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Connected Car Sales Grew 12% YoY in 2022 With Volkswagen Group in Lead

Volkswagen Group led in connected car sales, closely followed by Toyota Group.
4G cars captured more than 95% of connected car sales in 2022.
Tesla broke into the top-10 connected car sales rankings for the first time.

New Delhi, London, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – April 24, 2023

Global connected car sales* grew 12% YoY in 2022 with the share of connected cars in the overall car sales exceeding 50%, according to the latest research from Counterpoint’s Smart Automotive Service. The US remained the strongest market for connected cars followed by China and Europe. These three markets accounted for nearly 80% of the total connected car sales globally in 2022. Despite having a relatively small share of connected car sales, Japan experienced the highest growth in connected car penetration.

Commenting on the market dynamics, Research Analyst Abhilash Gupta said, “The penetration of connectivity in cars improved during 2022 after struggling in 2020 and 2021. In 2022, new facelift versions of older models like the Honda Civic, Toyota Corolla, Ford Escape and Chevrolet Equinox were introduced with upgraded 4G connectivity and new features. Some prominent features include remote lock/unlock, remote engine start/stop, climate control, vehicle status, location tracking, geofencing, emergency assistance, in-cabin music, video streaming, and over-the-air updates. Next-generation vehicles are being introduced with various connected and autonomous features that require high-speed internet access available through 5G. However, as of now, 5G remains a niche, available only in premium cars like the Ford F-150 Lightning, Cadillac LYRIQ, Mercedes-Benz EQS, Audi e-tron GT, BMW iX and GWM Haval HG.”

Gupta added, “With consumers’ focus shifting to connectivity in the car, non-connected car shipments are steadily declining. The top five automotive groups accounted for nearly half of the connected cars sold in 2022. Volkswagen Group led the charts in terms of connected car sales volume, closely followed by Toyota Group. Tesla broke into the top 10 for the first time.”

Commenting on the market outlook, Senior Analyst Soumen Mandal said, “The shift towards digitization in cars is increasing at a rapid pace and is visible in the consistent rise of connected car penetration globally. Currently, 4G dominates the connected car market with almost 95% share. But as the automotive market is transitioning towards electrification, software-defined vehicles and autonomy, the need for seamless and faster in-vehicle connectivity will be fulfilled through 5G. By 2030, more than 90% of connected cars sold will have embedded 5G connectivity. Connected car sales are expected to grow at a CAGR of 13% between 2022 and 2030.”

* Sales here refer to wholesale figures, i.e. deliveries out of factories by respective brands, and consider only passenger cars with embedded connectivity.

The comprehensive and in-depth ‘Global Connected Car Tracker, Q1 2019-Q4 2022’ and ‘Global Connected Car Forecast, 2019-2030F’ are now available for purchase at report.counterpointresearch.com.

Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Abhilash Gupta

Soumen Mandal

Peter Richardson

Counterpoint Research

press@counterpointresearch.com

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ADAS Penetration Crosses 70% in US in H1 2022, Level 2 Share at 46.5%

The share of Level 2 cars in the US’ total car sales increased to 46.5% in H1 2022.
Toyota and Honda led the Level 2 segment with 24% and 14% shares respectively.
ADAS penetration is expected to cross 80% in the US by 2023.
Fully autonomous cars (L4-L5) are taking longer than projected to reach the market.

New Delhi, London, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – November 15, 2022

Cars with Level 2 (L2) autonomy features increased their share in the total car sales in the US to 46.5% in H1 2022, according to the latest research from Counterpoint’s US Autonomous Vehicle Tracker. The L2 cars’ share is rising because Level 1 (L1) features such as Adaptive Cruise Control (ACC) and Lane Centering Assist (LCA) do not create much value for consumers and brands. But the usability and value go up when both of these ADAS (advanced driver assistance systems) features are bundled together to offer L2 autonomy. Many brands offer ADAS suites, like Ford’s Co-Pilot 360, Toyota’s Safety Sense and BMW’s Active Driving Assistant, though these suites offer L0-L2 features currently. All this has helped ADAS (L1-L2) penetration in the US to cross 70% in H1 2022.

Commenting on the adoption of autonomous vehicles, Research Analyst Mohit Sharma said, “Fully autonomous cars (L4-L5) look distant in the future as autonomous driving has turned out to be more complex than thought. However, now automakers like GM, Ford and Tesla are wooing customers by offering L2+ hands-free driving systems to make driving less stressful on the highway. Volume carmakers like Toyota and Honda have added L2 ADAS as a standard feature in their latest car models. The carmakers have also increased the availability of L2 for more models by offering an ADAS suite/package as a standard or option for lower price bands.”

Source: Counterpoint’s US Autonomous Vehicle Tracker, Q2 2022

Commenting on the autonomous vehicle business, Research Director Jeff Fieldhack said, “Automakers are looking to create new revenue streams through a subscription model for over-the-air (OTA) updates for driving technologies. However, for this to happen, the cars should have the necessary hardware to enable L2+ or L3 driving systems. This subscription model will be good for both customers and OEMs as customers could buy according to their needs and OEMs would have a recurring revenue model.”

In H1 2022, Toyota and Honda sold the most cars with L2 driving systems and led the L2 car market with 24% and 14% sales share respectively. Premium brands like Mercedes-Benz still offer L2 as an option in most of their models except high-end models like the S-Class.

The hype over autonomous driving has been so much that most of the auto OEMs invested heavily in launching autonomous vehicles. In fact, during the initial years, a few OEMs like Ford, Volvo and Honda wanted to skip Level 3. Some parts of the world have already seen the launch of Level 3 cars, but the US is still waiting for such cars due to the absence of federal autonomous vehicle regulations. Auto companies are now realizing that L4-L5 driving will take longer than thought and, therefore, want to target the L2+ and L3 market. For instance, Ford and other major automakers like GM, Hyundai and Nissan are introducing L2+ capabilities to their cars. This will help the carmakers increase the adoption rate of L2+ and L3 driving features.

Source: Counterpoint’s US Autonomous Vehicle Tracker, Q2 2022

Commenting on the market outlook, Associate Research Director, Brady Wang said, “The US’ ADAS (L1 and L2) penetration is expected to cross 80% by 2023 as consumers become more aware of the ADAS capabilities for safe and convenient driving. As the autonomous vehicle industry becomes mature, it will see consolidation in the near term. For instance, we witnessed the demise of autonomous driving company Argo AI last month.”

For detailed research, refer to the ‘USA Autonomous Vehicle Tracker, Q2 2022’ report, available for subscribing clients and individual subscriptions

Counterpoint tracks and forecasts the autonomous vehicle market on a quarterly basis across major geographies and brands.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Mohit Sharma

Brady Wang

Jeff Fieldhack

Counterpoint Research

press@counterpointresearch.com

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LiDAR Now High on Automotive Industry Radar

LiDAR shipments are expected to cross 100 million units by 2030 driven by the automotive industry. The increase in demand for LiDAR will match the increase in demand for ADAS and automated driving in passenger cars and robotaxis. As the number of LiDAR sensors per car increases, reaching a likely maximum of eight units to enable fully autonomous driving, the LiDAR market is expected to grow at a CAGR of 65.9% to reach $15 billion by 2030.

Level 3 and above automated driving will require a fusion of LiDAR, radar and camera sensors. While a few companies, like Tesla and Wayve, will look to make autonomous driving successful without LiDAR, most car manufacturers, like Mercedes-Benz, Nissan, BMW, Stellantis, Volkswagen and Volvo, have already announced their intention to include LiDAR in their sensor suites for ADAS/AD in upcoming car models.

The biggest threat to LiDAR comes from alternative technologies such as cameras and machine vision. A small number of companies believe that vision-based systems are sufficient to support autonomous driving. This can hamper the growth of LiDAR as the cost of switching to cheaper vision-based solutions is relatively low.

Automotive LiDAR market

The current LiDAR market is crowded as more than 70-80 companies are operating globally, targeting different industries and regions. From 2020 onwards, a total of nine companies – Velodyne, Luminar, Aeva, Ouster, Innoviz, Aeye, Indie Semiconductor, Quanergy and Cepton – have announced listing of stocks through SPAC mergers.

Valeo’s Scala is the world’s first mass-produced LiDAR for cars. In 2021, Mercedes-Benz and Honda introduced Level 3 models S-Class and Legend respectively. Both are equipped with Scala LiDAR. Since 2017, Valeo has shipped more than 170,000 LiDAR units.

According to a Counterpoint study, the value of the automotive LiDAR market reached around $100 million in 2021 as car companies including Toyota, Honda and Chinese companies like Xpeng launched models equipped with LiDAR. Many car OEMs have signed deals with LiDAR suppliers for their upcoming models. Chinese automakers are at the forefront in entering such partnerships.

Future of automotive LiDAR market

According to Counterpoint’s Global Autonomous Passenger Vehicle Forecast, by 2025, 10% of the new cars sold globally will have Level 3 driving capabilities. Developed markets like the US and Europe will have a higher percentage of Level 3 cars and will first see the entry of Level 4 cars (subject to regulatory approval). This suggests LiDAR has a considerable growth opportunity as Level 3 and above cars will reach the mass market in unison by 2030. According to Counterpoint’s Automotive LiDAR Market Trends and Implications, 2022 study, the LiDAR market is expected to grow from $0.1 billion in 2021 to over $15 billion and over 100 million units shipped in 2030.

Conclusion

After the first use of LiDAR in the automotive segment, it took more than five years for LiDAR to make it to a production vehicle and it still has not been successful at achieving broad market penetration. But it is early days and the scope for LiDAR is considerable. We believe that despite the slow initial diffusion, LiDAR adoption will gather pace.

For more insights and analyses on the Automotive LiDAR Market, please refer to Automotive LiDAR Market Trend and Implications, 2022, which captures the current and future LiDAR trends, LiDAR cost, and threats to LiDAR in the automotive industry.

Can Chinese EV Makers Make it Big in Japan?

For an automotive market like Japan, which is the base of global giants like Toyota, Honda, Nissan and Mazda, and saw early entry of hydrogen-fuel vehicles, it is easy to assume that the country would be a big market for new energy vehicle (NEV) makers. But the numbers tell a different story. According to the latest Counterpoint Research Global Passenger Vehicle Trackers, the NEV penetration in Japan is around 1% compared to around 15% in China.

The total NEV sales in Japan from 2018 to 2021 were just 4% of the total sales in China in 2021. It is easy to conclude that Japan is not an attractive market for EV makers. But opportunities can be found when taking an in-depth look into the market. In fact, the Japanese government is now actively pushing EVs by providing subsidies to set up EV charging stations.

FCEV vs BEV: What will be the future trend?

The debate on fuel cell electric vehicles (FCEVs) and battery electric vehicles (BEVs) has been going on for years now. Many in countries like Japan and South Korea still believe that hydrogen fuel will be the future, while China has been pushing BEVs. Leading NEV maker Tesla has also bet on BEVs and made it to the top of the China NEV market by achieving almost 50% share in H1 2022.

The FCEV has many advantages but the BEV can be scaled up in a shorter time due to a more favorable infrastructure construction cost for the government and enterprises. Moreover, the BEV beats the FCEV both in terms of unit price and cost of use. Given the current macroeconomic headwinds, any plan to set up FCEV infrastructure will find few takers in the government or industry in the near future.

The Nissan Leaf BEV was the best-selling NEV model in Japan in 2021, with more than twice the sales as the second-placed Mitsubishi Eclipse Cross, a plug-in hybrid electric vehicle (PHEV).

Why BYD decided to enter Japan electric car market?

China’s BYD recently launched three electric car models in Japan – Seal, Atto 3 and Dolphin. As discussed above, Japan’s NEV market is comparatively small. So, what are the factors driving BYD’s Japan electric car market entry? We discuss them below:

Not a newbie in Japan’s vehicle market: BYD is already selling its electric buses in Japan. Furthermore, through tie-ups with Japanese companies including Toyota, Kansai Electric Power Company and Keihan Bus Company, BYD has a better understanding of the country’s consumption patterns.
Cost competitiveness: Within the same price segment, BYD can offer better vehicles in terms of mileage and other performance parameters.
Investment in charging infrastructure: Either by itself or together with the government, BYD has to increase the number of charging stations and charging points. The difference between China and Japan here is that there is a higher proportion of private charging points in China. But in Japan, more public charging points are needed due to the higher cost of land and parking slots. That is why the Japanese government is providing subsidies to set up EV charging stations.
Localization: The Japanese market has a unique taste in consumer electronics, such as the consumers here prefer to buy the iPhone SE while their counterparts elsewhere are likely to favor bigger-screen smartphones. The same is true for vehicles. The Kei car category, created by the Japanese government for the smallest permissible cars, is popular among local car users. Of the three models launched by BYD, the Dolphin is very similar to a Kei car. The key reasons why Kei cars are welcome in Japan include:
- Streets are narrow in Japan, especially in major cities.
- There are many mountain roads in Japan.
- Parking space is scarce.

China EV makers going overseas: Challenges and opportunities

Unlike the traditional internal combustion engine (ICE) vehicle era, China’s vehicle makers are big players in the NEV arena. Core NEV technologies like battery, motor and electronic control systems are all now being developed in China also. It is undeniable that China’s NEVs now dominate the market volumes globally. China’s NEV companies and even traditional car companies consider it strategically important to enter overseas markets.

Besides China, Europe and US are the other major markets with good EV penetration and growth. The rest of the markets are still in an educational phase. Therefore, some caution is needed for the NEV makers planning to enter markets like Japan.

The acceptance of the NEV: Although the safety levels of BEVs, PHEVs and FCEVs have improved and reached that of ICEVs, it still needs time for a large number of consumers to trust NEVs, especially in the markets dominated by ICEV manufacturers. But the situation is gradually improving with more and more friends, relatives or other known people using NEVs.

Cost: Many times it is the cost that triggers a purchase or replacement decision. For Chinese NEV makers, cost control is important as still many key parts are made only by a few players.

Better products: Besides the core technologies for the car’s hardware, new applications such as smart cockpit, driving assistant and driverless option are being introduced on the software side to improve the car user experience. Vehicle makers must continue to focus on removing key pain points of target consumers.

Brand power and market competitiveness: Car consumers are more willing to pay a premium for a known brand name. At the same time, many are looking for more bang for their buck. Therefore, it is important for car makers to study consumer behavior and composition of the market they are planning to enter.

Investment and policies: The NEV ecosystem in many markets is still not mature. Huge investments are required to develop this ecosystem, whether it is manufacturing units, service centers, points of sales or charging stations. With the goal of “zero carbon” in mind, many countries provide incentives to NEV makers and consumers, though the risk of policy change always remains.

Price Hikes Slow Automotive Industry Recovery

The global automotive industry has been in turmoil since 2020. The industry and its supply chain were initially disrupted by COVID-19, and then by supply chain chaos when the sector was unprepared for the demand rebound.

With the semiconductor shortage beginning to ease, 2022 was expected to be a better year, as indicated by increased sales during the initial months. But Russia’s invasion of Ukraine and fresh COVID waves in China have further delayed the industry’s recovery. Restricted supplies of critical raw materials procured from Ukraine and Russia are causing new supply chain impacts, driving up raw material prices including that of lithium, cobalt and nickel – the latter by 60% – as well as aluminium and, to some extent, steel. Furthermore, gases used in the production of semiconductors are also impacted – although the overall effect is unlikely to be immediately material. To cope with these cost increases, automakers across regions have reluctantly increased their vehicle prices, despite the likely impact on demand.

China

The Chinese automotive sector is contending with a double whammy – subsidy cuts and sharply increasing materials prices. The country’s government cut subsidies on NEVs (New Energy Vehicles) by 30% in 2022. This was long planned but will impact demand right at the point where escalating costs are increasing prices:

Tesla increased the price of its cheapest Model Y by more than $2,000 in March. The recent inflationary pressure on raw materials and logistics forced Tesla to then make a further price increase, the second time within a week, which looks like bad planning or miscommunication as much as a forced price increase.
Leading Chinese electric vehicle (EV) manufacturer BYD increased prices by $500-$1,000 depending on the model and specifications. BYD is developing and producing LFP batteries in-house but still increased prices twice this year.
Xpeng, a rising Chinese EV start-up, followed in the footsteps of larger OEMs to increase prices by $1,500-$3,000. Smaller OEMs may find it harder to control costs and compete with larger OEMs as they have less control over supply chains.
Other important auto OEMs such as Chery, SAIC, Hozon Auto and Wuling Motor also announced price increases for NEVs.
ORA has been forced to stop taking new orders due to a shortage of chips and other core components.

US

The US recently released its EV policies which are designed to push up EV adoption rates. But the Ukraine crisis and geopolitical tension with China may hinder the country’s plans. The US imports a major portion of its rare earth metal requirement for vehicle production.

To become self-sufficient and to keep the EV adoption progress on track, President Biden may include these rare earth metals under the Defence Production Act, which will enable the country’s mining industry to extract and refine these metals. Mining in the US has been restricted due to its environmental impact. Any resumption of broader domestic mining activity will eventually lead to price decreases, but this is not a quick fix.
Automakers are increasing prices to deal with supply chain situations and simultaneously building inventories as a hedge against future supply chain shocks. The largest EV manufacturer in the world, Tesla, increased prices by $2,000-$12,500 depending on the model from the third week of March. Ford has made significant price increases across several models. The F-150 Raptor was subject to the biggest increase ($3,300).

Europe

The ongoing Ukraine crisis has forced European automakers to halt production lines as the supply of critical auto parts has been severely hit. Moreover, in solidarity with Ukraine’s fight against Russia, automakers have withdrawn from Russia.

Auto OEMs such as Volkswagen, BMW and Porsche temporarily shut down plants to deal with the supply chain disruption. European automakers are dependent on Russia and Ukraine for the supply of raw materials for battery production, wire harness, neon gas and more. However, the level of dependence isn’t so high, which is one reason European automakers haven’t increased prices compared to other regions. There may be another reason, like profit margins, which are higher for European automakers and can absorb some of the extra costs.

Inflation across Europe reached 7.5% in March 2022, up from 5.9% in February. Though no OEMs operating in Europe, except Tesla, have announced price increases so far, we expect them to do so soon. The rising prices of petrol and diesel in Europe have created a favourable market for EVs, so automakers don’t want to disrupt EV demand by increasing prices.

Japan

The Japanese government removed most-favoured-nation (MFN) treatment for Russia over its invasion of Ukraine. This increased import tariffs by 3% to 10%. The demand for aluminium for automotive applications is rising due to the growing demand for lighter-weight products in line with the shift towards electric mobility. For these reasons, the Japan Aluminium Association is also concerned about price hikes, which may slow down BEV adoption in Japan.

German automakers Volkswagen and Mercedes-Benz raised prices by an average of 2% and 1% respectively. Jeep increased prices by 13% from March.
Japanese automakers including Toyota and Honda are resisting price hikes for now, while Nissan is reducing optional equipment and vehicle grades to cope with increased costs. For example, it is eliminating manual transmissions and narrowing the combination of best-selling models.

India

India’s government had extended its Faster Adoption and Manufacturing of Electric vehicles-II (FAME-II) program by two years until March. This initiative is further supported by the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage. India is trying to become a world-class manufacturing destination and more self-reliant in terms of production. As India’s automotive industry is dependent on other countries such as China and Japan for automotive parts, it is becoming difficult for automakers to control input costs.

Indian automakers are also reacting to raw material price hikes by increasing car prices by at least 2%. KIA Motors has increased prices of all its vehicles. Maruti Suzuki, India’s largest passenger vehicle (PV) maker, has also increased the average price of its cars by 8.8% since January 2022. Toyota, Tata Motors, Hyundai and MG Motors have also increased prices for their vehicles across ranges. Even premium vehicle brands such as BMW India, Mercedes-Benz India and Audi India have announced at least a 3% increase in their vehicle prices.
Due to the low EV adoption, high prices of lithium and cobalt have not directly impacted the industry. The price hikes in India are mostly due to the rise in the price of steel. Steel is used in manufacturing vehicle chassis and body. Nickel-containing stainless steel is used in some drivetrain components.
In addition to rising materials costs, fluctuating exchange rates and rising operational costs are other factors driving price increases.

Counterpoint’s Take:

The recent cost increases have already affected the EV industry. 2021 saw EV sales rising by more than 200% but price increases are likely to put the brakes on a continuation of this fast growth. However, while EV sales will slow, sales of conventional ICE vehicles will see more significant declines due to the global fossil fuel price inflation. For 2022, we expect global passenger vehicle sales will be around 72 million, some 5 million units lower than our earlier projections.

Related Posts

Global Passenger Electric Vehicle Sales Fall 8% in Q3 2019

The top three brands, Tesla, BAIC Group and BYD Auto accounted for 40% of total EV sales during Q3 2019.
Subsidy reductions in China continued to adversely affect sales.
EV Sales declined in China and the US, but Europe experienced high growth.

The global passenger electric vehicle (EV)* sales have fluctuated during 2019. They reached a high point in the second quarter but fell back in Q3 to 480 thousand units – down 21% sequentially and 8% annually. When compared to Q3 2018, the EV sales increased in key European countries including Germany, UK, France, and Sweden, but declined in China and the US. Tesla, BAIC Group, BMW and Hyundai performed well, increasing their global EV market share after declining sales of EVs. But many Chinese brands lost market share due to difficult conditions in their domestic market.

Exhibit 1: Global Passenger Electric Vehicle Market Share by Brand (%) – Q3 2019

Commenting on the market dynamics, Soumen Mandal, Research Associate, said, “Reduced incentives and economic uncertainty in China heavily affected EV sales during the quarter. The latest subsidy cut in the country began in June when the government reduced the EV subsidy by 50%, adversely affecting sales during Q3 2019. Moreover, pressure on automakers to upgrade their technology to meet national standards reduced the number of new vehicles launches, which had a further effect of cooling demand. China is planning to cut subsidies completely from 2020 for new EV purchases will see slower growth in the next few years. Reduced subsidies are impacting local Chinese manufacturers, such as BYD, which has already seen deep cuts in its sales volume in 2019. A more measured reduction in subsidies would help the EV market in China adapt to the new pricing situation more easily.”

The top five EV model accounted for one-third of total sales in Q3 2019. Tesla improved its delivery capability around the world, with the Model 3 performing well in the Europe and US markets. Two out of the top five EV model are from the Chinese brands. BYD Yuan and SAIC Roewe Ei5 models were victims of subsidy cut which led them to slip from top 5 EV models in Q3 2019, despite these models providing good specifications.

Exhibit 2: Top 5 Electric Vehicle Models during Q3 2019

Commenting on the brands’ performance, Senior Analyst, Aman Madhok, noted, “Increasing overseas sales helped Tesla to increase its market share in the global EV market. The company is focusing on further increasing its foothold in Europe and China by setting-up new battery manufacturing plants in Berlin and Shanghai.”

Aman adds, “Following the reductions in local subsidies by the Chinese government, the big Chinese brands are looking to expand in global markets to improve their scale. Lower priced Chinese EVs are expected to do well in developing countries, but they face challenges in terms of safety, in-car experience and brand perception. Without an improvement in the China market situation, Chinese EV makers will likely face consolidation.”

Key Takeaways:

Tesla sales grew 19% YoY, reaching 97,000 units, taking 20% of global EV sales. A 40% YoY increase in Model 3 sales due to strong overseas expansion drove Tesla’s performance.
BAIC Group grew by 50% YoY, reaching 47,000 units (despite a slowing China market) due to a better performance of the upgraded Senova, EU and EX series.
BYD EV sales were down by 30% YoY globally, reaching 45,000 units due to the revised New Energy Vehicle (NEV) policy in China.
China is the largest EV market, accounting for 48% of global sales in Q3 2019. But new EV sales decreased by 16% YoY.

*Definitions

The report includes pure electric vehicles (also known as battery electric vehicles – BEVs) and plug-in hybrid electric vehicles (PHEVs). Hybrid electric vehicles (HEVs) are not included in the study.

Counterpoint Research tracks model-level EV sales in 55 countries worldwide.

Analyst Contacts:

Aman Madhok
+91 9560384548
aman@counterpointresearch.com

@madhokaman

Soumen Mandal
+91 8218140908
soumen@counterpointresearch.com

@passtubul

Vinay Piparsania
+91 9971005882 vinay@counterpointresearch.com

@VPiparsania

Neil Shah
+91 9930218469
neil@counterpointresearch.com

@neiltwitz

Counterpoint Research press@counterpointresearch.com

@CounterPointTR

Top Mobile Devices Trends in 2014

Technologically speaking there has never been a dull year in mobile industry. Every year promises and brings in new technologies, disruptions, business models and lots of surprises and we hope 2014 will be another great year for mobile devices segment. Let’s see what we expect to happen in 2014.

Multiple Cores are fine but where is the Memory?

Dual Core processors will continue to dominate sub US$100 smartphones but the differentiation and competition in 2014 will shift to the point to see which vendor (Tier-1 or Tier 4) offers 512MB or 1GB RAM bundled at these price points first. This will unlock compatibility to upcoming platform updates and applications thus reducing fragmentation especially in Android & Windows Phone platforms. Quad-Core smartphones at sub-$100 retail price points will also be on the cards in second half of 2014. Watch out for likes of Lenovo, Samsung, Micromax and MediaTek in this space.

64 bit CPU is here but where are the apps?

Racing to get the 64-bit processors into the smartphones to win back mindshare will remain the hot topic but lack of applications written for 64 bit processing will make it an overserved feature until some OEM or platform vendors steps in to lead in 64 Bit app development (esp. For Android & after Google supports it in 2H 2014).

Watch out for likes of Apple, Qualcomm, Google, Intel and Microsoft in this segment.

LTE Phones reaching mass-market before the Networks

LTE phones which will reach mass-market (sub-US$150 retail) in mature LTE markets in 2014. OEMs will continue to supply LTE-ready phones (for scale) to newer markets and in the hands of consumers before even the LTE networks are live. LTE Device Installed base will be greater than LTE subscriber base and the trend will continue until the LTE plan pricing reaches mass market. China, USA will be the key market to drive this trend in 2014.

Additionally, many operators will leapfrog to LTE-A and hence the flurry of LTE cat-4 devices will start appearing in operator’s shelves.

Watch out for ZTE, Qualcomm, MediaTek and Samsung stimulating mass-market LTE market.

Sharper & Flexible – The New Glass

As Full HD (1080p) displays have gone mainstream at sub US$350 price-points, the battle shifts to getting either a 2K display or a Flexible display into the devices. Displays will remain the battleground for differentiation across price-bands in 2014 allowing OEM to either raise the price or reduce the price for a SKU. In the era of ‘size 0’ smartphones are trending the other way as consumers want bigger and bigger displays every time they are out for shopping their very personal device. Phablets and Tablets together are going to be US$170 Billion worth segments in 2014. Smartphones are achieving steady state towards 5-6 inch whereas tablets towards 7-8 inch formfactors. However, phablets are also poised to overtake tablets next year.

Watch out for LG, Samsung, Toshiba, Sony and Oppo to lead this trend in 2014

Imaging Kickstarts the Sub-Ecosystem wars, who will win it?

The camera resolution, OIS and low-light imaging wars have been reignited by Nokia, Sony and others in 2013 and the competition to differentiate will continue with Imaging as a key differentiator. The differentiation will come in the form of software behind the optics – array imaging, 4K image and video capture, video editing on the go, image stabilization, Kinect style interactions etc. This will kickstart a whole new sub-ecosystem of already popular use-case in a mobile phone – Imaging.

Watch out for Nokia, Sony, Qualcomm & NVIDIA to dominate this space.

Wearables a segment ready for prime-time or just forced down the consumers’ throat?

Appcessories are great as they have revolutionized the different use-cases leveraging apps, sensors and will continue to take off in 2014 and expand across price-bands reaching mass-market.

But do consumers need or want wearables those have another display on it to interact with? Smart-wearables with displays such as smartwatches, glasses are stuck between functionality of appcessories and smartphones. For such smart-wearbles to take-off in 2014 or future years will need a whole new set of ecosystem initiated by a new set of intuitive interaction mechanisms, connectivity technologies, extraordinary battery design, specially designed applications, software and services.

2014 won’t be the year of smartwatches or smartglasses unless OEMs fulfills the above criteria building a unique user-experience or these devices experience an iPhone moment to stimulate the demand. We see supply greater than demand as OEMs (forcefully) try to create a category out of it just to have these devices in portfolio and not being left out. Lots of work needs to be done for consumers to ‘want’ them.

Watch out for long tail of smaller startups such as Pebble, Vuzix, Omate, Misfit to players such as Epson, Symphony Teleca, Varta and bigger players such as Microsoft, Samsung, Google, Jawbone, Nissan and Sony.

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