One of the biggest surprises from Mobile World Congress last week was the furore around the new Nokia 3310. Here we have a phone with no real internet connectivity, no touchscreen and a very low resolution camera. Despite the low specs, it is has undoubtedly stolen the limelight from the latest, greatest smartphone launches.
Interestingly, the handset isn’t actually even designed or built by Nokia and so shares little apart from the name with its famous predecessor. Instead, it is being brought to market by HMD, a Finnish start-up that acquired rights to the brand from Microsoft, who bought Nokia’s handset business in 2014 and sold the bulk of it to Foxconn in 2016. We’ve seen similar cases too - BlackBerry now outsources its handset business and licenses its brand in order to focus on its high-security software.
Apple, which is still (just) the largest manufacturer by volume, and certainly by profitability, was again absent in Barcelona, so almost all of the handsets on show were running on a version of Android. It’s getting harder and harder for manufacturers of these handsets to differentiate, as they converge on similar designs and specs. The rise of the Chinese vendors is likely to continue, applying price pressure, although they too are now competing in the premium space through examples such as ZTE’s high-end Nubia brand.
Just as we saw handset manufacturers marginalise the brand power of the operators, we now see the over-the-top application and operating system providers doing the same to handsets. Like the network, the handset is now becoming a commodity, with buying decisions made on apps and user experience, not processing power.
All this led me to ask; what does the future hold for today’s seemingly all powerful handset companies? In the same way as the smartphone superseded the feature phone, consumers have choices in how and where they consume the content they value. The day I came home from Barcelona I collected a new car. It comes with a 4G modem and 3 years inclusive airtime, meaning I can get live updates straight to my car. Already, this means that my smartphone is offering reduced utility as my car, and the smart TV at home, become more important.
The way in which connectivity is consumed is changing, and new players are coming to the fore. We are likely to see a phase of increased fragmentation at the technology and device level, but with services (such as WhatsApp, Snapchat and Twitter) providing a seamless user experience across all of our devices. Who will be the next to join BlackBerry and Nokia in misreading their crystal ball?