The global handset industry lived up to consumer expectations in 2012 with new innovations, and game changing launches.
Samsung Electronics overtook Nokia as the world’s largest vendor of mobile phones, ending the Finnish company’s 14-year reign. Samsung also became the largest smartphone provider, outclassing all technology brands.
Only time will tell if long awaited queues for the iPhone 5 will help Apple regain smartphone leadership. The initial numbers though are impressive, with Apple reporting five million units sold on the launch weekend. The smartphone category will remain the main focus for manufacturers in their bid to cope with growing market demand, now fuelled by a much bigger market size due to lower smartphone ASP (average selling price).
In Pakistan too, smartphones promise to take centre stage. According to estimates there are over 19.5 million mobile internet users in Pakistan; more than double last year’s figures. The smartphone user count is still under debate, although estimated at 22 million. However, the most impressive indicator is the exponential smartphone growth in the new handset purchase category. High affordability levels, increased smartphone awareness among customers and heavy duty marketing have been critical factors behind this boom. Furthermore, telecom operators have capitalised on this opportunity to use these devices as internet enablers by launching aggressive data bundles. Pakistan is the sixth largest mobile market in the world and technology giants like Google and Microsoft have recently shown interest in ICT development in Pakistan. The recent visit to Pakistan by Eric Schmidt, Chairman, Google, is a case in point. Although Schmidt’s visit was brief and unannounced, it could turn out to be the beginning of increased collaborative technological initiatives.
####Smartphones are proving to be the biggest game changers in mobile connectivity. Khurram Mahboob looks at major developments in handset technology in 2012.
According to recent figures from GfK for Southeast Asia, sales of smartphones rose by 78% year-on-year, although feature phones continued to dominate, accounting for 75% of the 118 million devices sold. However, smartphones are where the money is and accounted for 61% of the overall value of the industry. In Pakistan there has been a phenomenal 65% smartphone adoption rate, although feature phones still outsell smartphones by more than double the ratio. It will take at least three to four years to see a change in favour of smartphones in terms of volume.
Android it is
Android-based devices are overtaking BlackBerry, Nokia and even iPhone by volume. Google’s OS is gaining traction with manufacturers across all tiers, with the result that sales are increasing, especially given the very affordable offerings available in the market. HTC, Huawei, LG, QMobile, Samsung, Voice, ZTE have all endorsed the Android platform, making it the dominant OS device. In fact, the latest Android Ice Cream Sandwich (ICS 4.0) version can now be experienced at much wide range of device categories.
Diminishing BlackBerry share; App World for Pakistan
BlackBerry is still the preferred corporate choice, but this is where the problem lies. Due to its strong ‘office device’ positioning, BlackBerry has been unable to penetrate other segments and RIM’s market share in the smartphone category is declining. RIM is still hoping to retain Pakistan as an important revenue generator market by introducing innovations on the BlackBerry Messenger (BBM) service.
War of sub $100
The market size for the smartphone has increased exponentially as a result of affordable device offerings ranging between $100 and $200. The most popular devices in this range are HTC’s ChaCha, Samsung’s Galaxy Y and the new Sony device series. However, the real market push is coming from QMobile which is attracting a much larger pool of customers with its sub $100 Noir series. After registering success in the low end feature category, QMobile’s strategy to focus on cheap Android devices has paid off. By leveraging its brand equity QMobile has been able to penetrate this market segment more quickly than other smartphone market entrants were able to do.
Recently, Huawei and a few other players have changed their go-to market strategy by bringing on board dedicated distributors to gain direct access to the smartphone retail market; and thanks to these companies, five affordable Android smartphones have already been introduced, although response so far is not tremendous as it will take time to establish credibility in this arena. It is expected that there will be further customer options in the $50-100 range, which may prove to be the game changer in outselling feature phone sales. However, for this to happen, other than affordability, smartphone manufacturers will need to aggressively work on customer awareness and the perceived ‘need’ to own a smartphone.
The most anticipated devices of the year are already out there
The HTC One X, Samsung SIII and iPhone 5 are already out in the market. The Samsung SIII, the official device of the London 2012 Olympics, exceeded customer expectations with its enriched technology-first features. The iPhone 5 is already being positioned as the fastest, thinnest, lightest iPhone ever. This device is now available in Pakistan.
Never talked about features now a reality
Other than the OS, processors, cameras and screen sizes are the decision making features for buyers. This year saw remarkable innovation on all these fronts, as well as continued focus by manufacturers on developing improved processor performance. HTC, Samsung, LG and Huawei launched quad core devices in the first half of 2012 and if the dual core processors were considered ‘cool’, the quad core devices available today are giving users a truly electrifying experience. Until last year, a five megapixel (MP) camera in your phone was a good enough component; in 2012, customers can opt for a 41 MP camera with the Nokia PureView. Further image processing innovations continue to be a reality especially with HTC and Samsung’s patented technologies. Similarly HTC’s 4.3” EVO screen created a stir in the market. Now there are smartphone options with screen sizes of over five inches, positioning them as better alternatives of tablets and even laptops.
iPhone remains a niche
The iPhone will remain a niche buy given the cost, and more importantly, the lack of carrier subsidies and the comparatively low numbers of postpaid users in Pakistan. Nevertheless the phone has over 150,000 users in Pakistan and the brand recognition is extremely high; any affordable instalment plan will change the base exponentially.
However, for a truly amazing experience customers will need to wait for 3G.
Khurram Mahboob is a telecom professional in Pakistan. firstname.lastname@example.org