Adios 2018, Hola 2019!
Updated: Jan 3, 2019
Last year’s darkness derails. A steady growth carriage carries bouquets of positives in tonnes.
2018 has ended and it’s time for the “Pundits and Gurus” to make predictions. I am none so you’ll have to give me some benefit of doubt here on my predictions.
When it comes to smartphones trends, I have drawn a lot from:
a. China as a market for its eco system and success of its brands globally. Smartphone business moves around R&D and supply chain, and China is strong in both. What happens there gives one a tremendous insight into how things will shape up elsewhere.
b. US as it’s amongst the top 3 markets. #Apple as a brand has a rippling effect on what happens on Android devices – In terms of technology and design – Notch was one such example.
Globally, based on various reports getting published, the global smartphone volume will see a decline in 2018. This will be due to increased smartphone replacement cycle and prices, industry consolidation, declining China market, a static US market, and economic headwinds/uncertainties etc..
However minimal as it may be, but things definitely look a little brighter in 2019.
India which will show just about a double digit growth this year, will maintain the same in 2019. One can attribute it to the low penetration of smartphones and replacement demand for the first wave of 4G phones sold in 2016-17.
I’d say that the smartphone market size for 2019 is between 160-165 million with smartphone contribution being higher than feature phones for the first time. Let’s tag this as the first of the many great news that 2019 comes bearing.
While everyone talks about volumes, I feel it’s value that is more important for the Industry. The growth in revenues will be much higher as both volumes and ASPs will increase. Second great news.
Sentiments Are Positive
2018, I feel, was the most difficult for many associated with the industry – brands, businessmen and employees. Based on all my studies, I strongly believe 2019 is going to be much better as it will be the year of digital adoption.
On a lighter note let me add a touch of numerologyfor those who believe in it.
Since we have taken China and US as the reference markets with India as our base market, let us see what does 2019 have in store based on forecasts from the numerology norms of these countries.
China: 2019 is the year of the Pig. Pig is mild and a lucky animal representing carefree fun, good fortune and wealth.
US: In Christian numerology, the Trinity is very important and linked naturally with the perfect, most holy and the best. Even before Christianity, 3 was linked to the superlative and the Greeks translated it as superlatively great. The Latin translated it as happiest.
India: 2019 promises amazing opportunities for greater happiness, fulfilment, and well-being.
So from all the three cultures – 2019 seems to be a year of good fortune, fulfilment and happiness. Third great news.
A brand is as good as its products and let us therefore start with what we can expect on products.
As mentioned in my earlier blog, the hardware has exceeded the limits required. So what’s next? While brands may still try and play a bit on hardware, the most exciting smartphone innovations of 2019 should happen on the software front.
Let’s try and predict.
1. 5G Phones
While 4G adoption in India will only increase in pace with the large base of feature phone users, and there is apparently no readiness or requirement of 5G phones, we will still see brands launching them. Why? It can be a good selling point for 2019 flagships. And we Indians love to buy phones based on hardware is known to all!
While the first 5G commercial handsets will go on sale from 2019, sales will not begin to scale up until 2021.
#Motorola is planning on selling a 5G mod for some of its smartphones.
In fact, most of the big names have already confirmed they're going to be introducing 5G technology during 2019: the likes of #OnePlus, #Samsung, #Sony, #Huawei and others are all on the record as wanting to introduce 5G handsets over the next 12 months. Others may not have said it in so many words but may well do it as well.
4G LTE, currently the dominant handset technology worldwide, will remain a mainstay for mobile phones.
The only devices that will make use of a 5G network in 2019 will be Android based. There will be no iOS device on this much-anticipated network. And note this – you're going to pay a rather hefty price for entry.
2. Foldable Phones
Well, the foldable phones will be big, thick and expensive, but are definitely coming during 2019. We might see something as early as the CES 2019 in January. We've already seen Samsung show off a prototype foldable phone.
Not too far behind is Huawei – Their CEO Richard Yu said so during the launch of the Mate 20. LG hasn't said anything officially, however recent patent applications by the company suggest it's working on this design too.
The advantages are obvious – a large screen, tablet-style experience when the device is opened out. All this in a pocket-friendly form factor when folded (no hinge in the middle). Android is adding support for screens that shift in size in preparation for a new wave of devices. No news from Apple though. The technology won't be perfected, and it will be met with lukewarm acceptance initially. However, with the concept finally approved, manufacturers will start getting creative with the idea and by the end of 2019 we'll start seeing some fascinating uses and designs for foldable phones.
3. The Evolution Of The Notch
Notch will stay at least for 2019 but a Notch change is surely on it’s way. Phones such as the #OnePlus6T have already reduced the Notch right down to almost nothing, and if Huawei's latest teaser is to be believed, it's soon going to be debuting a phone that features a circular Notch completely surrounded by screen. 2019 will see different Notch types and positions.
iphone started the trend in 2017 to reduce the display bezel. Even Samsung – which has held off on the Notch up till now – has been showcasing some work-in-progress Notch ideas that might appear on some of its phones during the course of 2019.
As brands work out how to embed fingerprint sensors under the front display, the next on list using the same trick could be the Notch which may vanish by 2020.The camera in this case will be tucked behind the display.
4. More Camera Lenses
The number of cameras and megapixels have already exceeded required limits. The only thing left on the camera is the increase in camera lenses, but I do believe some brands will still try and up the megapixels.
I read on the internet and to quote “We're dealing with rumour and speculation here rather than confirmed fact, but considering that LG has been spotted patenting a camera with 16 lenses – a hexa-lens camera – it seems likely that the major players are going to keep adding lenses on the back of their phones until there's no more room left”.
So we’re definitely going to see a significant improvement on the camera performance front in 2019.
5. Added Artificial Intelligence
The buzz word for the 2ndhalf of 2018 was AI and it is already playing a major role in flagship smartphones. As we move through 2019, expect that role to get bigger and better. The premium handsets of 2019 will be able to do more than ever before without your help.
Most high-end phone processor chips now have dedicated components for artificial intelligence calculations. This means that they can handle tasks specifically suited for machine learning, like being able to recognize a dog and a cat in a photograph, or being able to tell your voice from anyone else's.
That in turn means a phone doesn't have to upload these kind of recognition tasks to the cloud, so you get your results quicker and the device responds instantly.
There'll be a host of improvements on the software side too of course, as Google Assistant, Siri, Bixby and the others continue to get smarter.
AI will finally reach that point where it can successfully (and regularly) predict user behaviour and make interaction with apps far more efficient and intelligent.
By the end of 2019, the majority of our mobile communications with support and customer service will be in the form of AI-fuelled chatbots. To take this one step further, most users won't have the slightest idea they are communicating with a bot. That's how far AI will progress in the coming year. Of course, chatbots aren't really new, but they are becoming more prevalent with time.
7. Size May Matter
Will it be the year of 7” Smartphones?
Going by the fact that video streaming and gaming are the key consumption apps, screen size does matter. Also, addressing the fact that 2019 will be the year of folding smartphones, it’s a simple derivation that this year may be the year of ultra large displays.
IDC reckons that by 2022, 98% of Android phones will feature screens with a size larger than 6 inches.
9. Gaming Gaining
#PUBG and #Fortnite have caught the attention of the masses. It has been reported that the gaming phone market will grow from the present 1.8% to around 3.3% in 2019 as per CMR. We already have One Plus, #Poco, #Asus, Huawei, #Nubia addressing the segment with specific devices. And, if that be the scenario they must have done their homework on this segment. The others need to take inspiration and start focusing more on this segment already. At 3.3% of the market, gaming phones could contribute to close to 5.3 million devices or approx.. 450k devices per month – a great number on its own.
10. Pure Android
One thing I believe we're going to see is more devices running a pure Android experience. The #AndroidOne project proved that a stripped down Android is not only possible but desirable. Without carrier and OEM bloatware Android is faster, more reliable, and far easier for users to configure and manage. We already have complaints on various OS from brands not being liked by customers (#Realme, #Xiaomi). Will it be through the Android One devices, which will help lead the charge for more consumers demanding purer Android devices.
11. Android Q a Question
Q should start rolling out to some devices (such as the Pixel 3) by the Q2 or Q3 of 2019. What will it feature? It's too early to tell, but my guess is that it will be a minor upgrade of #AndroidPie with the expansion of the gesture-based navigation to make it not only more prevalent but more intuitive. One possibility is doing away with the back button altogether and replacing it with something like a two-finger swipe to the left. Clearly, AI will be at the heart of Android Q, as will security.
One addition we'll see in Q is support for Foldable phones.
With the existing offline brands, online exclusive brands coming offline and some more Chinese ODMs taking a shot at the Indian market, there is bound to be a fight for placement at retail space. Whether it is at the brand, distributor or the retail level, no one would like to carry too many brands in the same price segment and the product portfolios have to get trimmed. Even internally, brands have realised that this has led to cannibalisation of their own range.
With the smartphone penetration increasing, and more and more data being stored on them, along with the increasing digital transactions, security would be a key area to be addressed by brands. #Blackberry does stand a chance if they are able to showcase the security levels their phones carry vis a vis a normal Android device.
14. Water And Dust Resistant
With the ASPs going up, customers would be keen to hold on to their phones for a longer period. These are two areas which I feel will start getting included in the mid-end and higher priced phones as differentiators.
15. Glass Backs
As per #Counterpoint – 41% of the devices in 2019 will be with glass backs. As of now 80% plus devices in the premium segment have glass backs and we should see this trend go one step down to the mid-price level segment.
16. What Else Could Happen?
· No Micro SD cards.
· Display to act as speaker - #VivoNex display emits sounds.
· Power/wake button to act as volume button.
· No SIM card slot.
· Mid and high-end market will continue to grow faster with upgrades. The ₹10-15k segment is already growing the fastest, with the sweet price spot shifting from₹10k to ₹15k.
· Augmented Reality (AR) limited to maps and games to become a standard feature.
Possible resurgence of the Indian Brands
The new e-commerce guidelines should give a ray of hope to the Indian brands with currently limited play online. They will get a chance to sell their goods with even the major platforms which were not focussing on them so much till now.
#Micromax does have a reasonable play online and may not gain much on this account. Others can.
With hardware specs reaching their peak and most of the top 5 brands, forget the others, not making money in India, the price game cannot continue for long. It has to go beyond price now. Product design, major innovation, a unique customer offering in the phone. It could be anything.
In terms of the price segment, the ₹14,000-29,000 price segment, as per Counterpoint, will grow by four times by 2022.
Be it offline or online, with the cashback offers and freebies by online under the radar, EMI would come up as a strong option for customers wanting to buy smartphones now with the ASPs moving up. Of course the cost of finance has to be borne by either the brand or the customer, but yes, the down payment being low could do the trick.
With the competition getting fiercer by the day, and the Indian customers not known to be very loyal to brands – customer retention to ensure repeat buy is essential! This is one area where Indian brands lost out and Samsung could sustain earlier. For the top 5 brands having a reasonable base of customers now, this parameter which is the most neglected is going to become an irritant if not an negative influencer for brands for repeat buying which do not take it seriously.
Normally when a product gets sold online, service issues escalated are less. When it comes to offline, service issues do act as an irritant for the retail when old customers walk-in and complain of issues while there are new customers standing to buy. It also spreads a negative word of mouth.
Heads up for Xiaomi and all online brands moving offline. This is one area which they need to address on priority. They cannot hide behind the e-commerce portals any longer.
Well, I have covered most of the things except the channel play and the brand expectations. Stay tuned for an in-depth coverage on these two in my next blog coming up soon.