Smartphone portfolio planning doesn't have to be a guessing game. Carriers and OEMs don't have to launch dozens of smartphones each year and hope that one succeeds.
In every major smartphone market, there are underlying price and usage trends that dictate which launches are successful and which are not. And these trends are noticeable enough to use them in portfolio planning and predict, not guess, the winners.
First and second half of information:
There is no doubt that consumers like choice. But when it comes to smartphone markets it would be more accurate to say that some consumers like choice. In most major North American and Western European markets, just five to six smartphones drive nearly 70% of total smartphone sales.
Similar numbers are seen in most other markets as well. In short, a handful of devices drive the majority of the sales. Smartphones are not commodities (not yet anyway) and clearly successful devices have certain winning attributes.
The challenge product portfolio managers in carriers and OEMs then have is to identify and forecast these winning attributes and plan their portfolios to reflect these attributes accordingly. The inability to do so accurately means that one has to launch several smartphone models at various price points with different feature sets in the hope of finding one that sticks. This approach comes with a cost - namely, greater development, marketing and testing expenses. Smartphone vendors and carriers should start moving away from guessing the winners to intelligently forecasting them and their key attributes.
In the end, there are just two primary attributes of a successful smartphone - the user experience it targets and the price point at which it is offered to end-users.
User experience is often treated as an intangible quantity, especially when used in context of end-user devices. But in fact, it is possible to relate the usage behaviour of customers to software and hardware features of a device.
Consider, for example, a high-end customer who desires an entertainment-centric smartphone experience. Such a user would probably buy only a certain type of a device - perhaps a device with a slate form factor (ie, no physical keyboard), a big screen (maybe around 4-inches), high resolution (that enables optimal viewing of video) and lots of on-board or removable memory (for storing music and video). At a software level this user is probably interested in built-in music streaming, a variety of supported audio/video codecs etc.
The other primary attribute of a successful smartphone is its price point. The trick is to offer a user experience at a price point that matches the consumer's willingness to pay. While a mid-end customer who desires an entertainment-centric user experience might want the same features as a high-end customer, his willingness to pay might mean a smaller screen, lower resolution and lesser memory, all of which translates into a cheaper device.
By segmenting smartphones into different price bands and user experiences based on their offered features and then observing their sales, one can decipher the underlying user experience and price preferences that are unique to each market. This can help carriers and vendors to understand and make customised forecasts as to where the smartphone market is heading, and prepare their smartphone portfolios accordingly.
Smartphone portfolio planning is not a guessing game anymore. The market is mature enough to perform an informed analysis of what users want and what they are willing to pay to get it, and the real winners among carriers and OEMs will be the ones that can do this most accurately.
Daniel Kellmereit presented this at the Mobile Commerce during Telecoms World Africa in Cape Town, South Africa, on the 14 September 2010.
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