SINGAPORE: The world’s top smartphone players are gathered in Barcelona this week for the annual Mobile World Congress (MWC), with the likes of Samsung Electronics and Sony unveiling new products, but few analysts believe this will be enough to reverse decelerating sales worldwide.
“The tech geeks are excited about what they are seeing, but the general buyer is likely struggling with why they should buy a new smartphone,” Rob Enderle, president and principal analyst of technology advisory firm Enderle Group, told Channel NewsAsia.
After nearly a decade of skyrocketing double-digit growth, sales of smartphones worldwide have slowed from their heady highs in recent years. Latest figures from US research firm Gartner showed smartphone units sold in the final quarter of 2015 rose just 9.7 per cent from the same period last year, logging the market’s slowest growth rate since 2008.
Even Apple has not been able to escape the slowdown. The Cupertino-based tech giant reported its slowest-ever increase in iPhone shipments last month.
Apart from subdued global growth and currency weakness in key emerging markets sapping consumers' spending power, a combination of already-high smartphone ownership in developed markets and a lack of real innovation means that fewer consumers are feeling the need to purchase new handsets.
“We believe the smartphone industry is becoming more like fast-moving consumer goods (FMCG) industry, as the hardware becomes highly commoditised with little differentiation to offer from different brands,” said Neil Shah, a director of Counterpoint Research in Mumbai.
MORE INNOVATION NEEDED
One phone maker that market watchers have been less than impressed with is Samsung, which launched two new versions of its Galaxy S smartphone at the MPC industry show this week. The South Korean tech giant re-introduced popular features such as a waterproof design and expandable storage space into its flagship range, but analysts noted that the Galaxy S7 fell short of a “ground-breaking upgrade”.
“Bringing back these features from the S5 is a good move, but whether it’s enough remains debatable. Given that users can switch freely to other brands with the Android system, Samsung has to do more to retain users,” Tay Xiaohan, senior market analyst at IDC’s Asia-Pacific Client Devices Group, said in a telephone interview.
To be sure, there are other industry players who have fared slightly better. South Korea’s LG, for instance, introduced a modular design to its new G5 smartphones, which Ms Tay described as an "innovative element which can create buzz”.
For TECHnalysis Research’s president and chief analyst Bob O'Donnell, HP’s new Elite X3, which is touted by the US company as a possible PC replacement for light-duty tasks, was the “intriguing” product that caught his eye.
“With some of the hardware accessories that the company specifically developed to be used alongside it, and the capabilities of Windows 10 Mobile’s Continuum features, the X3 can morph into a full-on, big-screen computing device,” Mr O’Donnell said in a commentary titled The Devices Formerly Known as Smartphones.
“It’s not clear to me that a device like the X3 will become most people’s only, or even primary, computing device. Nevertheless, in a world where people are looking for more flexible computing options, and are accustomed to working across multiple devices, the X3 concept seems to be well-timed,” he added.
However, with 2016 shaping up to be another tough year for global phone makers, more innovation will be needed to mend the fortunes of the smartphone market, analysts said.
“What gets consumers excited is mainly the design evolution across hardware and software. We need to see more such that enhancements in camera, one-touch digital commerce, control of peripheral hardware and accessories via apps are some things which may excite consumers,” Counterpoint’s Mr Shah said.
Apart from product innovation, industry players also have to step up their efforts in emerging markets such as India, where consumers still prefer cheap phones.
In 2014, 42 per cent of smartphones sold in India were priced below US$100, according to data from Bernstein, and the competition on price is set to intensify with expectations for half of all Indian smartphones to cost less than US$100 by 2019.
This paints a challenging picture, in particularly for established brands such as Apple and Samsung.
“Overall, industry growth is still coming from emerging markets where at least three-quarter of the volumes still come from the lower-priced segments below US$150," Mr Shah told Channel NewsAsia. "For Samsung, we are already seeing a shift-in-sales mix towards the cheaper J series phones. Similarly, rumors about a possible refresh to the iPhone 5s could mean a shift in Apple’s strategy to not just focus on the premium segment.”
Meanwhile, creating a compelling market campaign is also top on the to-do list for global phone makers, according to Mr Enderle.
“Android’s low-cost approach drove down margins and the phone makers don’t seem to have the money they once had to market and create excitement around their products. Even Apple seems to be struggling and, as a result, we aren’t seeing the same kind of demand we saw years earlier.”