Tag Archives: smartphone

Why Xiaomi is The Future of Smartphone Industry?

What is the world´s fourth and China´s biggest smartphone company?
Hint: It is not Nokia.

It is actually company called Xiaomi, four-year old Chinese company, who does really affordable smartphones and has been dubbed as the Apple of China. it has taken China by storm and is now eying for world dominance. So forget the usual players for a moment and take couple of lessons from the new rising star of mobile:

1.Smartphone market will be commoditized, be cheap
Smartphone is not a status symbol anymore or anywhere in the world. The latest innovations in smartphones have majorly been in terms of size. Xiaomi´s operating margin was only 1.8 percent compared to 28.7% Apple and 18.7 Samsung. Part of it is due to their aggressive growth strategy, but other part is the commoditization. Profits will definitely shrink in smartphone category. Especially when the main source of growth will come from developing markets.

2. Copy with pride & style
One of my colleague ordered new Xiaomi phone. When I tested it out, it was quite a revelation for a devoted Apple user. Actually it was probably the first Android phone I thought of actually, so striking was the similarity with iPhone. Whereas many other copycat products I have seen, it did not feel cheap or shady at all. The package was nice and the phone felt way more premium than its price. So it would be unfair to categorize Xiaomi phones only as copycats, but it would be unfair not to mention that aspect either. It is not coincidence that Lei Jun, the founder of Xiaomi, rocks black turtlenecks and jeans in their product unveilings. Technologic innovation is expensive, so Xiaomi bypasses that one and innovates in other areas of their business.

3. Innovate the business model
Xiaomi is not technologically innovative, that is true. From business perspective, they have been really disruptive. Xiaomi keeps their phones longer in the market than other competitors (even to 18 months compared to 6 months of Samsung). Apple has to come up with new products constantly to keep up their margins. Xiaomi is more betting on component cost drop-off during those two years and prices their product initially close to the component cost. Selling phones (they also have tablets and tvs) is just one side of the coin; their main goal is to actually sell services and apps through the phone.

Next year will be important litmus test for their approach as they are rapidly expanding beyond China. They concentrate on markets with large populations, e-Commerce infrastructure and weak telecom carriers. The initial response from India was great, although now the sales have been blocked because of potential patent infringement. The focus on India, Indonesia, Brazil & Russia is wise strategy, but there might be actually some opportunities in more developed markets as well. My colleague was not the only Singaporean who has bought their new phone. During this Christmas season Xiaomi phones have been more popular lucky draw prizes than iPhones. At least for a while, the slick design and renegade attitude has certain aspirational cool factor, not normally attributed to budget versions.

4. Innovate the distribution
Xiaomi has a digital-first approach to the sales of their phones. They partner with big e-Commerce retailers (like Tmall in China and Flipkart in India), and sell their phones through them. They never sell through brick & mortar stores. By selling directly to consumers, the company can collect and administer all the feedback and built it into the next generation of their phones.
They are also well known for their flash sales, which resemble more of buying rock concert tickets than traditional mobile phone sales. In China, during Single´s day, they sold over 200k smartphones in less than 3 minutes. In India they sold out in their flash sales in 4 seconds. Flash sales work both from branding and business perspective. They create demand and buzz around the phone. Flash sales are not just solitary transactions; they are actual events. One of the main reasons why they sell limited quantity of phones each week is to keep costs down by having smaller inventory.

5. Being cheap does not mean that you do not have brand
Xiaomi phones are entry-level phones, but creating brand affinity with teens is not necessarily a bad strategy. Xiaomi is not just a cheap phone for their devoted fans. It resembles more like religious cult. Part of it is that Xiaomi is probably the first technology brand, that Chinese can really be proud of. It does help to have charismatic leader to go with it as well. Xiaomi launch events are real festivals and people even buy tickets to attend them. Over 60 million watched the livestream and some even took 15h ride to attend those launch events. The events, flash sales and the product serves as marketing. Xiaomi does not really do conventional advertising and uses only 1% to marketing. Their devoted fans and devoted leaders are the best marketers. When Lin Bin (Xiaomi co-foudner) had a “planking” competition with their management team this December, the photo was shared over 3000 times. Not necessarily something that would happen with more traditional companies.

Although you would not necessarily switch to Xiaomi phone, their disruptive business model is something to follow and watch out for in 2015.

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Why Smartphone Batteries Are Always Dead?

During recent years our smartphones have taken huge leaps.

Still even though we have fingerprint scanners, high-end cameras, all the bells and quite a lot of whistles, one question still boggles every smartphone user´s mind:

Why does not my damn battery last any longer?

 The reason is simple. Smartphones in general follow Moore´s Law, meaning that processing power will double for every two years. Batteries are expectation to this, because they are chemical products converting chemical energy to electrical energy. Batteries do not follow Moore´s Law as their “technology” has already been optimized.

When you are desperately trying to find a place to charge your phone, here are couple of things to consider:

Team is only as long as its weakest link
Life is like working out in gym. As tempting it would be to only do bench press and skip all the more difficult exercises, it will eventually backlash. Smartphone manufacturers have been obsessed with new additional features and bringing more power. What they have neglected is the battery. At some point, the drained battery might be the Achilles heel of the whole smartphone industry if it is not taken care of.

People learn new habits when they are forced to
When we still used feature phones, it would have been totally unheard of to charge your phone even on every day. Nowadays you charge your phone whenever there is an opportunity and you are accustomed to everyday charging. People also routinely disable different features to maximize the battery life. Would people be more effective if they could use all the smartphone functions without the fear of battery drainage? One way to increase the battery life is not to use data, but that pretty much defies the idea of smartphone, not?

The solution will come from somewhere, we just don´t know the angle
It might even be that our batteries will never be able to last as long as during feature phone era. The toll our new features put on smartphones is just too much. There will be improvements in battery technology, but it will take time. There are couple quick wins to be had, such as smarter antennas that could double your battery life. The answer might not also be to increase the durability of the battery, but to make recharging faster. If you could recharge your phone fully in 30 seconds (or even 2 minutes), that would be the potential game changer.

Batteries are not a trivial matter, as certain studies say that people appreciate it more than brand, speed or camera quality. That might be an opportunity for some newcomer brand to disrupt the marketplace?

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Wearable Tech: The End of The Mobile as We Know It?

When observing people playing with their smartphones, tablets and phablets*, it is quite hard to believe that handheld mobile phone is only 40 year old invention and has been in mainstream use only for the last twenty years depending on the country. The influence of mobile phone to human behavior has been profound. When comparing current smartphones to the first bulky ones, they are quite far away from its original purpose of speaking to each other. New devices are definitely mobile, not necessarily that much of phones anymore.

So enter the wearable tech. It will be the next step for the mobile revolution.

Phone has been just a transition period with mobile. Mobile consists of three important elements: freedom, access & connection. You can achieve those with multiple devices. When assessing the future of mobile, there are two major shifts happening. Firstly, we are moving to the age of different screens. Secondly, we are totally defining mobile in a new way. It easy to dismiss wearable tech as a fad, but Sergey Brin raises really important point in this comment from Ted Conference few weeks back:

“Is this the way you’re meant to interact with other people? Is the future of connection just people walking around hunched up, looking down, rubbing a featureless piece of glass? It’s kind of emasculating. Is this what you’re meant to do with your body? You want something that will free your eyes.”

Using of smartphone has created new behavior patterns for us (aptly documented in the excellent Curious Rituals). Wearable tech is ideologically step backwards from smartphones. It is technology adapting to existing human behavior instead of actively changing it. In a way, wearable tech is more natural than using smartphone.

When thinking about possibilities of wearable tech, I would closely benchmark sports companies. Quantified self –movement naturally started from sporting and has evolved lately to other areas. Nike FuelBand is one of the first crossover wearable tech products, which has its roots in sports but expands to other areas as well. The really big potential is with the normal people. Being a sports fanatic myself it is often hard to forget that the target audience of us is lucrative but still quite small. The wearable tech company who is able to tap the mainstream audience will win. And win big: the wearable tech industry is estimated to be worth of $6 billion by the end of the year 2016.

When creating wearable technology, we have to think quite deeply about the issue of what people would wear and what they are wearing now? Looking from that angle, the wearable tech products most likely to hit mainstream should be quite familiar product types. My hunch is that they will be either watches, glasses or clothing (or combination of all of these):

The Revenge of the Watch
Watch has been relevant for hundred of years. You do not necessarily use it to its original purpose of timekeeping, but it has still maintained its role as a status symbol for many people. If you check time from your mobile phones, why would you not send your WeChat-messages from your watch? It will be interesting to see will certain existing watch manufacturers with strong brand equity challenge the technology companies in this field?
Watch out for: Kickstarter all-star Pebble, The rumoured iWatch, traditional existing watch manufacturers, sports watch brands (such as Polar or Suunto)

Using Glasses to Look Be Smarter
What can I say about Google glasses that is not said in this video (NSFW)?

Nevertheless, I want to acquire one pair, despite all the privacy concerns.Google Glass has already competitors as well, but all the eyes will be on the Google on this one.
Important players: Google Glass, Luxottica (world´s largest eyewear company)

Maxwell Smart was Right
With clothing technology this rubber boot phone is definitely the most interesting one:
Rubber Boot Phone
(Designer Sean Miles project for O2)

Jokes aside, the smart clothing has more supporting function with wearable technology accessories (maybe excluding bracelets). Different sensors can track things in clothing, but it is unlikely that we use our underwear as the main starting point for our mobile communication or access. That being said, combination of smartphone and smart clothing will probably be quite crucial in the transition period when moving to the new era of mobile. Especially if quantified self- phenomenon continues expanding to even more mainstream audiences.

Will wearable tech be the future of mobile?
I truly think so. The question is when that future is evenly distributed to the whole world?

* Contender for the most annoying word invented in last couple of years.

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Why Google is Struggling with Mobile?

The future of the business is mobile.

Or so they say. Currently it seems more that future business of companies is ruined by mobile. Zynga has lost 85% of its value, because the mobile adoption has been faster than expected. Facebook has been stumbling with mobile advertising, although its recent mobile ad revenues beat the industry estimates.

Even the traditionally steady high-performer Google has been showing signs of slowing down. The problems have their root cause in mobile: Motorola acquisition has not yet paid off and mobile advertising has driven average click prices down.

Here are five other reasons why Google (like many other companies at the moment) is struggling with the mobile:

1. Status Quo Bias
For years the AdWords has been the hen that lays the golden eggs for Google. As humans, we are more likely to believe that things remain the same and are more likely to select to stay in status quo whenever possible. Every company encounters status quo bias at some point. AdWords are still selling like pancakes, the main difference is that the average click price has dropped for four consecutive quarters in row.
Although no one accuses that Google is not doing mobile innovations and investments, there has apparently not been pressing need for them to roll them out faster.
2. Android Ecosystem does not pay off (expect for Samsung)
According to certain estimates, Google makes about $6.50 through ads on Apple devices, compared with under $2 in Android. Google makes roughly the same amount of profit selling Android ads & apps in year that Apple makes selling iPhones a week. Google has regarded Android ecosystem more of an extension of the advertising. Currently it seems that it only benefits Samsung (and maybe to some extend users).
3. Mobile advertising ecosystem is currently broken.
People are not yet ready to make purchases with mobile. That is likely due to change in the future. Meanwhile, the mobile ads generate less revenue than traditional ads on average. Mobile has been thus far more about duplicating the web experience for Google, than regarding it as a center of the advertising innovations.
4. Consumers are even more unpredictable with mobile
Who would have predicted that texting will become popular? Or that tablets will become hits? Consumers are always fickle and surprising, but especially in mobile. Consumers do not really know (or at least articulate) what they want, but they still act quite fast to get it.
5. Google is not (yet) producing phones
Although Google bought Motorola, there has been a strict separation of church and state between Android and Motorola. Apple and Samsung have proven that the money in mobile lies in hardware. Microsoft has returned to hardware game as well. Facebook will probably enter the competition soon. Can Google stay away from the phone game?

I am sure that Google has certain tricks up on their sleeves regarding the mobile. Until those tricks are revealed, there will be more growing mobile pains ahead.

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