Scary times ahead for smartphone vendors: analyst

The underlying issue is that the phone vendors have a massive issue with differentiation

The rest of 2012 will be very challenging for smartphone makers as they struggle to find ways to differentiate their "black slabs," Richard Kramer, managing partner at Arete Research, said during the opening address at the Open Mobile Summit conference in London.

Smartphone sales will total between 750 million and 800 million units and add up to over US$230 billion during 2012, according to Kramer. However, Apple, Samsung Electronics and HTC are the only vendors making money, he said.

"This problem is going to get worse in 2012," said Kramer.

The underlying issue is that the phone vendors have a massive issue with differentiation, while new entrants are expecting lower profit margins. The mobile phone industry has in the past three years moved to making products that for the average consumer all look like flat black slabs, Kramer said.

The end result is that the PC market model is coming to smartphones, according to Kramer. At the same time costs, including patent licensing and marketing, are going up for the phone vendors, which makes the current situation even scarier, he said.

To save themselves, vendors are going to have to change.

"I see this industry moving into what I call the "after hardware" phase. We have done hardware, and we all have high-speed touchscreen smartphones in our pockets," said Kramer.

One of the ways vendors are hoping to differentiate themselves is by integrating the smartphone with other types of devices, including the TV. For example, Sony is hoping to revitalize smartphone sales by taking advantage of its other consumer electronics products.

But that isn't going to happen overnight, according to Steve Walker, chief marketing officer at Sony Mobile Communications, who took part in a keynote panel at the Open Mobile Summit.

"We don't converge everything all at once. The consumer doesn't go into a mobile phone store and say I'd like to buy convergence, please. But what they do is start with one thing and then connect it to another, and maybe they try a few services, and before you know it things are really starting to work together," said Walker.

When phones look the same, brand becomes very important when people are standing in the store about to pick a new phone.

But just a well-known brand isn't enough, according to Walker. The product still needs to live up to the brand image if the consumer is going to buy a phone from the same vendor again, and more importantly recommend it to friends, he said.

The smartphone market isn't just about high-end smartphones for the US and Europe, according to Kramer. What is happening in emerging markets is just as interesting, and just as consumers in these parts of the world have bought cheap phones they will increasingly buy cheap smartphones, which will cost below $100, going forward.

"Emerging markets will be about 60 per cent of smartphone sales next year," said Kramer.

For example, Vodafone is about to launch the Smart 2, which will offer the same performance as a high-end smartphone did three years ago, according to Vodafone's group terminals director Patrick Chomet, who also took part in the discussion.

Smartphones in emerging markets will increasingly be co-branded with some sort of Web service, while tablets will become the low-cost computing platform, according to Kramer.

Two terms often used in the smartphone market that Kramer isn't a big fan of are "commodity" and "open".

When Kramer hears commodity he thinks of corn, copper and wheat, not something that an R&D department spends nine months to develop; he believes that something that is truly open has become myth. The likes of Apple, Google, Facebook and Amazon aren't interested in it, according to Kramer.

"None of these guys want open ecosystems," said Kramer.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknas

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?