Has the Smart Phone Industry Matured?

Hi Guys,

Long back, I had written a post on how Samsung was losing its plot in India in the Smart Phone segment. In this post, I try to find out the way the Indian Smart Phone Industry is panning out and how different players are fighting it out.

Has the Smart Phone Industry matured?

Large Displays, Better RAMs, Better Resolution, More Megapixels… This is how brands are differentiating. Even the flagships have concepts like Force Touch, Iris Scanner which are not really great innovations. Today any smartphone in the range of Rs. 10000 has a good screen, decent camera and a big display. And brands matter less and less. So many Chinese brands are coming in. Nubia, Meizu, PhiComm, Coolpad… These are some of the brands that came in last year and had a decent crowd going for it. Reliability has not been a big question mark as the OEM tends to be the same player. The newsmakers have been fast shifting… From Motorola to Xiaomi to OnePlus to Asus in a span of 2 years.

Flagships are not really attention seekers anymore. Who would spend 40000 bucks on a phone when a 10000 bucks phone has 75% of those features. Apple thought it could extract its brand premium and priced 6S at a whopping price of Rs. 62000. Only to realize that Indians value their money and had to reduce price by nearly 15% overnight.

Do UIs Matter?

With majority of phone makers coming out with their own UI like MIUI (Xiaomi), Zen UI (Asus), Oxygen OI (OnePlus), does it really matter to the end user? Some of the UIs are pretty different, but none difficult to manage. The interface remains pretty much the same. And it doesn’t seem to be a key feature that impacts Buying Behaviour. Before OnePlus Two came out, CyanogenMed (which was used in Oneplus One) was highly critical and said OnePlus Two would fail because there was no Cyanogen. OnePlus said Oxygen UI is the best UI that is available today. But, no one bothered about the UI. No one either criticized or praised Oxygen UI.

I just wonder why many companies donot stick to the stock UI like Motorola. It is less complicated, straight forward to use and people find it good. So, why spend lot of R&D on a UI which is really not different?

Less Choice is better?

There is a concept in Behavioural Economics which states that lesser the choice, better the proposition. More the choice, people tend to get away or become confused. Most of the companies had a very good sales in the first generation – Motorala (Moto E, Moto G, Moto X), Xiaomi (Mi3, Redmi 1S), One Plus One and Asus Zenfone. Once these phones started coming out with more and more models, people started getting confused and the sales started dipping.

Any new Game Changers?

One of the key requirements of users these days is better batteries. But if you raise the capacity, the phone becomes heavy. What we need is an innovative technology that could provide better powerful batteries. I don’t think any of the existing companies are looking to solve this. The solution could come in from a new player who specializes in manufacturing batteries (someone like Panasonic or maybe Tesla or a new kid in the block).

Apart from that, most of the innovations claimed by companies are really not Game Changers. And again they are easily imitable in nature. The Industry looks to have hit a plateau where larger display, more MPs and better resolution are available with everyone and are affordable too.

Worldwide too, it doesn’t seem vastly different with Apple gorging up 94% of the Smartphone profits despite selling less than a third of the smart phones. The remaining players fight for the 6%. Apple has been able to play with its brand name, replacements and stature. But, not sure how long it would convince people to buy Apple, just because it is Apple…

It appears to have lot of parallels with the PC industry. Effectively, it looks like a field where everyone around looks the same and you got to sell more, spend less to make more profits…

Happy Reading!

Has Samsung lost its plot in Indian Smart Phone Industry?

Hi Guys,

When I saw the ratings for Samsung Galaxy S5 in Flipkart, I was quite shocked. I expected a poor show, but I didn’t expect 1.6 out of 5 for the new phone. It made me think as to whether Samsung has lost its plot in India somewhere down the line?

To understand this sudden dip, it is essential for us to understand the evolution of Touch Screen Phones or the Smart Phones (both terms might be mutually exclusive, but most Touch Screen Phones are smart phones and vice versa) in India.

Nokia 7710 was first touch screen phone in India (year 2004). But, it was in the late 2000s that Touch Screen phones got a bit popular in India. When Nokia introduced a stream of Touch Screen phones in late 2000s and early 2010s, there were few takers. But, they were not much impressed with the interface. Sony had a few good phones and then there were niche players like iPhones for which Apple didn’t have any proper retail strategy in India. It was around this point of time, Google’s Android phones were becoming popular.

It is at this stage that we need to understand how the commonly used jargon in Strategy class ‘Diversification vs Focus’ worked here. Diversification is a strategy where a firm is present across different sectors instead of focusing on a single business (eg: Tata Group). Focus is a strategy where a firm concentrates on a single business and focuses all its efforts on the single business unit (eg: Ferrari in Sports cars).

In the early 2010s, the touch screen market entered the growth phase. Diversification strategy works in Growth phase. Samsung introduced a few Android mobiles in India and they were becoming a huge success. Buoyed by the success, Samsung started introducing a wide range of phones available across all price categories from Rs. 7000 to Rs. 40000. At this point of time, other players were very focused like Apple or HTC. Samsung had phones to offer to all type of customers. The Diversification worked for Samsung. Customers thought Samsung Phones had value for the price they paid for. These phones became an aspirational product for many of the youngsters. Samsung rode on the absence of competitors.

The next phase is an interesting one. Around 2012-2013, Samsung introduced Samsung S3, which was a total revamp of S2 and provided a wide range of features. They also had large screen phones at the middle segment like Grand which was also a success. On the other side, they were losing the market at the lower end of the market. Micromax had slowly started to dominate. They offered phones with same features at around 50% of the price Samsung provided. Samsung’s ‘Cost Leadership’ strategy started to vanish. At the other end of the spectrum, Apple started to focus in India and iPhone4 and 4S were major successes in India. Nokia’s Lumia Series with Windows 8 OS had quite a few takers who wanted alternatives.

Enter the next phase in late 2013 and early 2014. I feel this phase is the beginning of Maturity phase in the Smart phone market with less and less innovations coming and cost becoming an important factor. Micromax rode on the ‘Cost Leadership’ strategy and made Hugh Jackman their brand ambassador. They introduced 5 inch screen phones for Rs. 10000 odd and their Canvas series was a huge hit. The same features in a pure branded phone would cost double.

Nokia’s Lumia had its set of loyal customers. Apple had started to increase its value share. Google’s Nexus 4 and 5 were real alternatives to people who were looking for premium segment phones.  Moto G opened to a stunning response with all phones sold out in Flipkart in no point of time. Samsung had no significant launches in the mean time. I have a feeling that Samsung started to think that they belong to the ‘Premium segment’. Launching Galaxy S5 at Rs. 51000 (around the price of an iPhone) just proves what Samsung thought about the phone. If you compare S5 with Galaxy S4 at around Rs. 35000 or Nexus 5 at around Rs. 30000, you will know how overpriced S5 is.

At this point of time, Samsung still is the leader in Indian Smart phone industry by a huge distance. But, if you think as to how Nokia lost its plot a few years back, you would wonder if Samsung could lose it the same way.

Other point to ponder is how Samsung is going to respond to the competitor’s strategy. At one point of time, Samsung were the ‘Cost Leaders’. Now Micromax has taken the tag away from them. It would be difficult for Samsung to occupy the same rung as Micromax. Competitors like Nokia, Apple have entered into ‘Differentiation’ strategy with unique products.

The question that comes to one mind is whether the time has come for Samsung to shed its Diversification strategy and start focusing on a particular segment? Also, do they have the time to do the same?

It would be interesting to observe how the smart phone industry would pan out in the next months (Years is too long for the industry).

Happy Reading!