DUBAI, 23 October 2007 — It used to be that there were a few really “hot” mobile handsets and everybody wanted one of them. In the Kingdom, those popular phones were given nicknames — Panda, Tear and Kitkat, were some of the memorable ones. Nobody checked out the specifications of those devices. They were purchased more for fashion than functionality.
Times are changing. The future of the mobile handset industry will be one in which consumer choice will drive manufacturers to fill niches rather than create one device that will find universal favor. Handsets under $50 will still primarily be mobile phones, with their focus on voice. However in the midrange and premium handset segments, manufacturers will have to mix and match form and function to try and serve the desires of an increasingly segmented customer base.
“On the higher end, one big trend that has really been happening for last year or two is the handset as an entertainment device,” said Dr. David Steel, VP, Marketing Team, Mobile Communication Division, Telecommunication Network Business, Samsung Electronics. “A few years ago, handsets were just voice devices and now we see more and more entertainment capabilities coming in. The growth of handsets enabling music, video and mobile TV will continue. We’re also going to see more productivity applications, such as e-mail. A lot of people still access their e-mail exclusively from a PC. In the past, the only place people made phone calls was from a fixed line at home. That e-mail experience needs to increasingly be mobile. Navigation applications will become ubiquitous so people can use GPS on their handsets to find where they’re going. We’ll also see more forms of communications such as video conferencing on mobile devices.”
There has been an explosion recently in the functionalities of handsets. That has in part been due to the availability of increasing amounts of storage or phone memory. These days 1GB is where 128K was just two or three years ago.
“Many of our music phones already feature at least that amount of memory,” remarked Steel. “With more and more multimedia functions, memory will continue to come up, but it will come up at the speed at which the cost comes down. The reason we’ve seen this explosion in memory size is that our colleagues in the semiconductor business, who are the biggest memory makers in the world, have managed to bring those costs down.”
But as handsets do more, they require more power. For all digital devices, the lag in developing new battery technology is becoming an issue. According to Steel, current battery technology, which is lithium-ion based, has probably gone as far as it can. Improvements in terms of power consumption on the chip side probably will be incremental. He doesn’t foresee any big breakthroughs until fuel cell technology becomes more common and that will take a while. In the meantime, power users and road warriors should consider larger “extended batteries” for their phones, rather than the slimmer batteries that come as standard with most handsets.
Steel observed too, that although there has been a prediction for a while that mobile handsets will take on more and more functions, it’s still not going to be one size fits all.
“There won’t be a single device that will do everything. It would be too expensive and it would be huge. You wouldn’t be able to carry it,” he pointed out. “Also, you would have to trade off function and people don’t want that. For example, consumers who buy a music phone want great audio. Someone who chooses a phone for business wants business applications to be a priority within the phone’s functionality. Innovation is coming across such a wide range of areas and Samsung as a manufacturer must adjust. We need to have approaches in place for the various segments and we need to have a presence in all of them.”
One area where Samsung is making new moves is in the midrange market segments. In the past, Samsung’s strategy had been to produce only high end products, with the latest innovation and the latest design. But with numerous consumers in emerging markets finally getting telecom access, Samsung found that it was losing market share. The company has decided that a better policy is to create products that fit the markets.
“Saying we are going to sell premium phones in Western Europe is very different from selling premium phones in Africa,” Steel said. “In redefining our strategy we are now aiming to localize around markets. We have opened the door much more for phones that will address the requirements of China, Latin America, South East Asia, the Middle East and Africa. Not only in the premium segment, but also opening much more into the mid-range. What we are still very clear about is that we want to keep the good brand image. So we don’t just dive in on price and go to the lowest end of the market and fight it out there, if for no other reason than our cost structure won’t support that. We are investing so much in R&D and design that we can’t be a company that just sells on price at the low end.”
With that in mind, Samsung has set out clear lines that won’t be crossed. For example, the company won’t sell phones with black and white displays. Plus, in any given market or any given segment, their goal is to sell handsets with more functions, more features, better design and a little bit more innovation to get more of a premium for the brand. The company does understand though that expanding mobile communication networks are fueling demand from new groups of consumers and Samsung wants to capitalize on those opportunities.
“This year worldwide there will be 1.1 billion handsets sold out of a global population of six and a half billion,” Steel advised. “One in six people will buy a handset this year. So for many consumers, the first experience they get with connectivity, communication and even the Internet will be on their handset. I think that handsets are actually a big opportunity to spread technology, to spread efficiency and to spread communication. There are stories now from emerging markets how having the connectivity provided by a handset allows people in rural areas to have a better economic situation, even getting their products into overseas markets. Samsung certainly wants its handsets to be key enablers of a brighter future for people the world over.”
Comments to [email protected]
