JSON TV crew and analysts from J'son & Partners Consulting participated in Mobile World Congress 2014 - a key event of the world telecommunications market, held on February 24-27, 2014 in Barcelona, Spain. Traditionally, the Mobile World Congress can be divided into three key areas: consumer devices, network infrastructure, and the development of the overall mobile ecosystem. This report is dedicated to consumer devices.
Consumer Device Market Trends
Affordability becomes the key issue in the market, especially for the smartphones. At MWC−2014, Mozilla announced a 2G/3G platform by its Chinese partner Spreadtrum which created the world’s first smartphone on Firefox OS costing only USD 25. Thus, a new price segment appeared in the world market: ultra-affordable smartphones. In addition, as expected, Nokia introduced its first Android OS based smartphones (budget line: Nokia X, X+, XL Euro 89-109), designed for developing markets, where "junior" smartphones of Lumia series are still too expensive. Despite the availability of the Android OS, these smartphones will not have direct access to Google Play applications, but users will be able to download Android apps from third-party stores (Yandex, Slide Me, etc.) or transfer them on SD cards. And the developers, as Nokia pledged, shall be able to port the original Android apps for the Nokia X series easily. Accordingly, the new lineup uses Nokia/Microsoft services (out of the box are accessible free one month calls with pre-installed Skype, free offline maps and HERE navigation app, as well as One Drive and MixRadio). Microsoft also announced at MWC-2014 the expansion of its partner ecosystem: from now on, Windows Phone devices will be developed also by Lenovo, LG, Foxconn and a number of smaller vendors in China and India.
Major smartphone vendors presented in Barcelona mainly the low cost devices and mid-range models. Exceptions were Samsung, who demonstrated its flagship Galaxy S5 (see the interview with the Head of Product Marketing, Samsung Electronics CIS, Andrei Kamardin), and Sony, with its Xperia Z2. Interestingly, both flagship smartphones got shock-resistant, waterproof cases, as well as cameras capable of shooting Ultra HD 4K (3840 x 2160) video. These features, along with optional LTE-Advanced support, will also become a next big thing in the premium segment for smartphones. The new Samsung Galaxy S5 received also a fingerprint scanner similar to Apple’s iPhone 5S. This fact, in view of scale operations of these two largest players in the global smartphone market, will speed up the development of the mobile payment ecosystem (Samsung already has announced at MWC-2014 a partnership with PayPal).
Among the technology trends it is also worth noting the promising prospects of flexible displays, especially in the segment of tablets and smartphones with new form factors. So, LG introduced at MWC-2014 its firstborn G Flex - the world's first smartphone with a slightly curved 6-inch display (to large extent, LG Electronics received the title "Creator of the most innovative product of the year” at the GSMA Global Mobile Awards ceremony that took place at the Congress). You can learn more about the flexible smartphone LG G Flex from this video at JSON TV.
Another interesting technological innovation is a new version of smartphone by Yota Device with second E-Ink screen. The 2nd generation device has thinner body without physical buttons, elegant design and an enlarged primary screen (5’ AMOLED with 1080р and 442 ppi). The second, 4.7” monochrome display was also updated with curved E-ink touchscreen protected with 3D Curved Gorilla Glass. The company expects the LTE supporting YotaPhone2 to be available on the market in Q4 of 2014. In general, Western analysts take a positive view of the device and of this trend in development of smartphones.
At the same time, an overall shift from 32 to 64-bit architecture can be considered the most promising technological trend in the mobile market. The analysts from Strategy Analytics expect this shift to be fully completed in the period of 2014-2016. Smartphones will be mostly equipped with four-core processors. The average display size has stabilized at 4.5-5” and is unlikely to grow, and HD video (720 and 1080p) is now commonplace.
The strategy of classic PC vendor in the mobile market and the prospects for the market in general can be found in JSON TV’s interview with Vice President of ASUS, Benson Lin here. In particular, the company's top manager tells about two products: ASUS PadFone (smartphone and tablet combo), and the Zenfone smartphone line with Intel chipsets. Speaking about prospects of the mobile market up to 2020, Mr. Lin expressed confidence that the market will continue to grow steadily. Cloud computing will become a common practice. It will be the real "mobile" era. People will use mobile gadgets exceedingly more often, and will be able to receive any information - immediately. All the necessary technology is already available today. Speed of LTE network already exceeds the cable capabilities. Can you imagine what will happen in 5 years? Wireless communication will open up instant access to any information on your personal mobile device. It’s simply breathtaking... Speaking about form factors for future devices, Mr. Lin thinks that everything will be determined by our preferences. When you keep a gadget in your hand, its size is very important? - that is why we cannot make a mobile device too big, we simply won’t be able to hold it in your hands. So ASUS’ Vice President Benson Lin is sure that in 2020 devices will have improved ergonomics and would become more comfortable.
Mobile Market Trends
The market trend shows that mass launch of LTE networks in developing country markets gradually increases demand for affordable LTE smartphones, costing sub USD 100. Such devices are not yet available on the open market but MediaTek, which dominates in segment under USD 200, has already announced a four-core LTE platform with 64-bit architecture for “super-medium” price range. LG also announced a budget smartphone, LTE-F70 (4.5” display, 4 x 1.2 GHz processor, 5 MP), however, it did not disclose the pricing. It is also interesting that the largest Russian mobile carrier, MTS, originally bet on affordable brands of LTE smartphones, as opposed to a high-end models of Apple, Samsung and Nokia. In carrier’s opinion, this, along with 4G rates similar to 2G/3G pricing, will increase the number of LTE smartphone users. This strategy has already been successfully tested also by Orange, who has launched 14 models of devices under its own brand in 2013 and was able to increase sales by 40%. The goal of Orange, who has LTE network in 10 countries, is to reach low income 4G subscribers with inexpensive LTE smartphones (e.g., Orange Reyo). In general, the focus on the budget sector worked out quite well. The other success story is Alcatel OneTouch who achieved impressive success in the emerging Latin American markets, getting to the second place by sales level in the region. In Q4 2013, the year-on-year sales growth was 60%, more than 50 million devices were shipped.
The second key trend in the consumer market - so-called wearable devices, which are expected to have a great future. According to Strategy Analytics estimate, a market for wearable devices will reach 125 million in 2017, with the predominant area remaining the fitness/sports/health monitoring and smart watch, jointly occupying up to 70% of the market. With regard to new products in this area, Samsung presented at the Congress not only Gear Fit curved screen fitness band (the company received «Best-in-Show» award for this device, which is particularly the first one ever for wearable devices), but also an updated version of Gear 2/Gear 2 Neo smart watches running by Tizen ОS with lower power consumption. “Wearable device is the category that was up to us, but we came in and made it really big. Launched Gear on the market only in October last year, we have already got a 54% market share in wearable devices. We expect that there will be a real revolution in the next three years; pretty soon people will forget the ordinary watches because they are just inconvenient compared to Samsung Gear. The first generation of Samsung Gear worked on Android OS, in the second we moved to Tizen OS, because there was a very important request from the consumers for compact, "long-lived" watch which needs to charge rarely. Tizen is very energy efficient operation system; despite the fact that Gear 2 added a lot of new functionality, now instead of one day without charging, this watch can live up to three days", - commented Head of Product Marketing, Samsung Electronics CIS, Andrei Kamardin (you can watch full interview with Mr. Kamardin about Samsung’s vision of mass market tech trends here).
This fact demonstrates the first example of Tizen’s move to truly mass market. The commercial launch of smartphones based on this operating system is expected in 2014, hopes Roy Sugimara, Director of Product Department, NTT DoCoMo and Chairman of the Board, TIZEN Association. According to him, nowadays technologies are changing so fast that nobody knows what will happen tomorrow. In such circumstances, TIZEN Association tries to create and maintain in this consortium an atmosphere of artistic freedom, where all bold ideas can be openly expressed and realized. And Mr. Sugimara is sure that already in very short time end users will see the tremendous benefits and convenience that Tizen brings to ordinary things. There’s already a video camera with Tizen OS, as well as a home automation system of that supports not only mobile but fixed connections. In the future TIZEN will move on to supply and service of digital HDTV. Increasingly, we hear that Tizen can be used for refrigerators and other appliances, which are projected to get much smarter soon - he said. You can watch an interview with Roy Sugimara about development and growth of Tizen OS at JSON TV here.
Market does not stand apart from the new trend – Telefonica, one of the largest mobile carriers, announced at MWC-2014 its alliance with LG, Samsung and Sony Mobile to promote wearable devices and develop appropriate business models of their mass usage. Motorola (recently acquired by Chinese Lenovo from Google) also tries to jump on bandwagon - the company promised to announce its own wearable device later this year. Huawei, in addition to several new traditional subscriber units, also presented its view on the concept of wearable devices. In his interview to JSON TV, Shao Yang, Huawei’s VP of Consumer Marketing Department, explains how the company became No.3 smartphone vendor in 2013. “Just three years ago, nobody heard of Huawei's name, because we did not supply consumer devices straight to the market under own brand, we sold it to mobile carriers under white labels. But three years ago we began a transformation from B2B brand to consumer brand, from OEM to ODM, from cheap brand to brand of medium and higher price ranges. And over the last three years we have made substantial progress. If you read the latest reports from IDC, Gartner and other main researchers, you saw that last year Huawei became the No. 3 brand in the smartphone market (5.1%), right after Samsung and Apple». You can watch the interview with Huawei’s VP of Consumer Marketing Department Shao Yang in full at JSON TV here.
Speaking about current mobile market trends, Mr. Yang particularly noted that usage paradigm in mobile communications is shifting from voice to data very quickly, moreover, development of 4G networks and mass popularity of OTT services will have direct effect on the market of mobile subscriber units. According to Shao Yang, MWC-2014 was far more extensive and interesting than last year, because many vendors have provided really innovative solutions. Mr. Yang are sure that out world is becoming more and more unpredictable. For example, until recently, all cell phones on the market looked like an army of twins; most of them were like the iPhone. This is not surprising - iPhone has set standards for the form factor of 3G-era. But here came the 4G era of tenfold increased speeds, with fundamentally new requirements to processing power, and user experience began to change. So in the next few years, Mr. Yang expects a new wave of innovation and ideas – such as, for example, MediaPad X1 “phablet” that Huawei showed at MWC-2014. A video-presentation of this phablet available here.
It is also worth noting that as the average world price of smart phones drops, the Chinese vendors, inevitably, will occupy an increasing share of the smartphone market. And this becomes one of the key trends in the global smartphone market. Thus, according to Strategy Analytics, in Q4 2013 Huawei, Lenovo, ZTE, Coolpad and TCL-Alcatel collectively accounted for almost 20% of the market. Meanwhile, Chinese vendors can offer not only products with good value "price-quality", but start to supply quite innovative solutions. For instance, ZTE’ MyDrive voice control app for drivers’ smartphones, developed for flagship smartphones ZTE Grand Memo II exclusively. A small demonstration of this smartphone’ voice controlling application for drivers you can see here.
During the MWC 2014, the JSON TV crew produced about 40 videos that are available on the JSON.TV website. These includes an interview with Ralph Simon, the founder of the world mobile entertainment industry, the "father of the ringtone" and General Director of Mobilium Global Group (here), as well as interview with major network infrastructure vendors, analysts, the world's leading research agencies, who shared their thoughts on global industry trends and assessed the development of Russian mobile carriers.
Interviews with LG, NTT-DoCoMo, ASUSTek Computer, Samsung Electronics and other exclusive materials are available at JSON.TV portal:
1. MWC−2014. Benson Lin, Corporate Vice President & General Manager of Mobile Communication, ASUSTek Computer. February 2014. Spain.
ASUS mobile device market strategy.
Presentation and market prospects of ASUS PadFone and Zenfone. Mobile market predictions to 2020.
2. MWC−2014. Roy Sugimara, Director of Product Department, NTT DoCoMo & Chairman of the Board, TIZEN Association. 2014. Spain.
Current and future development of Tizen OS
The reasons for NTT DoCoMo participation in Tizen Association, current development of its ecosystem, market prospects, whether there will be commercial Tizen OS based smartphones.
3. MWC-2014. Shao Yang, VP of Consumer BG Marketing Department, Huawei Device. February 2014. Spain.
New Huawei devices at MWC-2014
Presentation of Huawei’s new consumer devices, including the world's first commercial LTE-Advanced router for Russian carrier MegaFon (300 Mbps) and Huawei’s view on wearable devices.
4. MWC-2014. Andrey Kamardin, Head of Product Marketing, Samsung Electronics CIS HQ. February 2014. Spain.
Samsung and mass market tech trends3.
How Samsung advances and produces mass market trends, bringing new categories: Samsung Galaxy Note with S Pen; Samsung Galaxy Mega phablets; Samsung Galaxy Zoom; Samsung Gear. Why OS Tizen was selected for a new generation of Gear smart watches? How does Samsung responds to reduced PC market demand.
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.