Mobile-review.com Spillikins #72. Singapore as Temporary Centre of Mobile Universe

CommunicAsia 2010 is going on right now in Singapore, and it is for the first time that all participants have prepared new products to demonstrate. Nokia, Samsung, and Sony Ericsson can be observed among those. The summer is just round the corner, and it is about time we did some field work as the number of announcements is huge, which make the backlog for September. Based on the previous years' experience, this is an unusual time for the manufacturers to unveil their new models. They must be readying for the fall, which is not bad.

Contents:

Nokia on CommunicAsia 2010, or the Triumph of the Square, plus the Producer's Troubles

Nokia's presentation appears weird somehow. In particular, I cannot understand the Nokia X5-01, an odd square model that doesn't look very appealing in real life. Even the price of EUR 160 is not able to compensate for its quite unattractive design that looks awful in pictures. The designers are either having rest or cutting down on niche models. Initially, I was going to touch upon where all manufacturers got the idea of a square design from, but this is not happening today, since we have quite a lot of news to cover, to say the least.

In addition, the company announced an 8-GB version of the Nokia X6, which would retail for EUR 240 in the coming fall. Such price should generate decent sales for the device; it is absolutely identical to the original model, save for a single color tone.

Nokia didn't seriously prepare for the showcase as they had other things to do. In particular, some journalists and bloggers were gathered in London and presented the Nokia N8. Naturally, those were prototypes only, as the manufacturer didn't have the final version, month and a half before the mass production. The journalists were disappointed with the prototypes, since the latter couldn't offer any new user experience; the hardware was excellent but the software wasn't very good. I'm saying this with a reference to those who were actually present at the event and got their own impressions of the device. Strangely enough, their words went in line with what I had written in some earlier Spillikins even before the announcement of the device. As a proof, here is a link to the material with the impressions of various publications after the event collected together.

It is funny how people handpicked by Nokia turned out to be unanimous about the product. Even Symbian oriented resources had to point out, every now and then, that those were prototypes. In a sense that one shouldn't be too skeptical; the final version in September would be just awesome. Yeah, right. Say no more. This is my irony about all that happening; indeed my evaluation of the device was objective and it got support from various sources months later.

Last week, Nokia also issued an official document for the investors, in which it had revised the sale volume predictions for Q2 2010 (for your information, the second quarter is almost over, short of a few weeks). The results will be announced during the second week of July, but the company made a statement that those would be lower than anticipated or within the lines of the pessimistic forecast. I would like to remind you that Nokia's shares have been going down this whole year, and they dropped another 10 percentage points after the announcement. The investor pressure on the company top management is getting stronger, and negative opinions become louder. Specifically, those analysts who predicted Nokia's return to the smartphone market in 2010 are now saying the latter will happen in 2011 only. I second to that as an optimistic prognosis. To return, Nokia has only one last chance called Symbian^4; there are no other cards in its sleeve and it will have to bet on low prices otherwise. Against the background of increasing competition, that is hardly possible. At the moment, Nokia is putting additional pressure on its partners, in particular, its component suppliers, in order to lower the final costs of the products. However, it won't be very successful, especially taking into account the cheap Euro. The company is losing money because of the exchange rates difference, which does not allow it to implement a very aggressive pricing policy. Nokia believes to hold on to its market share in 2010, but I don't see that happening. They will lose a minor share of the global market, just a matter of 1-2 percentage points, which is more than enough nevertheless. The Symbian share will go down, due to the growth of sales volumes of other smartphone makes, too.

However, that's enough of melancholy; let's turn to other players, who have good news to share quite on the opposite.

Second Wave – Samsung Attacks on All Fronts

The Samsung Wave sales have begun. The first results have exceeded all expectations; there is no waiting list, yet the phone is quite popular. It is a very good result for a model of the price range. In Singapore, the company adds oil to the burning fumes by announcing several models at once, the key ones being the Wave 2 and Wave 2 Pro, as well as the Galaxy 3 and 5 (i.e. the i5800 and i5500).

Let's sort it out. The only difference between the Wave 2 and Wave 2 Pro is a slide-out QWERTY keypad in the latter. Therefore, there's no need to distinguish between the models; technically, they are the same. Both sport the TouchWiz 3 interface and Bada platform. On the downside, the screen is not Super AMOLED, just casual 3.2-inch TFT, and the resolution is mere WQVGA. That is the models' biggest downside. The camera is a 3-megapixel one and there is inbuilt Wi-Fi b/g/n there; the models are due somewhere in July or August. The prices are EUR 300 and 350, respectively, likely to drop down in the late fall. Are those successful models or not? I think, they will have decent sales but won't cause a market sensation. The reasons to that are the screen and the fact that Bada is not well known yet. The segment is dominated by Android phones; they are the priority for all manufacturers, including Samsung. Hence the sales will be moderate yet on the whole significant for the market.

The Galaxy 5 and Galaxy 3 appear more interesting, both to show up in July at the prices of EUR 250 and 300, respectively. Strangely enough, the Galaxy 5 is not the senior model, as one might judge by the index, but rather the opposite. Apparently, the goal was to have the enemies confused. It is a typical Android smartphone with version 2.1 of the system, 2.8-inch display, 2-megapixel camera, and no special features. The senior model has a 3-megapixel camera with autofocus and a 3.2-inch screen. Both devices are based on the TouchWiz 3 interface, have SocialHub, and are generally appealing. They can be thought of as the Spica replacements.

If I may, I won't discuss the projector-enabled phone (it's a niche model) as well as the Omnia Pro on Windows Mobile, which is another variety model before version 7 arrives.

Sony Ericsson – Both the Profit and Player Return

In the previous issue of Spillikins, I said that Motorola had taken the right course and was gradually improving despite its having sunk very deep. Now, Sony Ericsson is getting back on track. That can't be seen in the recent announcements yet, or probably not to the extent one would like. The changes are minor, but if the company plays the cards well, not only will it have the profits back (that should be attained in 2010) but will also start to increase its global market share by concentrating on the right products. Sony Ericsson's goal is trivial – i.e. to make every product make profit and add to the company image, help get back to the market. The necessary prerequisites are being created today – those are the Vivaz and models announced in Singapore. Let's take a closer look at them to see what the company is offering and where it is going with that.

The company is not intended to produce low-end solutions as the competition is very high, the margin is minimal, and it is difficult to vie with Nokia and Samsung. The latter would trample without even noticing. Yet one can't do without inexpensive phones completely, otherwise the price of the entry ticket to the Sony Ericsson world would be too high for the consumers. It is also ironic that the company's budget phones have not been very popular, usual for the market segment but not the best. And they have had little impact on the future purchase. That is, a person, who has owned a cheap Sony Ericsson, would often switch to another make for his next phone. In 2010-2012, the company will be working to change the situation for the better. What should it do?

It should offer some experience comparable across the low- and high-end devices. For instance, having owned an inexpensive phone, one should get the same experience plus extra bonuses like a bigger screen, better camera, etc. when upgrading to a senior one. Such models are being worked on at the moment; one of the first examples is the Yendo (cheap, touch-enabled Walkman), not the Cedar as the title of this subparagraph may suggest. Where is the J108i's place then? The latter is one of the dying-out representatives of the classic phones; in effect, the company updated the A200 platform once and again, slightly changed the interface, added a few features, and obtained a copy of the Naite. For EUR 100, that is a reasonable solution, not very popular but quite interesting. It obviously won't be able to catch up to Nokia's candybars but will find its buyer as a variety model. The way to the market is long, by Q4, that is by October, a lot of more powerful candybars with comparable prices will have appeared. Yet I will repeat myself to point out that the model will generate its projected sales. It's a variety model and nobody really bets on it.

New people have come to Sony Ericsson; they don't remember that the company has had touch-sensitive Walkman phones, for example the Sony Ericsson W950. That is why it is called the "first full touch Walkman phone" in the press release. In reality, the confusion is caused by the fact that it is the first touch-sensitive phone on the platform (what platform is it, by the way? It is definitely not A200 as I am told in my blog).

There will be even more models like that, they are becoming the priority. One can say that the Yendo is at the bottom of the price range, other solutions will be more expensive. However, much depends on the introduction of S40 Touch, which Nokia is willing to promote using an aggressive price schedule in order to compete with inexpensive Korean devices. Therefore, the price of such devices should be around EUR 100. Being the first to announce the product, Sony Ericsson makes a preemptive strike, yet other companies are wide awake. By the time the Yendo comes to the market, it won't be the cheapest or the most powerful; it will just have the Sony Ericsson style.

The sensor screen is low-end, 2.6-inch in the diagonal, with the QVGA (240x320 pixels) resolution. On the outside, the device resembles the X10 Mini, whereas on the inside, it mimics the interface of the senior model. In the end, it turns out quite nice for the general public, just like prescription drugs. Another common feature is replaceable panels; there is one extra in the bundle; the colors are raving bright.

It is one of the first devices to sport a 3.5-mm audio jack with remote control support (and first for Sony Ericsson). Such slots are supposed to be installed on all future Walkman phones (the actual remote control needs to be purchased separately; the MH810 headset will do, albeit it costs a bit too expensive for the Yendo audience).

The device is due in October at the price of EUR 100. The latter is reasonable but not best; yet the phone will press the Korean solutions due to its different looks and good build quality. Personally I find the model very appealing; the company should expect significant sales in the segment (significant for Sony Ericsson, not the market, which is more than enough for the company).

This product becomes crucial for the company. Here we have removable panels, the hardware and interface similar to X10 Mini. The difference is the 3" screen of 320х480 resolution. 3.2 MP camera has no autofocus, which reveals the budget solution confirmed by the European price of €250. This model is positioned slightly below HTC Wildfire to be released this summer for around €230-240. Keeping in mind the difference in design and the time of release I think HTC Wildfire will sell better, but X8 volumes will be noticeable as well, especially for Sony Ericsson. We do not know about other low end Android smartphones to appear at the time, which will make the X8 price not the most attractive. This announcement is too early.

Android 1.6 is offered now, but the manufacturer promises to get 2.1 by the time the phone goes on sale (the OS version is not as critical as the meager 128 MB of storage). If they don't make it, then 2.1 upgrade should be available at the beginning of 2011. That is fine for a low end model, but as the company plans to provide X10 with 2.1 upgrade at the same time, they will not be able to get version 3.0 and this will put the clock back on the flagship. For budget models like X8 it is not going to be crucial. This handset is attractive and will be popular despite the OS version and will sell much better than X10 Mini due to its size, which will retire X10 Mini from the scene.

San Francisco is Now Safe from Phones

When the politicians get involved, things get complicated. The mayor of San Francisco Gavin Newsom is a fan of technology and relies heavily on Twitter. The number of his followers there is 1.35 million people, which must be respected. It allows him to rely on people's opinion and offer various legislative initiatives. One of them would make all shops, which sell mobile phones, inform the customers about the SAR indicator. SAR is a measure of the rate at which energy is absorbed by the body when exposed to a functioning mobile phone. It does not show how safe or harmful a model is, but just indicates the level of tissues heat in watts per kilogram (the maximum level in the USA is 1.6 W/kg). Many people never thought about hazards indicators for mobile phones and there are still no reliable and impartial data or research in the field. The popularization of schungite plates by certain sellers and journalists is nothing more than a quasi science and we will not view it here.

Municipal administration of San Francisco have already made the necessary arrangements, including the font size no less than 11, which must be visible to customers. On price tags we will see a special label with SAR level. Is it useful for us? I am afraid, not.

SAR is measured in laboratories and the worst conditions for the phone are created. Artificially the phone is made to create the maximum electromagnetic field possible. At the beginning of 2000s SAR levels began to decrease for all manufacturers and reached 1.2-1.3 and even 0.1-0.3 for particular models. Then, the unexpected happened as the new networks, chipsets, models and hardware made SAR grow again. Starting from 2007 the old records have been regularly broken. First they got to 0.8-1.0 followed by 1.2-1.4. Have the manufacturers changed anything to increase the SAR levels?

The answer is in the methods of measurement, which record the peak and not the average points, which is quite logical as the worst case scenario should be taken into account. What was the main cause for SAR to grow so much?

The manufacturers improved the algorithms of radio modules, perfected the antennas and optimized the performance. Modern phones better connect with networks, keep this connection more effectively and are well prepared to work with modern networks and related equipment. "Better" must mean lower SAR levels, but it is not so. Some people think that higher SAR makes the phone more powerful and reliable. "It works even in the basement", - exclaimed one of my acquaintances while choosing the phone with the maximum SAR. Unfortunately, this is just an anecdote similar to the supposed danger of phones relative to their SAR levels. These are pure phobias of people. New algorithms of network connection are comparable for the majority of manufacturers and they offer the maximum power at the start of the talk. Optimum characteristics are chosen during the initial connection and the current measurement methods show the increased SAR. It is a cheap way to provide the reliable network connection (engineers, please do not criticize me too much and I know how it works, but am not ready to devote 5 or 6 pages of the Spillikins to explain all details. If you are ready to write such an article we will be more than happy to publish it, so here we have a deliberate technical simplification).

It happens that San Francisco initiative will not inform the customers, but just confirm the popular myth that the phones are dangerous. This initiative will strengthen such beliefs and some people will use SAR as the reliable indicator of the phones' danger, which has never been the case. Those, who want to get the maximum protection from the phones, should stop using them. Alternatively, you can follow several simple hints:

Japan is Ready to Attack the USA

The headline reminds you of WWII and Pearl Harbor attack from the Hollywood movies, but we are interested in the phones industry and Japan undergoes sweeping changes with the far reaching market consolidation. Japanese operators control all sales channels and dictate terms to the manufacturers, which phones even cannot have the logos of their manufacturers. Models with similar indices may be produced within one range by different companies. This is a paradise for operators and hell for the manufacturers. Nokia decided to withdraw from Japan as it failed to get a foothold in the market and almost the same miserable situation is "enjoyed" by the market leader in South Korea, where its products are not competitive. This is a completely different world with another mentality where other phone features are popular.

The Japanese economy suffered during the recession and the people stopped replacing their phones as frequently as they used to. A quarter of the mobile phones market is occupied by Sharp, which leads by a big margin from others, but Sharp is a local player and all its attempts to break into Europe or Russia failed. Unlike the Korean manufacturers Sharp has another mentality and was not ready to invest in the development of its brand, sales and distribution channels. It acted like a seller, not a strategic market player, which ended in unsuccessful expansion. The price of its handsets was traditionally higher than that of similar products from, let's say, Nokia, which is a typical feature of not only Sharp, but any Japanese company. Toshiba also tried to sell its phones outside Japan, but made the same mistakes. There are 8 major Japanese players, but their number has been falling thick and fast and the market has consolidated.

In May three Japanese manufacturers (NEC, Casio, and Hitachi) announced the joint venture under the name of NEC Casio Mobile Communications. 70% will be owned by NEC and 20% will belong to Casio. The joint structure will develop the models in its R&D center and there are plans for 12 million handsets to be produced in 2012. The company also expects to sell 4 million phones outside Japan (USA and Asia). These estimates must be treated with caution, because in the past ambitious plans of Japanese manufacturers often turned out to be mere wishful thinking. Anyway, the attempts of companies to enter the US market will result in additional pressure for other players.

Not much time has gone since May 1, but the number of players in the Japanese market has gone down from 8 to 6 and two more companies (Fujitsu and Toshiba) will enter the alliance on October 1. Fujitsu will become the main participant in the joint company with 70-80% of ownership (according to the Japanese papers). This resulting alliance will become the second player behind Sharp with 18% of the market. The group of NEC Casio Mobile Communications has not been No 2 for a long time. New company also plans to market its products outside Japan, which is too small for everybody. Asia and probably the USA are the main targets, while nothing was said about Europe. Changes in Japan are important, because they can reduce the current market shares of Asian manufacturers and offer new models for the global markets.

Question to Nokia No 3

To avoid repetition we advise you to read about the questions and their prehistory here.

Question No 3.

Dear Victoria,

You had no time to answer out first and second questions, but I hope this letter will be luckier and you will provide the comments to our readers.

Is it true that the sales of OVI Store software in Nokia shops in Moscow surpassed the performance of OVI Store in the rest of the country during the given period? How the company is planning to improve the experience with Ovi Store?

Sincerely yours,

Eldar Murtazin, Editor in Chief, Mobile-Review.com

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Spillikins #72. Singapore as Temporary Centre of Mobile Universe