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    MWC17 A feature phone steals the show…

    A feature phone steals the show… The launch of the new Nokia 3310 was the highlight of Richard Windsor, Analyst at Edison Investment Research’s show –which is an indicator of how difficult it has become to innovate in smartphones

    Mobile World Congress saw a raft of handsets rolled out – but it was the launch of a revamped Nokia 3310 phone from yesteryear that really got people talking. But it is a feature phone and shows just how hard it is now to gain any edge with handsets.

    The launch of the new Nokia 3310 was the highlight of our day which is an indicator of how difficult it has become to innovate in smartphones. Industry profits are gobbled up by Apple, Google, Baidu, Tencent and Alibaba leaving those without an ecosystem struggling for relevance. Add this to a market that is unlikely to grow much in unit terms and may decline in monetary terms leads to a pretty grim outlook all round. This is why we continue to prefer the ecosystems of whom Tencent, Baidu and Microsoft are our top choices.”

    That said, here are some of the key roll outs at this year’s show.

    Huawei – Rear view mirror

    Huawei launched its latest flagship the P10 and P10 plus but did not seem to be very excited about its products in a press conference that felt like it was simply going through the motions. This was exemplified by the fact that Huawei had Pantone on stage talking for 15 minutes about two of the multiple colour variants in which the P10 is being launched.

    Elsewhere, Huawei made incremental improvements to the camera and photography experience as well as marginal tweaks to the user experience. At its heart, just like every other Android phones in developed markets, the P10 is a Google device and where Huawei is able to drive further usage, it will be Google that really benefits. This is because, Huawei’s products remain largely undifferentiated to the user meaning that Huawei cannot charge a premium.

    Huawei has made good progress with its brand this year rising to No. 72 (Interbrand) but even Samsung at No. 7 only really makes money from its volume, not premium prices. Consequently, Huawei must find something with which to excite users otherwise it will continue to grind out 2-4% operating margins in the best instance. Huawei has made good share gains but barely enough to be seen only as a dot in Samsung’s review mirror.

    Nokia – No downside to old glory

    Nokia relaunched itself into the handset market with a throwback to its old glory days but the key ingredient, profit, looks unlikely to make a reappearance. Global HMD, a company backed by Foxconn, launched three Android devices and new version of the classic 3310.

    The 3310 has three features of note: the battery lasts a month, it has the Snake game and it has the old Nokia ringtone. Beyond that it is a design classic and while not sexy, it is likely to appeal in Africa and India where nearly 100m feature phones still sell each quarter. Global HMD also launched the Nokia 3,5 and 7, which are three unremarkable Android devices that are really going to struggle to compete against the Chinese brands.

    The real clue to the situation at Nokia and HMD Global is in the prices being charged for these new devices.

    The 3310 is starting at $51 which in Nokia’s heyday would have been priced at almost half that and Nokia still would have made great margins on it. The Android devices are priced at $150, $200 and $315 which in my opinion do not stack up that well against what the Chinese are offering. This is clearly because Nokia no longer has the power of 40% global market share or its brand.

    Consequently, if it wants to make headway in Android, it will have to do something interesting with the devices or cut its prices. Good news for Nokia (the company) is that its exposure to this is simply the brand license fee that it receives upon which gross margins will be almost 100%. Consequently, there is no downside for Nokia if this does not work out as planned.

    Samsung – Comes in the box

    Samsung launched a series of devices that need to have the accessories included in the box to drive user interest high enough to make a purchase. Following a pitch on the needs of 5G and the launch of some infrastructure, came 2 tablets of which innovation around the new S Pen was the most interesting.

    The Samsung Galaxy Tab S3 which was an unremarkable Android Tablet other than it has four speakers and that the S Pen comes in the box. The Galaxy Book which is a Windows 10 Pro tablet that is very thin but in my opinion is far from cutting edge. At the cutting edge, we find the Eve V which is 7th generation i7 and is remarkable in that the device is fan-less. The Eve V is a little thicker at 8.9mm but it delivers a more powerful processor, double the RAM, double the storage, more USB ports and a kickstand.

    To jazz the Galaxy Book up Samsung is including both the S Pen and the type cover in the box with the device. The S Pen stole the show as it works with both Android and Windows Tablets, is integrated with Photoshop and Staedtler is doing a version of the S Pen that looks just like its classic yellow and black pencil.

    Finally, a new version of the Gear VR was launched in conjunction with a hand controller that, of course, also comes in the box. Of software, services, artificial intelligence and ecosystem there was no real mention other than a nod to Samsung’s cross device strategy powered by Samsung Flow. The net result is that with the launch of the Galaxy s8 now on March 29th, these launches are unlikely to have any real financial impact this year even with the accessories already in the box.

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