There was no disguising the air of sobriety hanging over Mobile World Congress this year. Visitor numbers were apparently down by 25%. And it showed.
Some companies, with little to exhibit, appeared embarrassed to attend. A few even paid to cancel their bookings, underlining just how quickly strategies and priorities have been altered due to the economy.
The main topics from the event were:
- Sustainability, with companies looking to save money and show their green credentials in the process.
- Applications, which are on everyone’s agenda, opening up an interesting dynamic between manufacturers, operators and developers.
- O2 and Vodafone’s lofty talk about co-operation, cost cutting and leading the economy out of recession.
- Widget-based mobile internet access.
- Competition in the handset market with the emergence of new Far Eastern manufacturers.
The fall in the handset market in 2009 is now predicted at 15%. Manufacturers are clearing their previously over-ordered stock, and there is also the natural drop in consumer demand.
The market is becoming extremely tight, with several new entrants vying for a share in this smaller market, and most manufacturers are focusing their strategies on a similar area: touch-screen smartphones.
The paint was still drying on the Nokia stand when it opened on Monday (16 February). There were a few exciting new launches, but the one-time untouchable market leader looked decidedly on the ropes.
Nokia is facing competition for its crown from all angles. The manufacturer is so pre-occupied by new challengers Apple, BlackBerry and Google for its industry leadership mantle, it has almost forgotten to spot Samsung cutting its prices and taking the segmentation approach that has always proved so successful for itself.
Development of the Ovi portal and a move into applications was the big announcement (more of that later), and Nokia’s new handsets received a mixed reaction.
Last year’s range was undoubtedly poor; only the E71 and N95 sold well,
as Nokia became distracted by its internal restructure, and new focus
There was an update of two popular Eseries handsets; the excellent E71 has been given a slide-out keyboard, and there is also the bar-style E55, which takes on the two letters per key format of the BlackBerry Pearl.
Elsewhere, Nokia unveiled the eight-megapixel N86 slider and two phones built around mapping – the 6710 and 6720. Nokia released two navigation phones in 2008, the 6220, and the 6210 ‘navigation’ phone, which barely registered on anyone’s radar and was pulled before it launched.
There was a chance to see the previously announced 6700 – the everyman mid-range replacement for the 6300. It had a full life cycle, carried down from £40 per month contracts and into £50 prepay.
The N97 (pictured) is impressive, but is almost emblematic of Nokia’s potential problems. Operators will simply not want to fork out for this device. It is £500, and is just the start of a tense relationship with operators.
Vodafone and O2 responded furiously to Nokia’s announcement that it would bring Skype onto some of its handsets.
Buyers from operators question whether Nokia has the strength to bully as it has in previous years. One analyst believes that without the E71, Nokia would have really struggled last year.
The application store (following Apple, Google and launching along with BlackBerry) was the manufacturer’s big announcement.
One major problem for Nokia is that it cannot start from the same point as
Apple or RIM, who already have accounts with customers in the form of either iTunes, or the subscription accounts of BlackBerry users.
Tony Cripps, an analyst from Ovum, says: ‘Nokia plans to use operator
billing and credit card processing for content purchasing. Neither
means is as natural as Apple’s fully integrated experience.’
One network buyer says: ‘Nokia has been on a collision course [with
operators for some time], but Ovi really steps it up. They sound like they’re saying to us “we’re not just going to build profitable devices; we want a slice of your business as well”.’
Sony Ericsson was the most talked about manufacturer in Barcelona, raising questions on whether it would be the biggest casualty from the telecoms industry of the global recession.
Sony Ericsson’s problems stem from its own strategic errors in 2008, and
the ongoing internal wrangling between Sony and Ericsson, rather than the economy.
The strategy is to slim down the range that has been saturated with too many similar products over the last two years.
The manufacturer has taken a financial battering, with sales and profits collapsing. Profits were down 97% at one point in 2008. Group CEO Dick Komiyama has initiated a brutal cost-cutting programme across the world, and is now trying to produce fewer, but more ‘starry’ handsets at the top end.
New UK managing director Nathan Vautier says: ‘There’s been a whole area of work on becoming more efficient and becoming more flexible on development. We will bring down our production from over 30 handsets in one year, to less than 20 handsets.’
Sony Ericsson has not decreased its marketing budget for the UK this year, but the level to which the Walkman and Cyber-shot brands are being
phased out is unclear.
The Cyber-shot and Walkman brands will no longer be used on top-end handsets – as Vautier has said Sony Ericsson has taken both brands as far
as it could. Cynics say it is a further signal of disillusionment from Sony towards the mobile phone joint venture, after Sony blocked the handset business’s requests for the PlayStation brand on phones.
The two handsets for this year are good, but not great. The W995 (the last big Walkman phone, pictured, near left) looks to be a solid handset, and the new ‘Idou’ concept device (pictured, far left) is similarly strong, but not out until the second half of the year. The problem is whether the phones will look fresh and exciting when they are released.
There is a risk that the market will have moved on, with the likes of Nokia, Samsung, HTC, LG and even Apple bringing better designed handsets into stores faster.
It is a critical year for Sony Ericsson, but there is enough good will from operators and enough strength in the company for many to expect it to bruise its way through.
The Korean’s price cutting and segmentation made it a star performer in the UK and globally in 2008.
Samsung’s superb range of handsets on show in Barcelona laid down a strong statement of intent, and the Omnia HD (pictured, below) and Tocco Ultra (pictured, right) were marked improvements on last year’s versions. There are also touch-screens across all price points.
Samsung dominated prepay at the end of 2008, and it wants to continue that, but with a move into the business market.
The success in mobile coincided with falls in its other electronics business last year. One operator buyer says: ‘They probably thought lets liquidate the money from fridges and TVs and execute hard on mobile.’
In the Americas, Samsung has virtually swept up the Motorola customers single-handedly, but the task now is to continue it. Samsung is pursuing a completely different tack to Nokia. The battle with Nokia has an interesting ‘hardware versus services’ dimension.