IFA2019 – Mid-Range Smartphones Get Some Much-Needed Attention

In the smartphone market, a lot of emphasis is given to flagship products – they are the ones that tend to receive the first release of new technologies and are therefore championed by opinion-formers. But at IFA2019, the mid-range products were more prominent, and this is a good thing.

Mid-range is 40% of volume

Products with a wholesale price of between US$200 and US$800 account for ~40% of global volume. Even markets like the US, which has traditionally been split between high-end and low-end, is now seeing growth in mid-range price bands.

5G arriving fast to mid-range

With 150 designs already underway, or launched, Qualcomm is the undisputed 5G leader. One of the key announcements at IFA was delivered during Qualcomm’s keynote address by company President, Christiano Amon. He revealed that 5G capabilities are coming to its Snapdragon 7 and 6 series starting in 2020. These are mid-range application processors used to power many of the products that form the 40% of volume. And while 5G devices built around these processors will likely be more costly than non-5G versions, they will also fall solidly within the mid-range.

Huawei – 5G powerhouse, that’s losing its power

Richard Yu gave one of his typically upbeat presentations where he announced two key products – the Kirin 990 5G SoC and the Kirin A1 which is designed for wearables. Huawei claims it’s the first Bluetooth and Bluetooth Low Energy (BLE) chip to support version 5.1.

The Kirin 990 is a powerhouse chipset based on the TSMC 7nm FinFet + EUV process. It incorporates the modem to provide a single chip solution – though only for sub-6GHz frequency ranges for now, though it does support both Non-Standalone (NSA) and Standalone (SA) 5G network types.

Huawei joins with Samsung that launched the Exynos 980 single-chip solution, and will likely be outflanked by Qualcomm’s forthcoming Snapdragon 865.

Huawei Kirin 990 5G SoC

However, Huawei continued to ignore the massive elephant in the room that will likely crush Huawei’s consumer business – the trade ban by the US that means its next product – the Mate 30, that will be powered by the Kirin 990, likely won’t launch, natively, with Google’s GMS services, forcing consumers to have to side-load the services. It also means that the operating system will not be supported with updates and security patches throughout the product life. For many consumers and many operators, this will be too difficult to contemplate buying the product. We, therefore, expect that Huawei will continue to suffer share losses in the market.

Huawei’s misfortune opens door

As Huawei suffers a traumatic loss of market share, it opens the door to others to take advantage of the vacuum it creates.

HMD Nokia has been flat-lining in market share terms in the smartphone market. It has done well in feature phones, but while that’s good, the market for feature phones will inevitably gradually decline, so it’s crucial that its smartphone business flourishes.

HMD Nokia launched two new smartphones as updates to its 6 and 7 series – the 6.2 and 7.2.

Both include innovative technology from Pixelworks that efficiently upscales content to HD on the fly. This means that the products can be spec’d with cost-efficient screens and application processors (a Snapdragon 636 on the Nokia 6.2 and a Snapdragon 660 on the 7.2) but deliver performance equivalent to more costly products. Both also sport triple-camera setups with the 7.2 getting a 1/2 inch 48-megapixel sensor.

Pricing for the 6.2 starts at €199 with the 7.2 starting at €299.

HMD Nokia emphasised its lead in updating software and security based on the research conducted by Counterpoint Research.

In addition to the smartphones, HMD Nokia also introduced three new feature phones – a market where it leads by a considerable margin already. The new products will help it tighten its stranglehold on the feature phone space:

The Nokia 110 – a cute basic 2G feature phone based on enhanced Series 30 operating system.

The Nokia 2720 – a flip phone smart feature phone with 4G LTE capability and running on KaiOS with essential apps for many markets including Facebook and WhatsApp preloaded. An emergency button is also included which means that the 2720 could be aimed at the elders market to compete with offerings from companies like Doro, though the emergency button is quite small.

The Nokia 800 Tough – Nokia feature phones are well-known for their ability to withstand harsh treatment, but the 800 Tough goes several steps further. It’s a ruggedized smart feature phone running KaiOS and built to MIL 810G standard. It also has a remarkable battery life. On GSM, Nokia claims it will last almost six weeks between charges. For expeditions that may have limited access to power, this could be a lifesaver, though the market for builders and other laborers is much larger than those of explorers!

TCL takes a swing at the smartphone market

TCL is best known globally for its TV business in North America, but it offers a diverse range of consumer electronics products that span domestic appliances, air conditioners, TVs, audio products, to smartphones. TCL licenses the Alcatel and BlackBerry brands, which have carved out specific niche positions – notably Alcatel that performs quite well in the prepaid markets of the Americas. But the Alcatel brand has never had the muscle to fight in the affordable premium and premium segments. This is where the TCL brand is being mobilized.

Its initial smartphone product is the TCL Plex. It’s a well-executed mid-range smartphone. Interestingly, it also runs the Pixelworks technology that HMD Nokia is using. Here Pixelworks helps TCL’s own display technology to really shine, with excellent color reproduction.

The Plex also has a triple camera set-up, which is almost now table stakes in the mid-range.

TCL has good organizational structures in many parts of the world in which its Chinese rivals are only just now establishing. This means it has a head start in some respects, but the brand is unknown in the smartphone market in Europe and many parts of Asia. And given that it will only launch in markets where operators are not heavily in control, means that it won’t launch in the US, UK, and a few other key markets – preferring to work with open market retailers.

TCL flashed a look at a folding concept, though played down the speed with which it will bring a device to market. It also showed an augmented reality headset concept – again with no specific plans to bring it to market.

TCL faces a considerable task to establish a beachhead in the market. But its challenges are mostly around marketing, distribution and brand than execution of good hardware.

Moto – Camera to the fore

Motorola’s One Zoom is the next iteration in the Moto One series (that also includes the One, One Power, One Vision, and One Action). As the name implies, this model is leading with its telephoto camera capabilities. The phone sports a four-camera set-up on the back with standard, telephoto, wide-angle and a ToF depth sensor. These are paired with an OLED display and powered by a Qualcomm Snapdragon 675 chipset and running stock Android 9. Pricing is around €400. The design is not to everyone’s taste, but the materials and finish are to a high standard.

Sony: didn’t get the memo about mid-range

Sony launched the Xperia 5, a flagship device with pricing likely above €800. Running on the Snapdragon 855 application processor, with a 21:9 aspect ratio 6.1” OLED FHD+ display, it’s a surprisingly compact device that acts as a smaller version of the Xperia 1, launched in February.

However, we doubt the Xperia 5 will do much to rekindle Sony’s dismal sales figures. With a wide range of excellent competitor devices from a variety of OEMs, mostly at much more attractive price points, Sony will likely struggle to gain traction even with the help provided by Huawei’s current misfortune.

Samsung: an unfolding story

Samsung’s ill-fated Galaxy Fold has been under wraps since the problems surfaced back in the spring. Samsung has been working on several improvements, such as small retention covers to prevent careless users from peeling off the top layer of the screen. And the gaps that allowed small particles of material to enter under the screen have been closed. In addition, the hinge mechanism now feels much sturdier than it did. This may be subjective and may also vary between units, but it now feels mechanically robust.

In addition to the outward hardware changes, Samsung is now offering the Galaxy Fold in both 4G and 5G versions, though it’s not clear what the pricing differential will be between the two or which markets will get which versions.

The device is definitely a work of mechanical art, but whether it’s worth the massive price premium is less clear. The advantages in terms of additional screen real estate come at a high price – both financially but also in terms of bulk and fragility. We expect the Galaxy Fold, and other folding form factor devices, will remain of niche interest for early adopters, for now.

Hearables are go

One of the other trends evident at IFA was the burgeoning availability of true wireless earbuds with updates and new releases from multiple vendors: including Huawei, Jabra, Plantronics, Nokia HMD and TCL.

Huawei’s launch of its Freebuds 3 was significant because they’re based on the new Kirin A1 chip. Outwardly they look similar to Apple’s Airpods, but their features set them apart. Despite having an open ear design, they offer active noise cancellation (ANC). They also feature bone-conduction technology to enhance microphone sensitivity as well as a wind deflector so they can be used while outside or even when cycling at up to 20km/h.

We couldn’t try the wind deflecting capabilities, but we did try music and they sounded good, with noticeably better audio quality than Apple’s Airpods. However, expect Apple to update its own Airpods within the next few months to raise the bar higher again.

Peter has 27 years experience in the mobile industry with extensive experience in market analysis and corporate development. Most recently Peter was Global Head of Market and Competitive Intelligence at Nokia. Here he headed a team responsible for analyzing and quantifying the industry. Prior to Nokia, Peter was an equity analyst at SoundView Technology Group. And before that he was VP and Chief Analyst of mobile and wireless research at Gartner. Peter’s early years in the industry were spent with NEC and Panasonic.

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