Resisting the commoditization of smartphones
By he smartphone business is no longer the same as before as the average selling price of devices continue to fall and feature sets becoming increasingly similar. Manufacturers are all adopting standard specifications either dictated by the chipsets offered by low-cost SoC vendors or standard parts that provide OEMs with better cost advantage. No matter how you look at it, there’s little differentiation remaining in today’s mainstream and budget devices. At the end of the day, the focus is really on price.
But some manufacturers are not interested in racing to the bottom with brands that focuses only on budget smartphones. They know all too well that once they start to descend and compete in that market segment, it’ll be a continual downward spiral towards the commoditization of smartphones.
Smartphone manufacturers like Samsung recently noted that although market competition is stiff, it would continue to offer premium products with the use of higher quality materials, thinner unique designs and exceptional hardware like higher resolution displays across its portfolio of products.
HTC, on the other hand, believes that there are still a lot of room left for unique differentiation and firmly thinks that the commoditization of smartphones would not happen anytime soon. Noting how smartphones are highly personal devices, HTC doesn’t think that consumers would settle for generic-looking products.
The recent launch of the Samsung GALAXY S6 and HTC One (M9) demonstrated how both companies are trying to set themselves apart from their competitors with more premium specifications and greater luxurious feel to the smartphone’s build. While Samsung has finally replaced its cheap plastic finish in its flagship series with glass, HTC kept their design DNA and improved on its aluminum finishing. Although both companies have a very different approach to their design, they have one thing in common - design and product personalization ranked high on their list of priorities.
Still, smartphone manufacturers are not resting on their laurels. Pressured by dwindling sales and lowered profit margins, manufacturers are now looking beyond smartphones for the next source of revenue. Popular brands like Samsung, LG and Sony have already started venturing into the smartwatch space while Apple has only just released the Apple Watch this month. However, that’s not the only trend that these companies are betting on.
Beyond smartwatches and fitness bands, manufacturers are now eyeing the lucrative yet untapped market for VR headsets. Samsung is already on their second iteration of the Samsung Gear VR that works only with the Samsung GALAXY S6 while HTC announced the HTC Re Vive, a new VR headset targeted specifically at gamers. One thing in common with these two company’s strategy is that they are not going into this alone. Samsung is building its Gear VR headset in collaboration with Oculus VR while HTC is partnering with Valve. The approach is not surprising because both technology partners have the technical know-how and content to support the products while it’s obvious that Samsung and HTC are only playing the role of a hardware developer and manufacturer. Still, it’s not an uncommon partnership given how Android smartphones heavily depend on Google for its software and apps ecosystem.
Besides Samsung and HTC, Sony is also investing in the VR market with Project Morpheus. Announced early last year, the product has been work-inprogress with a launch date set somewhere in 2016. It’s not clear if the product is going to be extended beyond gaming on the PS4 but unlike Samsung and HTC, Sony is entering the VR market by itself.
There seems to be no lack of opportunities and product diversification seems to be the main strategy for smartphone manufacturers to remain relevant in this competitive marketplace.