MWC Day 1 –Going bananas.

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MWC retro mania continues (except 5G).

Android dullness alleviated by a banana.

• HMD (Nokia) has once again laid bare how dull the world of smartphones is these days with its relaunch of the 8110, better known as the banana phone.
• It is a re-imagining of the original device which was hugely popular in the mid-1990s and it comes in the perfect colour: bright yellow.
• I must admit I was not expecting much from this obvious gimmick, but just like the 3110 in 2017, the table where the device is sitting is rammed with people all jostling to get their hands on the product.
• This in stark contrast to many of the other stands where there are any number of black glass slabs with Google apps on them that warrant barely a glance from passers-by.
• This is not an indication that the banana phone is going to sell huge volumes but an more an indictment of how uninteresting the world of Android devices has become.
• This combined with a market that is once again stagnating indicates how difficult has become for anyone that is not Apple or Samsung.
• This means that the smaller players will have to find an edge of some kind to make a decent return as volume is really no longer an option.
• This is because Samsung has such a large volume advantage that even Huawei has all but given up trying to break-it, meaning that everybody else has no chance.
• This leaves differentiation through a niche or a feature as the only viable option.
• This can be anything from playing on a user’s desire to buy a product from their own country, AI components or finding a very specific user case or feature.
• Outside of this, Android handset makers will still have to grind out an existence selling products at 2-4% operating margins.
• This is not an environment where I would want to be invested unless it is at the top where the ecosystem is or at the bottom where a technology edge can be delivered (value added components and maybe some novel antenna design (see below)).
• I expect that in 2019 it will be a relaunch of the Nokia 8800 that will drive everyone bananas.

5G – Antenna issues.

• With the crystalisation of the specification of the 5G standard in December and another year under the belt, the 5G demos have become more tangible.
• Now we can see prototype devices of roughly the right size and shape running at multiple Gbps using all of the new radio tricks envisaged by 5G.
• However, one thing these demos all have in common is that the devices are made of plastic because the highly complex antenna arrays that facilitate these speeds will simply not work with a metal case.
• At anything much over 28Ghz, (30-300Mhz is targeted) they may not even work with a plastic case but as these wave lengths, the signal tends to get absorbed by almost anything.
• Hence, if 5G wants to make it to the mainstream, there will have to be a huge amount of hardware innovation around how to deploy a series of antennas that have line of sight to the base station without trashing the aesthetics of the device.
• According to Ericsson’s surveys, consumers seem keen for 5G, but I doubt they will like the form factors of their phones without some real advances being made in this space.
• This is particularly the case as gigabit LTE (which I suspect that almost every consumer will find indistinguishable from 5G) does not have to make these compromises.
• This is a theme to look for (and invest in) over the next year or two.