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Galaxy S7

At the time choosing Android seemed like a smart choice for phone makers. Many will now regret that decision.

Choosing Google’s operating system was a shortcut to the market. It saved time and money. A lot of money. It costs at least a billion dollars to build a phone operating system from scratch.

Android looked like it would do for phones what MS-Dos and Windows did for PCs.

In one sense it did. Android accounts for the lion’s share of the market. About 85 percent of phones sold this year use the software.

What Android didn’t do was establish a level playing field. Only one, maybe two companies have benefitted.

Nothing special

The problem is one Android phone is much like every other Android phone. This means a cheap Android phone seems like a bargain compared with a more expensive Android one.

To get around this Phone makers add their own software layers to the stock Android OS.

That could be a waste of time. Many customers prefer it when phone makers do less to change Android. It’s doubtful whether users think software overlays add any value to their phone experience.

Avoiding the Android overlay

Indeed some customers prefer it most when the phone maker does nothing at all. They buy Nexus phone models built with stock Android and no overlays.

When sales grew fast, phone makers stuck with the plan because there was a promise of an eventual payday.

Two market changes mean that is now unlikely.

Replacement market

First, the market slowed. In most of the world, the phone market is, in effect, a replacement market. IDC says phone sales grew just 1.6 percent in the last year. There aren’t many more new customers to sell to.

Second, a wave of Chinese phone makers challenges them with low-cost, good quality alternatives.

In the parts of the world where there’s still room for growth, customers want cheaper phones. That means lower margins for companies making phones.

Losing money

LG, Motorola and HTC lose money every time they sell a phone. There is no clear path to profitability for these companies. None of them is in good shape.

Sony was in a similar place this time last year. It since rebooted to focus on selling high-end models. The company dropped about two-thirds of its models.

Up to a point the strategy paid off. Sony’s phone business is now profitable. Although the margins are so small it might be better to describe it as break-even. This year’s tiny profit is little compensation for years of huge losses.

Samsung winning

Samsung was struggling to make money from phones for a while. It now makes a respectable profit. The company is doing so well that it can afford the recent recall of Galaxy Note 7 models.

Until recently only two phone brands mattered: Samsung and Apple. LG, Motorola, HTC and Sony are insignificant. They lose money. They lose so much money you have to wonder why they stay in the phone business.

Soon we can stop wondering. One or more of these brands will close their phone making operations. At Mobile World Congress HTC was more interested in selling virtual reality hardware. Both Motorola and LG were pushing devices other than phones — at a phone industry event no less.

Huawei emerging as challenger

The elephant in the room is Huawei. It is now the third largest phone maker in unit numbers. It is also the third in revenue.

While Huawei doesn’t break out phone financials, we can assume the business is profitable. It has scale. Huawei has factories working around the clock in Shenzhen and elsewhere churning out phones.

The recent Huawei flagship phone, the P9 sells for about half the price of a Samsung flagship. It might not have the feature list or the brand recognition. Yet 90 percent functionality for half the price is a compelling sales proposition.

Huawei is no slouch with innovation. The P9 beat Apple to market with a dual-lens camera by five months or thereabouts.

Chinese phone makers

Behind Huawei is a flotilla of smaller Chinese phone makers. They all offer low-cost phones with functions to please users who want a working device, not a piece of jewellery to flaunt.

So let’s look at where the market seems to be heading. Apple iPhone sales may or may not have peaked. It doesn’t matter. The company has momentum and a loyal band of followers who will snap up with it offers.

Apple’s ecosystem is greater than just phones. There are productivity benefits for those who commit to it.

Reports this week say the new iPhone 7 is selling out in stores. This tells you Apple will continue to make more profit from phones than anyone else.

Galaxy woes

For now, we can assume Samsung’s Galaxy Note 7 problem is just a stumble, not a sign of deeper problems. There will be a financial hit and some reputation damage. Yet the company should get over this fast enough. It will be interesting to see if Apple, Huawei or anyone else benefits from the incident.

Samsung sells twice as many handsets as Huawei and makes three times the revenue. That means it should stay in front for now. Huawei is growing fast. The company has deep pockets. If necessary, it can subsidise its phone business from its lucrative network hardware sales.

That telco relationship will also serve Huawei well. It opens doors that Samsung doesn’t have access to.

Huawei built up a head of steam and continues to grow faster than the market.

It’s possible Huawei or another Chinese phone maker buys one of the established brands. Yet that’s fading. After all, Lenovo’s acquisition of Motorola hasn’t been a great experience.

LG, HTC and Motorola fading

More likely LG, HTC and Motorola will fade into the background. We’ve seen something similar happen with Microsoft and Blackberry.

Sony has a better chance of making it in the phone business. Although the parent company may find more lucrative investment opportunities in its other markets.

At the time of writing Apple, Samsung and Huawei account for two-thirds of all phones sold. In effect they account for all the profits made from selling phones. For the near future it looks as if the story of the phone business will be how they perform compared to each other. The other brands are no longer important.

exhibition hall at Mobile World Congress

Barcelona’s Mobile World Congress is the telecommunications industry’s annual showcase and conference.

As the name says, the emphasis is on mobile technology. That’s where you’ll find today’s action. Everyone from consumers to small businesses to corporations depends on devices you can carry.

Apple wasn’t at MWC 2016, but every other technology company worth talking about was at the show. This makes it an ideal place to get a taste of where technology is heading.

If the device makers get their way, we’ll all be using more virtual reality. The devices were everywhere. At the moment they are no more than expensive toys and there’s little worthwhile VR content. The technology may take off, but don’t hold your breath.

Phone innovation stalls

One possible reason for the VR product surge is that phone makers have reached the end of the line with conventional devices.  This year’s crop of phones from the big brands offered little that is new or revolutionary. Screens were not bigger. They did not offer higher resolution. Most phones are still flat touch screen glass slabs with metal cases.

In almost every case, the changes were incremental with phone makers refining their wares.

Samsung, the world’s largest phone maker, used MWC to launch the Galaxy S7 and S7 Edge models. Launch razzmatazz aside, there’s something tired and stale about the Galaxy S range. The phones offer little that’s new or exciting.

That doesn’t mean existing Samsung users won’t want to upgrade.

Samsung fixes shortcoming

From what I saw in Barcelona the new models were fixes correcting flaws in the lacklustre S6 models. Samsung’s Galaxy S7 phones have more rounded bodies. There are no sharp corners making them more comfortable in the hand. Samsung has restored the microSD slot — something many Galaxy fans missed in the S6.

Samsung says the new phones have bigger batteries than the S6 models. They need to be bigger, a busy S6 user might struggle to get past lunch time on a single charge.

None of this is groundbreaking.

There was no new phone buzz at the Samsung pavilion when I visited. The new models were only on show behind glass cases. Visitors appeared more interested in Samsung’s virtual reality products than in the phones.

While you can’t write Samsung off, it is clear we have gone past peak Galaxy. 

LG tries a different approach

The lethargy around Samsung contrasted with the hands-on excitement at LG’s stand. Demonstrators showed how the modular G5 can change features by snapping-in new capabilities. You can add a better camera, hi-fi sound or even something resembling a tiny robot.

A modular phone is a clever idea, but in its current form it feels like novelty for novelty’s sake.

Even so, this was the most radical phone innovation on show at MWC. It could put life back into LG which has struggled to make money from phones. Show visitors seemed interested in LG’s modular approach.

For me the curious aspect of this is that the underlying G5 is LG’s best every phone. I only had hands on for second, but I could get a lot more excited about owning the G5 than the Galaxy S7.

Sony: A new hope

Sony showed mid-range Xperia X and XA models. The phones I saw on the stand show a possible new direction.

Xperia X and XA phones have less heroic specifications than the flagship Xperia models with emphasis on camera and battery life. Sony says the phones will cost less than rival models although how that works in New Zealand isn’t clear. They’ll need to come in at less than NZ$800 to make an impact.

The market hasn’t been kind to Sony. The company loses money and there’s no obvious sign than will stop. Which is a pity because the Sony Xperia phones are a good choice for less geeky users. I suspect many Samsung Galaxy customers would have a better experience with a Sony phone.

HTC chooses VR

HTC’s phone losses are so bad I doubt we’ll see much more from this once-great brand. There were new midrange phones from HTC, but the emphasis was on the Vive virtual reality headset.

You couldn’t get close to the HTC stand for the crowds queuing to try the Vive. HTC sent a press release earlier this week saying Vive is available for pre-sale, whatever that means. You’ll need deep pockets HTC says it will cost US$950 in New Zealand. That includes GST but doesn’t include shipping — a strange way of telling us the price. At a guess that means you’ll need to pay around NZ$1500.

There were new phones from ZTE and Xiaomi at MWC. I ignored them as they are unlikely to make it to New Zealand, at least not through official channels.

Bill Bennett travelled to Mobile World Congress as Huawei’s guest. 

 

LG G4 phone

Although LG’s G4 is one of the best Android phones you can buy It isn’t likely to sell large numbers. At least not in New Zealand.

That’s because at NZ$1200 it is too expensive.

It doesn’t stack up well against the competition.

LG’s problem is that the G4 is squeezed between Apple at the top of the phone market — the iPhone 6 Plus is $50 more expensive — and cheaper Androids offering a similar experience.

As Andrew McPherson points out, the Moto X is a good alternative. You can buy it for NZ$600, half the price of an LG G4.

Sure the G4 has better features: a better screen, a better camera. Even so, there’s little you can do with a G4 that can’t be done as well with the Moto X.

Better Android options

If you’re adventurous there are even cheaper Android phones that deliver almost as much as the LG G4. Vodafone NZ sells the Vodafone Smart for $150. You’ll get, perhaps, three-quarters of the functionality and pay one-eighth of the price.

You don’t need to visit the bargain basement to get a sharper price. Even Samsung’s swanky Galaxy S6 costs $100 less than the G4. You can get the Samsung phone for under $1000 if you shop around.

There’s not a huge gulf between Huawei’s $800 P8 Android flagship and the G4. The LG G4 may have a better camera, but almost no-one will notice the difference in practice. You might as well pocket that $400. It’ll pay for a lot of mobile data.

LG G4 phone

LG’s latest flagship phone, the LG G4, will warm the heart of any long-term Android fan. It is one of the last remaining Android flagships to keep a removable back, memory expansion slot and replaceable battery. That combination once distinguished Androids from iPhones.

If you miss those features, this is the phone for you.

There may be an old-school feel to that classic combination, but otherwise the G4 is a 2015 smartphone through-and-through.

The G4 has a 5.5 inch 1440 by 2560 pixel display. At 538 pixels per inch, it makes for razor sharp images and beautiful text. The colour and brightness are first class. The screen shows stunning, crisp pictures.

LG G4 display up with the best

All 2015 flagship phones have good displays. This one is up with the best. Likewise the camera. LG uses a 16-megapixel camera capable of taking sharp images. It produces some of the best low-light condition pictures I’ve seen from a cellphone.

The camera software offers more manual mode flexibility than I’ve seen on other recent phones. That might appeal if photography is important. It might put you off if you look for simplicity.

Inside the case is a six-core Qualcomm Snapdragon processor. On paper that puts it a touch behind the eight-core processors found on other Android flagships, but outside of hardcore geeks no-one will ever notice a difference in practice.

LG puts the power and volume buttons on the back of its phones, not on the side. This may appeal to some people. I struggle with that, but it’s not likely to be a deal breaker for anyone. You can knock the phone to wake it, again, this feature is not for everyone.

I’m not a fan of the way phone makers load software over Android. The good news is they are now more restrained. LG’s software looks and feels seamless enough.

LG’s problem is that all phone makers are on top of providing great screens, cameras and processors. So standing out from the crowd requires fresh thinking. I’m not convinced LG has found the right answer.

Leather back

Most 2015 flagship smartphones are glass-fronted metal or plastic slabs. The review LG G4 came with an optional black leather back cover.

Apart from making the phone look different in a sea of sameness, it makes it easier to grip. Leather also gives the phone a better feel.

LG packed a dark plastic alternative back in the case with the review model. That feels cheap.

Glass and metal phones have more of a quality feel. The downside is they can be slippery in the hand.

Less likely to drop

Dropping a $1000 phone is not fun. The G4 plastic cover feels just as slippery as glass or metal. Although it can take more rough and tumble. It wouldn’t be expensive to replace if you scratched it.

The leather back has a grain effect, making it harder to drop the phone. It still doesn’t have the solid, quality feel you get from an iPhone, but for the most part it sits in the hand better than other Android flagship phones.

A leather back could put it among the most comfortable phones to hold, but for one problem: the G4 gets hotter than most other phones. I also found the case too large for easy one-handed operation, although that applies to all similar sized phones.

Overall LG ticks the boxes with the G4. It’s a flagship 2015 Android phone with all the trimmings. Yet, despite all the good points, there’s little to catapult the G4 ahead of a crowded field. 

That means any decision to buy the G4 will come down to price. LG hasn’t announced the New Zealand list price yet. Parallel importers sell it for around NZ$1000. It will need to come in at a lower price to tempt those who would otherwise buy a Samsung Galaxy S6. 

Update: The New Zealand recommended retail price is $1200. That makes the LG G4 $100 more expensive than the Samsung Galaxy S6 and $50 cheaper than the least expensive Apple iPhone 6 Plus.