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.

9 out of 10 Handsets Sold in China are Smartphones

Smartphone momentum continues in the world’s largest mobile market, China. According to the latest Monthly Market Pulse Report from Counterpoint Research, smartphone sales in China reached an all-time monthly high of 30 million units in August 2013. The smartphone penetration of the total handsets sold also reached a record high of 91% topping many developed markets such as USA which reached 87% during the same month. China is now almost three times larger than the US market after it surpassed USA last year to become the largest smartphone market globally.

Most of the contribution came from the domestic players such as Lenovo, Huawei, Coolpad, Xiaomi and ZTE boosted by their broader smartphone portfolio and expanding distribution reach. These vendors realized healthy sell-through after a channel inventory built-up in July 2013.

As a result, Android OEMs captured a combined record 96% share during the same period. While Samsung saw its share dipped to 15%, Lenovo maintained the number two spot with 11% smartphone share. Meanwhile, Nokia (& Windows Phone) surpassed Apple (& iOS) thanks to better movement for lower-priced models such as Lumia 520. But we believe this is a temporary setback as Apple will likely regain significant share from competition with the new iPhone 5s & 5c launches starting September 2013.

The premium smartphones’ growth significantly slowed in China in August 2013 following a small spike in May & June with Galaxy S4 launch. The key reasons being a dip in iPhone sales in anticipation of newer iPhones plus a shift in operator subsidies towards mid- to lower priced models.

The real volume growth driver in August 2013 was the sub-US$200 wholesale price band smartphones. Domestic vendors captured more than three-fourths of this fast growing segment thanks to smartphone retail prices reaching feature phone levels. Furthermore, the generous subsidies from Chinese operators significantly lowered the barriers for consumers to purchase these smartphones. Feature Phones are thus quickly moving towards oblivion and are disappearing from majority of OEMs’ product portfolios and & Operators’ shelves.

Figure 1: China Smartphone Sales* & Sales Penetration % Trends

China Smartphone Sales & Sales Penetration % Trends

Figure 2: China Market Smartphone Sales Share August 2013

China Monthly Market Pulse OEM Smartphone Share August 2013

Source: Monthly Market Pulse August 2013

* The numbers in this press release only account for the official and legitimate channels.

Apple iPhone 5s & 5c : Forget Low Cost Its Just High Profit !!

The most awaited launch event of the year kicked off today as Tim Cook unveiled the very expected iPhone 5s (but with a smaller s) and to everyone’s surprise a second new flagship the ‘iPhone 5c’ and not a “lower-cost” or lower-specced iPhone. So many Analysts will have to now revise (lower) their iPhone volumes outlook for Q4 2013.


iPhone 5s & 5c Flagships – Global LTE Ready

Apple is ignoring (again) the high growth smartphone markets especially the unsubsidized emerging and prepaid developed markets. Our Market Outlook service estimates that sub-US$300 smartphone price bands will contribute to more than two-thirds of the smartphone volumes globally in 2013. This is the segment which Apple is bravely ignoring and will be almost absent for some time now.

Apple’s strategy is clear here which is that it’s on an offensive to strengthen its position in “high-value” and “high-profit” premium smartphone market and protect its lion share of mobile industry hardware profits by clawing back share away from Samsung, LG , HTC and others. Apple has done three things right which will work in its favour atleast for the near- to mid-term to maintain its profit leadership:

1. Multiple Flagships Strategy: Apple is following its competitors such as Samsung (Galaxy Note 3 & S4), Sony (Xperia Z & ZL), Nokia (Lumia 1020 & 925) and Lg (Optimus G2 & G Pro) going with multiple super premium high profit flagship models i.e. iPhone 5s and iPhone 5c both with rejuvenated software, hardware design and features will provide fresh differentiated offerings to stimulate growth.

2. Multiple LTE band Support: Apple wants to tap high-growth areas within US$300 and above segments and that growth will be coming from LTE segment. We estimate almost 89% of the LTE smartphone volumes will fall in the  US$300+ and above trade ASP smartphone segment. So with iPhone 5s & 5c which has multiple SKUs out of which some support upto 13 LTE frequency bands (e.g. Model A1456) with one SKU (A1529) supporting three TD-LTE bands as well out of which one sits perfectly for China Mobile’s future TD-LTE roadmap. Apple aims to challenge Samsung and others in this LTE race maintaining its profit leadership with iPhone 5s and 5c and at the same time maintain scale and provide a solution to the fragmented  global LTE spectrum.

3.  Expanding TAM: With the new launches Apple also announced it has expanded its distribution reach to one of the world’s “premium” and advanced carrier, NTT Docomo, Japan with access to 60 million richer subscribers. The next big step would be China Mobile and TD-LTE capable SKUs of the new iPhones will help achieve that in next few quarters once the deal is finalized and tap into a subscriber base of 750 million users.

In addition to above key points the overall design change remains tangible from the main flagship perspective apart from the cosmetic changes and few unique features of iOS7,  moving to 64 bit arch as well as taking biometrics mobile  (in iPhone 5s) courtesy last year’s acquisition of Authentec. These incrementsshould be (again) enough for Apple loyalists in subsidized postpaid markets to upgrade but we still warn about a higher-level of ‘iPhone ecosystem fatigue” which could slow down the greater than expected sequential growth in some markets.

However, this gives a great opportunity for Samsung and others to attack the rest of the two-thirds of the smartphone market and maintain huge marketshare lead over the next few quarters and at the same time squeeze Apple with cutting-edge premium hardware as done by Samsung, HTC, LG and Nokia in the last two quarters.

Apple has thus for now given up the “low-cost” strategy and will continue in its march to just go after profits rather than volumes (market share).

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