MWC Smartphone Announcements Symbolize a Changing Market

This week has seen a slew of announcements from major smartphone manufacturers in conjunction with the global mobile industry’s annual event, Mobile World Congress, held in Barcelona, Spain. All the usual suspects, except Apple, have introduced new phones or other devices at the show, including a number of the flagship phones these vendors will sell over the coming year. You’ll find reviews aplenty elsewhere, so I won’t attempt another here. There are several themes that emerge from these device launches, which are symbolic of changes in the smartphone market and its competitive dynamics.

Android vs. Android, not iPhone

One of the biggest changes in the competitive dynamic is the largest Android vendors are now competing against other Android vendors more than they’re competing against the iPhone. Though the Android vs iOS and Samsung vs Apple rivalries have dominated coverage of the smartphone market over the last few years, focusing on these today misses some of the broader movements in market share. Though Google’s latest Android ad campaign continues to fight the platform wars, most of the individual vendors on the Android side are more focused – rightly so – on differentiating themselves from their Android siblings.

The simple reason is the differences between iOS and Android are clear and have been so for years now. Most people with the ability to buy either have long since made a choice and, although there are always some switchers, most of the switching is going from Android to iOS, especially in mature markets. At the same time, premium Android smartphone makers are suffering much more from the encroachment of hitherto low-end competitors also running Android into their target markets. Competition from smartphones with similar specs and running the same version of Android is tough and as such, these vendors have to demonstrate how their implementation of Android is different. Hence, you see Samsung focusing on things like its always-on screen, its improved camera, water and dust resistance, and the inclusion of the Vulkan APIs for graphics.

Beyond the phones themselves, several major vendors also pushed accessories, including Samsung’s Gear 360 camera, LG’s swappable Friends modules, and Sony’s Xperia Ear wireless earbuds. Each of these companies is attempting to build its own ecosystem of devices independent of Android, to try to drive user loyalty to its particular brand rather than to Android in general. Although Xiaomi’s focus at MWC was another implementation of its vision of high specs at low prices, with a Snapdragon 820-based Mi 5, it has long offered a wide range of other consumer electronics products under the Xiaomi brand.

Enterprise an increasing focus

Though these companies are all trying hard to differentiate themselves, they’ve gone through several interesting cycles in this regard. Samsung focused overly much on gimmicky features a few years back, turning its annual keynotes into litanies of features and UI elements no one would ever discover or use. Somewhat chastened by its slowing growth, it then dialed back these customizations but, in the process, went from meaningless differentiation to little differentiation. Over the last couple of years, we’ve seen an increasing emphasis on premium hardware paired with more meaningful innovation in software and that’s definitely an improvement. But many other Android vendors are arguably heading in the same direction and that’s where Samsung’s enterprise strategy comes in.

The enterprise is one area where no other Android vendor has a serious standalone strategy, despite some efforts a few years back from some of them. Samsung’s Knox solution has turned into a really solid offering for enterprise customers who want to offer their employees Android devices without sacrificing security. Knox allows Samsung to overcome many of the inherent weaknesses of Android from an enterprise security perspective while adding additional layers on top to provide businesses with better manageability and separation of consumer and enterprise data. This year at MWC, it added its Enterprise Device Program and a connected vehicle solution to the mix. The EDP builds on Samsung’s work to bypass the standard Android update program to provide faster patches for security issues, as well as guaranteeing longer life cycles for enterprise buyers of Samsung smartphones. The connected vehicle solution will certainly have a service-oriented consumer solution too, but will also be part of Samsung’s expansion into enterprise services beyond the smartphone. Samsung is here extending its lead in the enterprise in a way no other Android vendor can match and this is differentiation that will stick. The other benefit is enterprises will be willing to pay a premium for these features, helping Samsung to maintain margins.

Samsung wasn’t the only smartphone vendor to target the enterprise at MWC – both Vaio and HP announced business-centric smartphones running Windows around the time of the show. However, in both cases, businesses would be wise to exercise caution about jumping on board with vendors that have shown little commitment to enterprise smartphones in the past. It’s clear that, as Windows on mobile devices becomes ever less relevant in the broader smartphone market, it may well find refuge in enterprises looking to commit to an end-to-end Microsoft solution for their devices.

Xiaomi – disrupter turned disrupted

I’ve mentioned Xiaomi briefly already, but I’ll just close with this thought: it’s intriguing to look at Xiaomi and what’s become of it over the last couple of years as a lesson in trends in the Android market. Xiaomi broke into the market during a brief window of opportunity when it was the only Android vendor offering iPhone-like products at much lower prices. It did very well during that period, growing rapidly off the back of a mix of truly cheap handsets and competitive priced mid-range handsets and both Xiaomi and many observers expected it to continue to do so. But that window of opportunity began to close as a number of other manufacturers adopted a similar strategy but without the flashy marketing, thereby disrupting Xiaomi much as Xiaomi had intended to disrupt others. Having originally set a target of 100 million smartphone sales in 2015, it ended the year with just 70 million. It’s not clear things will get much better in 2016. The Mi 5 is more of the same, though now with a Qualcomm processor, but even as it seeks to undermine Samsung and other premium Android vendors, its own strategy of cheaper but serviceable alternatives is likely to continue to come back to bite it both in China and in other markets. The Android market is essentially eating itself, pulling down the premium vendors and depressing margins, even as Apple continues to plough its own furrow without anything like the same threat of disruption.

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Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

7 thoughts on “MWC Smartphone Announcements Symbolize a Changing Market”

  1. What strikes me about MWC’s phones is the focus on visual design and materials, and the convergence we’re seeing about that. Even lower-end phones are adopting the metal unibody design pioneered by HTC and popularized by the iPhone, many with what they call 2.5D (tapering at the sides) front and back and rounded borders and corners. Reviewers are having to get down to how metally the metal feels to try and make a distinction…

    Internals seem to be still progressing at a fast pace. The 820 and 8890 are the huge jump that the A72 wasn’t, the GS7’s camera seems to be night and day (or the reverse, seems to be able to make daylight pictures in the night)…

    It’s also the first time in a while we aren’t seeing flagships get bigger: LG’s G5 has shrunk, Samsung hasn’t announced PLUS variants of the S7, ditto others.Thankfully 2nd/3rd tier OEMs and Huawei are still catering to me and fellow Magoos.

    Nobody around me is talking about urgently upgrading though. It seems Android reached “good enough” around the 4.0 version as an OS and 4.4 still allows all apps and features (Pay, Wear…); 2yo hardware is still OK too it seems. I used to struggle to not change phones more than once a year… my current one is 18 months old and I don’t yet feel the urge… Incremental progress is fine but we’re missing a killer feature, and VR isn’t it. Updates or maybe something Continuum-like (which some OEMs have, but aren’t advertising well) might be it…

  2. Android v. Android i.e. the Race to the Bottom, up close.

    What is mystifying is that all this has been foretold at the very beginning. Not only foretold, but even demonstrated (by Windows), and yet all these manufacturers still believed that somehow things would be different with smart phones. Or did anyone go into Android smartphones thinking they’ll make a few hundred million dollars the first few years then get out when margins disappear?

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