MWC 15 – Day 1 – Action faction

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The real action in the mobile industry is no longer in Barcelona.

• With 90,000 attendees, MWC 2015 is bigger than ever but all through the bustle and the endless halls something is missing.
• Not only are the companies who make all the money in the mobile industry conspicuously absent, but no one is talking about software or ecosystem anymore.
• All of the product launches, the announcements and activity are almost entirely hardware centric.
• All of the stands are covered with endless slabs of black glass with a home button, a wearable or two and very little else.
• Samsung, Huawei, HTC, and many others have all launched products but the focus on the user experience, software and ecosystem is almost completely absent.
• It is almost as if the mobile industry has given up trying to compete in this space and has ceded the world to Google, Apple and China.
• The focus is back on hardware specification, connectivity and how much functionality can be crammed into a tiny piece of silicon.
• For the likes of Qualcomm, MediaTek and Intel, that is fine because there is a sustainable advantage to be had by being a provider of technology to consumer electronic devices.
• However for everyone else, nothing more than a commodity future beckons and the industry is set up to continue its break-neck race to the bottom.
• What is left is the possibility to earn a superior return by being significantly larger than ones competitors as R&D and sales and marketing are still critical parts of this business.
• By having greater revenues over which to amortise the fixed costs of R&D and marketing, slightly superior margins can be earned but these are very unlikely to get much above 10%.
• It is the ecosystem players such as Google, Apple, Baidu, Alibaba and Tencent who are making all the money with Microsoft, Yahoo! and Xiaomi snapping at their heels.
• Most of these companies are either not here at all or are operating in stealth mode leaving the rest of us vying for the scraps.
• It is still a massive industry with a vast revenue opportunity, but most of the real action and innovation is no longer here.
• Making the most of what is left is Samsung which has pulled out all the stops to differentiate itself in hardware and Samsung Pay but even if it is successful margins are likely to go back to 10-12% in the best instance.
• The two exceptions are Microsoft and Sony but they limited their announcements to the launch mid-range devices clearly aimed at recapturing the momentum lost in 2014A.
• It is clear that as far as the important announcements that will decide who makes the money in this industry and who does not have completely switched to the developer conferences.
• This is where the ecosystems reveal their latest services, their strategies to capture the hearts and minds of the users which at the end of the day is what now dominates the purchase choice by the user.
• Consequently expect the real action at BUILD (Microsoft April 29^th – May 1^st), Google i/o (May 28^th – 29^th) and WWDC (Apple – early June) to name but three, and it is there where the real future of the mobile and consumer electronics industries are likely to be decided.
• In that vein, I still think Microsoft has the greatest opportunity in front of it, but the time has come to really take the bull by the horns and explain its ecosystem to the end user.