Mobile Industry: Predictions for 2014

Mobile industry is known to move at a fast pace and so it has always been difficult to make predictions. As the first quarter of the year comes to an end, I am making a few predictions for the rest of the year.

1. No new innovation in smartphones, specs war to continue

After years of incredible innovations since launch of iPhone, it seems that the mobile phone companies are running out of new ideas. Last year we saw incremental changes in iPhone 5 and Galaxy S5. Vendors are launching phones with larger displays, higher RAM, Quad-core & Octa-core processors but nobody knows that is that next wow feature. Though curved and flexible displays are beginning to show up but I do not expect any new innovation in smartphones for next 9-12 months. Higher specs would continue to move down in price points. Features that were available in over $300 phones last year would be available at $200 this year.

2. Screen displays to move beyond 1080p

This year we are likely to see many high end devices moving beyond Full HD with launch of 4K resolutions. Most of today’s TVs, many tablets, and some phones today display at what is called “1080p”. For a phone, this would mean that it displays 1,080 horizontal pixels by 1,920 vertical pixels, combining for around 2 million pixels (2M).  “4K” devices display 4X the amount of pixels, 8 million (8M), driven by a resolution of 3,840 vertical and 2,160 horizontal pixels.  As smartphone innovations dry, I see 4K displays in mobiles to go mainstream and not be limited to a few stray launches even though the use case is limited to gaming.

3. Micro-brands to gain share with increasing fragmentation in smartphones; Samsung to be the biggest loser

Samsung has lost significant share to lesser known brands like Xiaomi, Lenovo, Micromax, Gionee, etc. in smartphones esp. in emerging markets. I see this trend to continue with China situation replicating in many other emerging markets which are open markets (open markets are where operators sell only the service and not the mobile phones to consumers). As per IDC, Samsung & Apple had 19% & 7% market shares in China in Q4’13 and rest 74% share was distributed largely among Chinese vendors. This is very different from other markets where the top 2 players control over 50% market share. I would not be surprised if Samsung’s market share were to fall from 28% to almost 20% by the end of the year

5. Consumer frustration with technology to rise – multiple devices, wearables

Most of the consumers are not comfortable with technology and need simple things. According to a consumer survey, conducted by Google, “The New Multi-Screen World: Understanding Cross-Platform Consumer Behavior,” 90% of all consumer media interactions are cross-platform and screen-based: smartphone, television, computer, or tablet. Within these multiple interactions, the consumer experience with brands crosses multiple devices, settings, operating systems, and applications. Consumers expect their interactions with brands to be seamless and significant. However, today the experience is very fragmented and hence frustrating. The user experience is not only multi-device, but also a multiple operating system and multi-application. The rise of wearables is likely to add to the already complex ecosystems. Convergence is the need of the hour but it is still elusive.

6. Voice recognition to go mainstream

Voice has been the simplest of the modes of communications. Apple launched Siri 2-3 years back but its impact was limited due to price points of Apple and not so good voice recognition capabilities on Siri. However, Google Now is changing the landscape. The voice recognition on Google is fantastic and with Android, the lower price points will also get benefited. Many other players are likely to launch voice recognition services and we can see almost 10% of smartphone users using voice recognition services in some form or the other by the end of the year.

7. New operating systems will fail to make an impact

Multiple new operating systems like Firefox, Sailfish, etc. are emerging on the scene but none of them are likely make any impact on the market. A few vendors might launch a few experimental devices on these new platforms but they are unlikely to invest behind the new ecosystems. The new operating systems would also find hard to get the backing of the application developers. I foresee the ecosystem war to remain primarily between the three large players (iOS, Android and Windows).

8. Connected cars to become a reality

This year, the key theme seemed to be connected cars in all major technology events like the CES, Mobile World Congress, etc. In-car connectivity and infotainment services are key areas automotive providers are seeking to differentiate on. Apple recently launched CarPlay and has tied up with all the big names of the car industry like Ferrari, Mercedes, Volvo, etc. Similarly, Google formed the Open Automotive Alliance (OAA) in January 2014. The aim of OAA is to bring Android to vehicles. The OAA is supported by Audi, GM, Honda, Hyundai and NVIDIA. Though currently the efforts are limited to high end cars, embedding LTE modules into cars will become the norm over the next five years when LTE would be more widely available. This will also open up new revenue opportunities for operators apart from differentiation for automobile companies.

9. Wearables hype to continue but opportunity to remain a mirage

Wearables seem to be the latest buzz word as the innovation in smartphones slows down. Almost all the vendors have either revealed their wearables plan or are in the process of launching them soon. However, it is a new category and still evolving and I do not see it generating revenues in the foreseeable future.

Health devices make up the vast majority of wearables sales today, and that’s likely to continue. Other devices have to find a way to appeal to a specific consumer need before they really take off. I have serious doubts on the watches. Today, most of the people either do not wear a watch or wear it for the brand value. This habit will take a lot of time to change.

As per Gartner, the hype around wearables is at its peak of inflation expectations and the wearable interfaces are at least 5-10 years from maturity. The hype cycle for emerging technologies can be seen in the diagram below

Gartner Hype Cycle for Emerging Technologies, 2013

10. Mobile video surpasses video traffic from PC

In 2014, mobile video viewing levels will equal PC viewing for the first time, according to research firm Yankee Group. The change will be due to the availability of better devices, faster wireless networks and cheaper data plans. This will result in people spending more time watching video, or longer, TV-like content, on mobile devices, according to Yankee Group. Mobile video viewing will also begin to rival TV and DVR video consumption in 2014, the company predicts.

12. Focus on battery management than innovation in Battery technology

With increasing specs like the Octa-core processor or 4K screens, the demand on the battery performance is likely to increase further. There is no new innovation coming to battery technology and hence the focus of the vendors would be on battery management. We are likely to see the energy-saving interfaces, e.g. glance screen on windows phone that gives the notifications on the lock screen so that the user does not have to awake the phone to see the any missed call or message. We might see the context aware battery management. e.g. if a user is 200, miles from home and the battery may not last the time it would take to reach home then the phone may automatically shift to power-saver mode. In a few cases, the vendors would give the users more control on power management by allowing switching off the number of applications that run in the background

In my opinion, we are in for exciting times in the mobile world. I would encourage the readers to give their comments on the above trends/predictions and add any missing trend
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Disclaimer: The views expressed in this article are my personal views and do not reflect the views of my employer.

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