powerful device, but if a consumer is ready to buy apps and pay for data, why not get a smartphone, which (after subsidy) is unlikely to cost much more? And what about consumers who might not want a (potentially required) dataplan?
  • Device vendors: A new platform can help vendors with smartphone-weak portfolios compete better, but also means more R&D work, further compliance testing, and potentially longer development cycles.

Strategy Analytics forecasts that 45% of the world’s mobile phones will have application store capability by 2014. While smartphones will account for a large chunk of app store-enabled devices, the fast-growing categories of touchscreen and QWERTY handsets are becoming the leading featurephone categories to embrace the app store business model.

Brew MP on AT&T’s messaging devices and other similar developments all point to the blurring of lines between smartphones and their less-capable featurephone cousins. While benefits of this activity extend to all involved parties, they do so to varying degrees. It remains to be seen how AT&T’s relationship with vendors, consumers, and developers evolves as a result.

-Alex Spektor


January 6, 2010 14:01 nmawston

The Google HTC Nexus One smartphone with Android 2.1 was unveiled in the US on Tuesday 5 January, 2010. It will initially ship in the US, UK, Germany, Hong Kong and Singapore. The HSUPA handset ticks most of the right technology boxes, including a 4-inch touchscreen, multi-tasking and a powerful 1GHz Qualcomm Snapdragon processor. The phone has a handy voice-recognition feature, which can be used for controlling text fields, and it will be a key differentiator. A user can quickly write SMS and email messages simply by speaking to the handset. Only time will tell just how accurate and reliable the voice-control solution actually is. Why has Google gotten into the handset business? Google wants to champion a flagship user-experience and limit fragmentation for Android, while simultaneously driving up its global user-base for future mobile advertising revenues.


Exhibit 1: Google Nexus One


clip_image001


Some downsides: first, the Nexus One lacks a hard QWERTY and multi-touch, which may be an issue for some segments. Second, the handset's style and design are a little ho-hum and me-too. Third, the retail pricing, at US$179 postpaid and US$529 prepaid unlocked, is not as competitive as some might have expected from a company that is often associated with super-low-cost business models. And fourth, the Nexus One is initially being launched with T Mobile, which may lack the marketing clout of its bigger US rivals such as AT&T.

An interesting development is the opening of a Google-hosted online store, at www.google.com/phone, which will offer an online retail channel through which consumers in the US can buy a prepaid or postpaid Nexus One. A customer must register on the site (useful for Google to control the end-user), choose a phone model, pick a data-plan from T Mobile, then Google will deliver the phone directly to their home. In effect, Google has become a handset distributor and retailer. This is unchartered territory, and it remains to be seen whether Google can compete effectively with the likes of Apple and Amazon. The announcement is certainly good news for the online handset distribution industry. Online handset distribution, via firms such as Amazon, currently accounts for 1 in 12 of all shipments worldwide. With Google's huge marketing clout and its heavily visited PC search engine, online handset distribution is going to see a major uplift in activity this year. Google just made online distribution a hotter topic for 2010.


December 4, 2009 15:12 David Kerr

sa photo dk 

As we rapidly close the cover on one of the toughest years the telecommunications, content and internet industries have ever seen, SA takes a look ahead beyond the recession to detail the key megatrends for the mobile industry in 2010.

We see a tough but positive mobile ecosystem outlook with devices recovering stronger than services. More consolidation is likely among network operators, while profits for device vendors will continue to flow away from handset only vendors in favor of device/services integration specialists. Emerging markets will continue to dominate volume with strong 3G rollout competition expected. The global market for services, applications, devices and infrastructure will post modest growth of approximately 3% in 2010.

The total mobile industry revenue including services, infrastructure and devices was flat in 2009. We expect a modest growth of 2.8% in 2010 to $1140B.

· In 2009, only strong growth in data spends by users ensured that total industry revenues did not decline. Data revenues grew 9.5% in 2009 and are expected to grow at a 13% rate in 2010 reaching over $200B.

· Handset market sell through revenue will rebound well in 2010, posting growth of 4% while the infrastructure market will continue to struggle and will decline slightly.

clip_image002

Key issues shaping the 2010 landscape include:

  • Operators needing to balance the the strong rise in Capex requirements driven by the data traffic explosion against slow revenue growth. The likely outcome being significant M&A, network sharing and even applications development.
  • Handset OEMs will be forced will put the early stake in the ground for new device categories. Traditional OEMS will continue to struggle to match the Apple & Google vertical integration strategy which has proven so successful.
  • As the big five vendors focus on smart phones and content/services in the open markets, a race develops to get services/apps onto feature phone products or other operator customized devices
  • On-portal traffic continues to grow but is outpaced by off portal session growth. Contextualization and personalization of the user experience will determine winners and losers.
  • The rapid diffusion of Flash and HTML 5 on handsets could negate much of the need for mediacos to use open platforms/app stores in mature markets.
  • In the business sector we see SMEs and Manage Mobility as key battlegrounds. We see growth in hosted services for SMEs (e.g. Unified Communications infrastructure-one phone mobile and fixed, one voicemail etc.  Personal v corporate liable devices (iPhone v BlackBerry) becomes a major issue.
  • In the Emerging Markets area we see consolidation & 3G expansion in urban areas as key battlegrounds. With improved financing prospects, there will be significant consolidation among regional operators and rationalization of holdings.