SAN DIEGO—The emergence of WiMAX, LTE and HSPA+ networks has brought increased speed and capacity to mobile devices. As a result, smartphones and tablets are getting overhauls – dual-core processors, front- and rear-facing cameras, bigger batteries – in an attempt to leverage and keep pace with all that extra bandwidth.
Ovum aimed to make sense of the evolving mobile device space with its CTIA Enterprise & Applications 2011 pre-conference event yesterday, Device Wars: An Ovum Seminar. Ovum analysts Jan Dawson, Sara Kaufman and Mike Sapien covered various aspects of the topic, from winners and losers in the smartphone space to the emergence of new LTE-capable models, as well as a panel on generating revenue from machine-to-machine technologies.
This was Ovum’s third straight pre-conference seminar at CTIA. Dawson, chief telecom analyst for Ovum, says the seminars are a good way to get Ovum, a U.K.-based firm, exposure here in the U.S.
“We found that it’s a useful way for us to connect with our clients and others who may not be as familiar with Ovum,” he says. “We’re generally pretty well known within wireless circles outside the U.S., but here in the U.S., there are a lot of big analyst firms that are headquartered here and have a higher profile than we do.”
Dawson, who covered the topic “Smartphone Winners and Losers,” says the number of devices unveiled at CTIA creates the perfect forum for the kinds of discussions that the company’s seminars cover, adding that the big question now is how does an OEM differentiate its devices from the rest of the pack.
“The Kindle Fire answered that question by saying it’s price and it’s content,” Dawson says, referencing Amazon’s low-cost tablet. “The iPad is not just the best device out there but it’s the best device with the best content ecosystem built around it and that’s why it’s so hard for others to compete, because they’re not bringing that kind of content portfolio to the table.”
Dawson says Amazon is the first tablet maker to challenge Apple on both price and content in a meaningful way.
“The iPad kind of laid down the gauntlet for everyone else. Now, I think the Kindle Fire is laying down the gauntlet to everyone that isn’t the iPad, saying, ‘Look what we did. We managed to differentiate ourselves. What can you do?'”
Dawson says that whether it’s a gimmick, like a Lapdock or 3D – it doesn’t really matter; differentiation is key. “You kind of have to do something pretty special to stand out, and I think that’s what we have to watch for at this CTIA show. Is there any device that really stands out that can differentiate itself in that way?”
In his presentation at the event, Dawson laid down a case for a new way to assess how OEMs are performing. “Shipment volume is simply not a sufficient measurement anymore,” he says, noting that while Nokia may be shipping more devices than many other companies, its margins and average selling price (ASP) have plummeted.
Dawson says that when combined, an OEM’s operator share, total shipments, ASP, margins and the percent of its total shipping volume that are smartphones offers a more complete picture of who’s actually winning and losing.
Most will not be surprised to learn that when all those factors are taken into account, it’s HTC, Samsung and Apple that appear to be growing at a healthy rate, while Sony Ericsson, LG and Research In Motion (RIM) all appear to be taking a beating as their shipment numbers drop right along their ASP, margins and subsequently revenue. Motorola maintains the middle of the pack, but Dawson adds that having Google as its new keeper could help it significantly.
The name of the game is bringing up ASP through the selling of more smartphones, something Samsung seems to have mastered. Ovum estimates Samsung’s margins have increased by 33 percent over the past year on the back of its Galaxy line. Apple’s margins have risen only 7 percent over the past year but given that the iPhone 4S is its first new device in a little under a year, Cupertino is still performing well compared to most others.
It may seem a simple task to just start manufacturing and shipping more smartphones, but Dawson cautions that the complexities of the market and the need to differentiate are just a few of the challenges standing in the way of players in the space. Add to that the need for strong carrier partnerships, a devoted developer community and lots of apps and you can see why a company like RIM is having a hard time succeeding.
It remains to be seen what kind of unveilings will happen at this year’s show. Google and Samsung have cancelled their event but there’s sure to be others waiting in the wings.