MWC Day 0 – Prominent feature.

Reply to this post

A feature phone steals the show.

Huawei – Rear view mirror.

• Huawei launched its latest flagship the P10 and P10 plus but did not seem to be very excited about its products in a press conference that felt like it was simply going through the motions.
• This was exemplified by the fact that Huawei had Pantone on stage talking for 15 minutes about two of the multiple colour variants in which the P10 is being launched.
• Elsewhere, Huawei made incremental improvements to the camera and photography experience as well as marginal tweaks to the user experience.
• At its heart, just like every other Android phones in developed markets, the P10 is a Google device and where Huawei is able to drive further usage, it will be Google that really benefits.
• This is because, Huawei’s products remain largely undifferentiated to the user meaning that Huawei cannot charge a premium.
• Huawei has made good progress with its brand this year rising to No. 72 (Interbrand) but even Samsung at No. 7 only really makes money from its volume, not premium prices.
• Consequently, Huawei must find something with which to excite users otherwise it will continue to grind out 2-4% operating margins in the best instance.
• Huawei has made good share gains but barely enough to be seen only as a dot in Samsung’s review mirror.

Nokia – No downside to old glory.

• Nokia relaunched itself into the handset market with a throwback to its old glory days but the key ingredient, profit, looks unlikely to make a reappearance.
• Global HMD, a company backed by Foxconn, launched three Android devices and new version of the classic 3310.
• The 3310 has three features of note:
  • First: the battery lasts a month
  • Second: it has the Snake game
  • Third: it has the old Nokia ringtone.
• Beyond that it is a design classic and while not sexy, it is likely to appeal in Africa and India where nearly 100m feature phones still sell each quarter.
• Global HMD also launched the Nokia 3,5 and 7, which are three unremarkable Android devices that are really going to struggle to compete against the Chinese brands.
• The real clue to the situation at Nokia and HMD Global is in the prices being charged for these new devices.
• The 3310 is starting at $51 which in Nokia’s heyday would have been priced at almost half that and Nokia still would have made great margins on it.
• The Android devices are priced at $150, $200 and $315 which in my opinion do not stack up that well against what the Chinese are offering.
• This is clearly because Nokia no longer has the power of 40% global market share or its brand.
• Consequently, if it wants to make headway in Android, it will have to do something interesting with the devices or cut its prices.
• Good news for Nokia (the company) is that its exposure to this is simply the brand licence fee that it receives upon which gross margins will be almost 100%.
• Consequently, there is no downside for Nokia if this does not work out as planned.

Samsung – Comes in the box.

• Samsung launched a series of devices that I think need to have the accessories included in the box to drive user interest high enough to make a purchase.
• Following a pitch on the needs of 5G and the launch of some infrastructure, came 2 tablets of which innovation around the new S Pen was the most interesting.
  • First: the Samsung Galaxy Tab S3 which was an unremarkable Android Tablet other than it has four speakers and that the S Pen comes in the box.
  • Second: the Galaxy Book which is a Windows 10 Pro tablet that is very thin but in my opinion is far from cutting edge.
  • At the cutting edge, I find the Eve V which is 7^th generation i7 and is remarkable in that the device is fan-less.
  • The Eve V is a little thicker at 8.9mm but it delivers a more powerful processor, double the RAM, double the storage, more USB ports and a kickstand.
  • To jazz the Galaxy Book up Samsung is including both the S Pen and the type cover in the box with the device.
• The S Pen stole the show in my opinion as it works with both Android and Windows Tablets, is integrated with Photoshop and Staedtler is doing a version of the S Pen that looks just like its classic yellow and black pencil.
• Finally, a new version of the Gear VR was launched in conjunction with a hand controller that, of course, also comes in the box.
• Of software, services, artificial intelligence and ecosystem there was no real mention other than a nod to Samsung’s cross device strategy powered by Samsung Flow.
• The net result is that with the launch of the Galaxy s8 now on March 29^th, these launches are unlikely to have any real financial impact this year even with the accessories already in the box.

Take Home Message

• The launch of the new Nokia 3310 was the highlight of my day which is an indicator of how difficult it has become to innovate in smartphones.
• Industry profits are gobbled up by Apple, Google, Baidu, Tencent and Alibaba leaving those without an ecosystem struggling for relevance.
• Add this to a market that is unlikely to grow much in unit terms and may decline in monetary terms leads to a pretty grim outlook all round.
• This is why I continue to prefer the ecosystems of whom Tencent, Baidu and Microsoft are my top choices.