Yesterday’s Top End or Todays Mid-tier?

Times have never been better for smartphone buyers. An abundance of smartphones to suit (almost) any budget. From entry level phones of up to $100 to the lower mid-tier of around $200 to the higher mid-tier (around $300) to the top tier of above $400. All manufacturers have various models to span all budget ranges. Some examples of the ranges and type of phones for a better understanding:

Entry-level up to $100 Motorola Moto E, Nokia X, Lumia 520, Samsung Galaxy Pocket, LG L40
Mid-tier (lower) $150 – $200 Motorola Moto G, Lumia 630, LG Optimus L9, Xperia M
Mid-tier (higher) $200 – $350 LG G2 Mini, Samsung Galaxy S4 Mini, HTC One Mini
Top-Tier $450 and above iPhone 5S, Galaxy S5, LG G3, Xperia Z2, HTC One M8

One question though any buyer of a phone should ask themselves is if you should buy this years’ top offering in the respective tier or rather last years model who’s price has reduced to move into a lower tier bracket.

I want to illustrate this based on the current higher mid-tier range which consists primarily of the mini versions of the various flag-ships:

  • LG G2 Mini
  • HTC One Mini 2
  • Samsung Galaxy S4 Mini

These phones cost around $300 to $350. Phones in this category have ambitions of being stylish and reflecting at least some of the design and functional elements of their top-tier relatives.

For the same amount of money you could also buy the flag-ships of 2013, such as:

  • LG Optimus G
  • Sony Xperia ZL
  • Huawei Ascend P6

Reasons why you should consider last year’s flag-ships are:

  • 720p HD screens (even 1080p for the Xperia ZL and 768p for the Optimus G)
  • Quad Core processors that will easily cope with Android 4.4
  • 2GB Ram
  • 4.7″ screens
  • Upgraded to 4.4 Kitkat (or confirmed to get upgraded)
  • Real premium elements in each of the phones
    • Sony: 5″ full-HD display
    • LG: fully Gorilla Glass covered
    • Huawei: slimmest smartphone on the market

In comparison there isn’t really anything that speaks in favor of the mid-tier phones other than that you are buying a phone which is earlier in it’s product lifecycle.

So what are your thoughts and recommendations?

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The Smartphone Manufacturer Landscape – Outlook and Analysis

So what will the future hold for the landscape and manufacturers of smartphones. Looking at the manufacturers as well as developments in the mobile OS space over the last 15 months I am predicting that there will be 3 companies that will lead the industry and many niche players in between.

The Dominant Three Apple, Samsung, Nokia
Notable Players HTC, LG, ZTE, RIM
The Rest Motorola, Sony, Huawei, and many more

Apple
Apple will continue to dominate the premium segment smartphone and tablet markets. However what the future holds after the launch of the IPhone 5 is less predictable. Up until the IPhone 5 product strategy and development is still the direct outcome of Steve Jobs. The first product of the post Steve Jobs era will only hit the markets in 2013. And Apple is clearly breaking new grounds and shifting away from Steve Jobs as we can see from Tim Cook’s recent moves to pay dividends as well as the Foxconn working condition deal.
On the negative side is Apple’s self-imposed market share limit in the smartphone market by only covering the premium segment. While this is still a strong growing market globally, other players cover the mid- and low-end segments as well and are better able to penetrate developing markets. It could be the mid-tier smartphone market that Apple will look at after the IPhone 5 in the Tim Cook era. Maybe an IPhone Mini for a $250 price tag?

Samsung
With its huge portfolio and spread of segments in the smartphone and tablet markets, Samsung will continue to dominate and strengthen its position as the largest manufacturer.
The core of Samsung’s market strength will continue to be Android, followed by Windows Phone. Bada will likely cease to exist with the launch of Tizen and build up a 4th niche ecosystem.
Samsung’s position is further strengthened by the support of Google which relies on Samsung to push Android and with it the armada of Google products and monetise smartphones and tablets as an advertising platform. The Samsung-Google symbiosis is even more important to Google than it is to Samsung due to Samsung’s coverage of all market segments (premium, mid-tier, low-end) across all continents and developing markets.
That support is at the same time the biggest weakness of Samsung since it is too reliant on Google’s development and delivery roadmap of Android. This is also why Samsung will continue to support WP7 and fasten the delivery of Tizen as a 2nd (and 3rd) leg to Android and to keep pressure on Google by demonstrating that there are viable alternatives.

Nokia
Saved at last minute from the burning platform by Windows Phone! How close Nokia was from missing the last boat from the burning platform is hard to ascertain from the outside but not many companies where in a position of cash and size to manage such a turnaround. And what a 180° it was.

Early signs are looking good. The Lumia 800 and 900 got very good reviews and Windows Phone is still one of the best kept secrets in the smartphone world. With the combination of the biggest software company and the manufacturing machine of Nokia behind it a bright future seems to be ahead for WiNokia. Furthermore Nokia managed to bring the price point of WP to Android levels and thus even gaining a competitive advantage over Apple. The Nokia 808 Pureview also demonstrates what Nokia brings to the WP ecosystem, the worlds best industrial development and manufacturing standards which only Apple manages to match.
Nokia’s 2nd leg, the feature phone segment, is pretty much owned solely by Nokia at this moment. While it is a less glamorous segment feature phones will continue to be the mass market product for developing countries and those customers that will always prefer just a phone next to a tablet rather than a smartphone.

HTC

HTC will continue to deliver devices by the numbers on Android and Windows Phone. While the sales figures will continue to grow, HTC’s market share should shrink due to not having a backing of any of the ecosystems. HTC is somewhat like the 2nd child of three. Neither getting much attention nor ever being able to be in a special position like the first or lastborn.
HTC may be in a vulnerable position since they are less diversified than Samsung, don’t have a strategic ecosystem backing like Nokia and neither have the brand, size or product development of Apple.

HTC will remain the 2nd biggest Android manufacturer for the next 2 years. Even though I consider HTC a takeover candidate.

LG

Three years ago it looked like LG will be a serious competitor to Samsung. Today LG seem to have lost track of their smartphone strategy and there is no clear vision of what segment the company wants to cover. LG  keeps dabbling around with mid and high-end Android, Windows Phone and the low-end Java based segments. In none of these are they delivering a continuous stream of devices that would make it clear what the vision is.

ZTE

ZTE is the dark horse in the smartphone race. Everything seems to be an option for a company that is already the 4th biggest manufacturer of mobile phones. ZTE has announced and ambitious roadmap of self developed devices and started delivering on it. It doesn’t seem unlikely either that ZTE might acquire market share through a takeover of another player. HTC, RIM or purchasing the mobile phone arm of LG could be an option too similar to the Lenovo/ThinkPad example.

RIM

The current position of RIM is not unlike the burning platform of Nokia. But RIM is in a much weaker position than Nokia to pull itself out of the mess and catch the last boat off the platform. Nokia was lucky that at the same time they needed a new smartphone strategy, Microsoft was struggling to get traction on Windows Phone. Timing was extremely fortunate for both companies. RIM, with it’s unique OS and enterprise server proposition won’t be able to find a partner like that and more and more enterprises move away from BB for mobility services. CEO Thorsten Heins also doesn’t appear to have the same sense of urgency or seeing the need for a drastic turnaround given early indications.

RIM will continue to lose market share and actual volumes will shrink as well. While it can still rely on popularity in established enterprise markets and as a consumer device in the Middle East and Southeast Asia, RIM will not get any foothold in new markets and lose out further in the Americas and Europe.

So what does that mean for RIM? They will either follow Palm or be taken over by ZTE or WiNokia and survive in a very different shape than what they are today.

Sony, Huawei, Motorola, Pantech, Acer, etc.

There will be a significant number of niche players covering Android, Windows Phone and whatever may become of Tizen. Though none of them will dominate an ecosystem the same way the Top 3 or Notable Players do.

Sony will be a niche  player in the premium Android market and attract mainly brand loyal Sony customers.

Motorola will function as Google’s enterprise device manufacturer and continue to develop premium product segment devices only.

So what is your opinion. I would love to hear your comments.

PP