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European smartphone shipments fall to lowest Q1 total since 2013

A new report from Counterpoint Research's Market Monitor service shows European smartphone shipments dropping by 12% year-on-year in the first quarter of 2022. That's the lowest Q1 total since 2013.
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Qualcomm legal action moves forward in the UK

Qualcomm legal action moves forward in the UK

Which? seeks payout for Samsung and Apple smartphone owners

Consumer protection organisation Which? has been given permission by the UK's Competition Appeal Tribunal to represent Apple and Samsung smartphone buyers in a legal case against chip manufacturer Qualcomm.
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Google announces new devices

Google announces new devices

Pixel Watch, smartphones, earbuds and more

Google's 2022 I/O conference for developers has seen the company previewing new products, including its Pixel 7 smartphone, a Pixel tablet and the first smartwatch entirely built by Google.
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UK advertising watchdog says Tesco Mobile ads were offensive

UK advertising watchdog says Tesco Mobile ads were offensive

The Advertising Standards Authority has ruled that a number of recent Tesco Mobile advertisements were likely to cause "serious and widespread offence".

Newspaper ads, digital outdoor posters and a Twitter post were investigated after 52 complaints.
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Apple launches self-service repairs in the USA

Apple launches self-service repairs in the USA

DIY iPhone repairers can now order official spares

Apple has launched 'Self Service Repair' in the USA, enabling consumers to obtain repair manuals, Apple parts and tools from an official Repair Store. The service will be expanded into additional countries later this year.
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Opinion Articles

Friday, April 18, 2014

Smartphone innovation is slowing down, as Samsung struggles to differentiate

Lawrence Lundy of Frost & Sullivan writes:

While the Galaxy S5 is an evolutionary product, there is not enough in there to make people upgrade from the 4. It doesn't push the envelope in any real way; we are in a sort of stasis now when it comes to smartphone innovation. We are going to see sustaining improvements as the market reaches maturity. That is not to say that smartphone innovation is finished, but much of the innovation is going to come from the introduction of sensors into the phone, and the improvements in software, and how the phone will interact with the range of wearable devices. The innovation will move away from hardware towards the kinds of services and platforms that are enabled on the phones. Services such as ordering taxis, mobile payments, and location-based services will add value on top of the smartphone platform.

High-end - Extreme pressure from Apple, less differentiation
In the premium segment, Samsung's scale and supply chain strength is less of an advantage. The key to success in this segment is differentiation, and as the market has matured it is less about features and more about design and brand. As competitors such as HTC, Huawei and ZTE catch up quickly on design, brand differentiation is critical, as well as the omnipresent Apple, its success with the premium line comes down to a huge marketing budget and a huge spend across the channel.

Samsung are now completely unable to differentiate on the software side with Google driving Android consistency. 25% of Android handsets sold in China last year did not include Google services, and therefore were not as valuable to Google. The company is therefore preventing fragmentation of Android, making it even harder for Samsung to truly differentiate itself.

Low-end - BOM falling to less than $20
Margins are coming under continuing pressure and price leadership has been difficult to maintain in emerging markets with OPPO, Wiko, Micromax, all producing handsets in the $100-200 segment. The bulk of Samsung's business, despite the high profile nature of its Galaxy line, is in the mid to low end. This is where Samsung is losing share as other cheaper manufacturers build capacity and experience, and can utilise lower labour costs. The bulk of growth in the market will come at the $200 and less price points, and these segments are simply less profitable than the high-end. For Samsung this means increasing pressure on margins.

Long-term - Value and profit will be captured higher up the stack with apps and services
A long term view would ask where does Samsung see itself in the value chain in the internet of things. Profit will be captured at the data and app layer rather than the hardware layer which is where Samsung's competitive advantage lies. The proliferation in internet-enabled devices will offer vast hardware opportunities for Samsung, especially with its expertise manufacturing hardware such as refrigerators, washing machines, and TVs. Samsung already has the largest portfolio of hardware, and it has a huge opportunity to connect these and really add value for the customer. However, Samsung does not have the internal software and machine learning capabilities to provide best-in-class solutions in the post-mobile world.

Lawrence Lundy is an ICT Consultant for global consultancy Frost & Sullivan.
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