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Is the Current Genre of Smartphones Good Enough?
May 14, 2018 Hyun, a 36-year-old office worker living in Seoul, always bought the latest smart devices, but since he changed his smartphone to Samsung's Galaxy S7 Edge two years ago he stopped purchasing new phones because he feels that it is still sufficiently convenient. "With Galaxy S7, I can use its mobile payment service, its design is still attractive and the phone has a long battery life. There is no reason for me to purchase a new smartphone," Hyun said. Even though manufacturers have been rolling out new high-end smartphones, fewer people are buying new smartphones. Hyun is part of those who are not. According to Strategy Analytics, smartphone sales in the world topped 1.5 billion units for the first time in 2017 but overall sales were up by only 1.3 percent from the year before. The percentage of the overall sales had hit double digits in 2015 but plunged to 3.3 percent in 2016. Gartner reported that smartphone sales hit nearly 408 million phones in the fourth quarter of 2017, a 5.6 percent decline over the fourth quarter of 2016. The agency said this is the first Y/Y decline since it started tracking the global smartphone market in 2004. BayStreet Research says the replacement cycle of smartphones this year is 31 months while it was only at 23 months in 2014. The research agency expects the period to increase to 33 months next year. In a bid to encourage more people to purchase the latest smartphones, manufactures have been trying various strategies:
Apple will be launching even more expensive iPhones this year, with its largest screen ever for the flagship model, which means a starting price in the range of US$1100 to US$1300. Recently, one Apple analyst suggested a price hike coming for the smartphone, which is likely to push more sales to the LCD version. UBS recently came out with a note suggesting Apple could make the newest iPhone X version this year start at $1,100. The firm provided the following chart showing iPhone price bands and how the trend has usually been higher, outside of the special version iPhone SE. Figure 1: iPhone Core Price Bands Source: UBS and Company
As discussed previously, Apple is expected to release another three-phone launch lineup this year, consisting of a similar 5.8-inch OLED screen, which would be an updated version of the X, a 6.5-inch OLED "X Plus" device, and a roughly 6.1-inch LCD screen "budget phone" that would be an updated version of the iPhone 8 but with a larger form factor. The LCD one could start at $699, the new X at $899, and the X Plus at $1,099. It's even possible that the LCD one could be even more expensive given the screen size, but that all depends on the hardware put into the device. The UBS report also suggests that the iPhone SE could have its price dropped to around $300. While that would likely increase the market opportunity, it's still a two-year-old phone. If Apple were to significantly upgrade the hardware in the SE and then charge $300, it likely would hurt margins a bit given the rise in component costs over the past few years. I think the small form factor phone needs to remain in the lineup, but Apple either needs to upgrade the hardware a bit (meaning price stays same or goes higher) or dramatically cut the cost because it is quite outdated. Competition in the foldable panel segment is expected to heat up soon as a number of China-based flat panel makers have geared up their efforts to develop related products aiming to catch up with their rivals in Korea, according to industry sources. ET News said China's major players including BOE Technology, Visionox, Tianma Micro-electronics and EverDisplay Optronics all highlighted prototypes of their foldable displays at the recently concluded China Information Technology Expo 2018. BOE displayed a 7.6-inch foldable OLED panel with a 5R radius of curvature and a resolution of 2,048 by 1,536 pixels (QXGA). When folded, the panel can be used as a handset panel; when unfolded, it can be used as a tablet. The panel can withstand the folding process of up to 100,000 times. Visionox highlighted a 7.2-inch folding panel with a 6R radius of curvature that can withstand at least 200,000 folds. Tianma was showcasing a 5.99-inch foldable display with a resolution of 2,880 by 1,440 pixels (WQHD) and a radius of curvature of 3R, as well as a notch on the screen. When unfolded, the panel can display high-quality images at an 18:9 aspect ratio. EverDisplay exhibited a 5.5-inch Full HD foldable panel with a 3R radius of curvature. In addition to the foldable panels, the company also showcased an array of curved and rollable panels at the show, demonstrating its strong intention of developing flexible OLED products. |
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Barry Young
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