Monthly Archives: February 2017

Evolutionary crisis in smartphones?

Nokia Phone to Smartphone Evolution

For ten years now the mobile phone business has been dominated by similar looking device offerings with large touch screens and similar user experiences centred on a responsive touch interface; is this going to continue, how is the market going to evolve?

Competition as a supplier in the mobile phone business is not straightforward -the rules of the game change from time to time. The mobile phone industry has seen a number of such change cycles since the establishment of the first digital mobile phones around 1990, with different players exiting and entering the market according to their ability to compete profitably within the cycle. During each cycle, different business factors become critical within the different phases:

The impact on a supplier’s product portfolio through the change cycle is a gradual increase in the in the lifecycle of individual products, which leads in turn to a widening of the number of products offered and ultimately to a much more consumer segmented product offer.

The voice era

The first change period in the digital era was purely the ability to produce a digital mobile phone at all – leading to the development of proprietary chipsets and software. The first digital products were too large and battery life was terrible, so the following consolidation phase was one of miniaturisation and power optimisation over a period in excess of five years. As the technology reached a point where acceptable size and power consumption was available there followed a plateau period for roughly 3 years when branding, segmentation and physical cosmetics was to the fore.

The multimedia era

The next change period came in 2002 with the advent of camera phones and programmable operating systems in GSM world markets. This heralded a period of multimedia convergence in the mobile devices as music players, video players appeared alongside the ever-present camera. A further complexity was incorporated over the following 2 years as 3G WCDMA became established as a fundamental requirement of a multimedia device. It can be argued that this change cycle was still in its consolidation period when it was disrupted by the next change period in 2007 when the Apple iPhone brought fundamental innovation in the user interface and later in the software application model. For a short period of less than two years products from both cycles were active and successful in the market – it should be noted that always after a change event there is a similar period, but the Apple iPhone product paradigm became the clear winner.

The Smartphone era

Since 2008 there has been a consolidation period in what became the smartphone space with ever better cameras, better quality displays and improved computing performance to deliver a high quality experience. Today the consolidation is reaching a point where the experience difference between high end smartphones and low cost smartphones has never been smaller. The smartphone based on the iPhone of 2007 has made it through its period of consolidation without being fundamentally disrupted.

So today, the smartphone business is in a plateau period- with supplier profitability tied closely to branding and logistical excellence fighting against the gravitational pull of commoditisation.

By retaining its own proprietary platform Apple has maintained differentiation while the rest of the market shares the Android platform and has therefore experienced greater pressures. Since the chipset business in the Android space has also been horizontalised- there is pressure from Qualcomm, Samsung and the like to adopt the very latest generations of their chipsets, however these are not delivering the big improvements in user experience seen in earlier years. Product differentiation is increasingly hard and the mode of the business is moving much more to a fast moving consumer goods model – as it did in the 1998-2002 period. The greater challenge now is that the smartphone form factor does not lend itself to easy cosmetic differentiation since the front face is over 90% glass.

So unless some breakthrough innovation is made, the winners in the smartphone market will be those who possess a good brand and marketing with the operational excellence necessary to deliver really good value to the end user.

Nokia – a good time to make a come back?

Nokia 6

After largely disappearing from the mobile phone market following its acquisition by Microsoft, 2017 will see the re-emergence of the Nokia brand with products managed by HMD Global in partnership with FIH Mobile (part of Hon Hai Precision) and brand licensed from Nokia. As someone deeply involved with portfolio management at Nokia during the growth and glory days, I would like to take the opportunity to explore whether this is a good time for them to make a comeback?
In a previous blog I analysed the dynamics of the mobile phone market in terms of what facets of the overall business need to be optimised at a given point in time. In brief, my view is that the smart phone market has moved into a plateauing phase where the key strengths needed are brand, distribution and cost efficiency. So the question is whether this new Nokia set-up is well placed for this challenge?
First of all where is the Nokia brand today? Ten years ago Nokia was the leading mobile phone brand across the world except in North America, South Korea and Japan. This position had been built on fifteen years of growth – how much can this legacy be drawn on now? At its zenith Nokia stood for a perhaps contradictory combination of high technology and reliability – you could expect to get the very latest from Nokia and the products would be really tough in real life. The challenges of the 2008-2013 period largely stripped Nokia of the high technology association but today you still hear stories of how good and tough my Nokia was. The UK press has been full of stories about the resurrection for the 3310 over the last week, all very positive. So if I was to describe the Nokia brand today from a European perspective I would use words like: honest, tough and sentimental.
Distribution is the next major part of competing in today’s market scenario as with any fast moving goods business. Here HMD take responsibility for sales and FIH Mobile for manufacturing and logistics. This has the promise of being a good combination with a lot of personnel coming over from Microsoft devices business while FIH are of course a well-established world class manufacturer. Access to market in countries where operator distribution is critical will depend on the right deals being made but there is no obvious reason why this may not be the case. While a split company setup may struggle in a period where the market is changing fast with product innovation at the fore, since this is not the case at the moment there is no reason to believe this cannot succeed well.
Cost efficiency is the key to offering the value for money proposition essential in a plateauing market and in this case to compete against mainly Chinese companies which offer very keen price points. Clearly the advantage of the resonance of the Nokia brand will give the new venture an edge but as a challenger there can be no expectation of premium pricing at the beginning of sales. With the mobile phone chipset business dominated by only a few suppliers, the size of FIH/Hon Hai as a manufacturer will be important to get good pricing as well as the potential of Nokia branded goods making even a fraction of historical volumes.
So in a nutshell it would appear that the timing for a comeback looks good. Leaving re-entry any later would see the continuing in the decline of Nokia as a consumer brand – furthermore the operational mode of separate sales and manufacturing companies in partnership can work when product innovation is not the main route to success.

London Tech Expo 2017, IoT products and enablers

London Olympia, site of IoT Tech Expo 2017This is a modified version of an article originally published on LinkedIn here.

I made a worthwhile trip to the IoT London event (23-24th Jan) recently to test the pulse of IoT and find out about some new and upcoming IoT product companies.

In general, I would say it felt like the scale and activity around IoT seems to have increased with a large number of participants and presentations on offer.  With so much to see and businesses to talk to, it would have been useful to have a few more chairs to sit down and catch one’s breath…

Having said that, it is appropriate that this is called the Tech Expo as I could see a lot of product innovation, but also some challenges for businesses in finding their best channels for growth. Notwithstanding, I will mention here a few of the physical product companies that captured my interest..

Nanolike is a French company taking advantage of nanotechnology to create a tiny force sensor which uses a fraction of the power of existing sensing technologies. These size and power advantages mean that there is a wide scope of deployment opportunities, perhaps new products in the quantified self area that become feasible?

BeanIoT is based in Cambridge, UK and has created a range of small autonomous “bean” sensors which can connect to and through mobile phones and other low power bluetooth based devices. The beans have batteries and can be charged wirelessly, with the battery life depending on the number and rate of measurements requested by the bean. There is a quite a wide range of sensing available in the beans: accelerometer (step counter), temperature, pressure, air quality, humidity etc. It is interesting to see such a “Swiss army knife” type proposition being brought forward, as opposed to a more single purpose accessory like a fitness tracker or a wireless weather station. The team is integrating their own cloud storage and ‘bean’ data visualisation platform so as to provide an out of box solution and broaden its appeal toward business.

OpenTRV is a UK company aiming to make a big dent in the costs of domestic heating to cash constrained consumers along with the UK’s CO2 emissions. Their products are a connected and a standalone smart radiator valve that detect presence/occupancy in a room and learn when to turn on and off the radiator. Now existing thermostatic radiator valves can be bought for about £5, but many do not work particularly well nor do they offer the same heat saving potential, with up to 30% saving being claimed. The company is looking at the most affordable product options in order to make a 1 year repayment case to also appeal to people in rental accommodation. The connected option of the valve is more expensive, but can offer “telemetry data” on energy savings e.g. for large scale housing landlords.

The last company I mention is Neurofox, a German company with a product dedicated to helping stressed people achieve a state of mental relaxation in minimum time. The product comprises a headband with 5 brain activity sensors feeding into a controller unit with a headphone audio output and a wireless connection to a pc. The idea is to use the audio feedback path to help train the users to fall into a relaxed state. Over a period of time, through personalised hints and customised feedback, the solution gets better – but how this is achieved i.e. the IoT feedback path is not quite clear yet.

In summary, the show offered an interesting mix of product innovation along with end-end IoT solution companies, data visualisation offerings, multi and wide-area sensor connectivity and connectivity management solutions.  Bearing in mind that google search does not generate a uniform distribution of winners, then for those interested in IoT companies, the list of exhibitors can be found here.