Smartphones search to inspire after devices hit upgrade impasse

The world’s biggest smartphone makers are preparing for the most important week of their year as they line up to launch their latest high-tech devices into a fiercely competitive and increasingly commoditised market.

A range of high-profile devices from Samsung, HTC, Sony, LG, Lenovo, Huawei and Microsoft will be unveiled next week at the Mobile World Congress, the Consumer Electronics Show in Barcelona.

Samsung, in particular, needs to try to stem the slide in its smartphone sales with the latest premium Galaxy handset that will be unveiled on Sunday.

Consumers were underwhelmed by the previous two updates to the once dominant range, including the Galaxy S5, which was launched at the same show last year to great fanfare. Sales fell flat amid criticism that the cheap-looking plastic handset had not moved on enough from previous efforts.

The big handset makers know that their newest gadgets will be measured instantly against a tide of increasingly technologically advanced cut-price alternatives from brands far less familiar to western ears. Among them are Xiaomi, OnePlus, Wiko, Micromax and Coolpad.

“In such a highly mature smartphone market it is increasingly difficult for vendors to differentiate their high-end products,” says Annette Zimmermann, research director at Gartner, the technology research company.

Handset makers are throwing every technical upgrade they can into their devices. New versions will come armed with better cameras and screens, faster processors and the latest designs using metal alloys and shatterproof glass. 

“We expect an even more intense competitive mobile phone market in 2015,” says Ms Zimmermann.

The battle to be biggest in the sector is as tight as it has ever been — Apple and Samsung shipped roughly the same number of smartphones in the last quarter.

But the direction of travel is markedly different, with Samsung shedding about a third of its market share in a year and Apple celebrating after an astonishing rise in sales on the back of its latest iPhone 6 launch.

Samsung’s share of the global smartphone market profits was less than 10 per cent in the last quarter, according to Strategy Analytics, with most profits being made by Apple. 

The US giant is reaping the rewards from its push into China last year, but Samsung has had a problem in the country because low cost but high-tech smartphones from domestic vendors such as Xiaomi and Lenovo have cut deeply into sales. Executives from Xiaomi will be at Mobile World Congress scoping out the competition, although the company is not showing off any new devices.

“It is a very big week for Samsung,” says Ben Wood, analyst at CCS Insight. “They took a big misstep with the all-plastic S5 in 2014 and so will want to come out with something very different, and much more successful.”

This time, if the rumour mill is correct, the new Galaxy phone will be entirely re-engineered. The South Korean group is expected to ditch the plastic backing for a more solid metal and glass frame and include innovations aimed at catching the eye of a fickle consumer.

Samsung is not alone in needing a hit. HTC is lining up its first move into wearables with a smartband and an update of its flagship “One” phone range, while both Sony and Microsoft are bringing out their latest devices that analysts say will promise better cameras, screens and processing powers for lower prices.

All three groups need to prove to consumers that they can offer something different, according to Mr Wood. The goal is to lift them above the scores of smaller handset makers that claim small single-digit shares of the smartphone market with devices that for most people “will be good enough”. 

However, telecoms executives are worried that there is little that Samsung — or any of the major manufacturers — can do to spur growth in the moribund market for mobile phones.

Apple goes it alone

The one notable absentee in the list of global technology groups showing off their latest smart devices at Mobile World Congress will be Apple.

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At the top end of the market, where the Galaxy S6 will be aimed, a dearth of innovation has meant that premium manufacturers of smart devices have struggled as cheaper rivals have quickly matched designs and specifications.

One executive at a leading mobile operator is blunt: “Smartphones are a done story. These are all now just screens — thinner, bigger, rounder, whatever. Move on.”

Even Apple, which is not showing off any new products in Barcelona, will not be immune from the ennui in the smartphone market. “While Apple had a very successful 2014 and a record fourth quarter, Apple has to come up with something innovative in 2015 to replicate such record sales,” says Ms Zimmermann.

With innovation in the smartphone market slowing, some companies are turning to the accompanying wearables market to win customer attention.

Ahead of the launch of Apple’s much anticipated Watch next month will be a barrage of similar products from rivals looking to steal some of its thunder.

Amid the plethora of similar looking smart bands and fitness trackers, watches from Huawei and HTC — which has a partnership with major US sports clothing company Under Armour — are being talked about by analysts as significant.

The wearables market is already splitting into different product areas designed for specific needs. Ranges of devices on show next week from companies such as Filip are designed specifically for children to wear and their use can be tracked by parents.

There are also niches opening up in the smartphone market. Devices makers are set to respond to the concerns around phone surveillance with the launch of several handsets offering better privacy and protection of information using military level encryption.

China’s Gionee is lining up to offer a phone that claims to be the world’s slimmest, while others will declare their devices to be the most hard wearing, long lasting or waterproof.

Cutting through such marketing claims, however, it will be easy to see the dearth of genuinely new ideas. The halls of Mobile World Congress will be stacked to the rafters with endless tales of rectangular slabs of glass and metal that are almost interchangeable, with little of the excitement of previous years that underpinned the five-year smartphone boom.

Analysts hope there will be some signs of innovations from market leaders such as Samsung, however. Otherwise, the future of the smartphone market looks increasingly low on thrills, and correspondingly low in profits for companies that once reaped large rewards from the launch of their latest phones.