Stagnation is the enemy at Mobile World Congress

The world’s handset makers are converging on Barcelona for this year’s Mobile World Congress, where – if you believe the hype – they will be breaking new ground with their latest and greatest devices. But truth be told, consumers and analysts alike are beginning to wonder whether there will be any truly groundbreaking technologies on display, or whether we will just be hit with the type of incremental improvements that have become standard fare over the past couple of years.

Regardless of where you sit on the hyperbole spectrum, this is for sure: MWC is by far the biggest mobile event of the year and there will be no shortage of vendors launching flagship devices into the cut-throat world of high-end handsets. Apple dominates this space in the GCC, with the latest figures from IDC showing that the vendor was responsible for 48 per cent of smartphone shipments priced over US$450 in thefourth quarter of last year. This was spurred by quarter-on-quarter unit growth of 19 per cent after the launch of its new iPhone 6s and iPhone 6s Plus devices.

Apple itself does not partake in MWC, choosing instead to host its own annual event. But in a break from tradition, Apple is expected to hold two events this year – at the first, in March, the vendor will attempt to appease all the small-phone lovers out there by unveiling a new smaller-sized and more affordable 4” device called the iPhone 5se. This will be followed by Apple’s more traditional September pitch, which is when the much-anticipated iPhone 7 will be launched.

Samsung and LG will both be unveiling new flagships at MWC. Samsung at last year’s event unveiled the Galaxy S6, which departed from its traditional design and build quality. The device introduced a whole new look for the brand, with glass panels neatly encased in the kind of sturdy metal frame that smartphone aficionados have long been calling out for.

But it was not all about the looks, as the Galaxy S6 also boasted a much-improved feature set and screen, as well as a camera that was applauded industrywide. Despite managing to deliver such a highly regarded device, Samsung’s share of the GCC smartphone market continued to decline, falling from 46 per cent inthe first quarter of last year to 42 per cent by the end of the year.

“Samsung is really banking on the launch of its latest flagship devices – the S7 and S7 edge – to mark a sea change in its declining fortunes,” says Saad Elkhadem. “Both devices will see spec increases and a slightly fine-tuned look, but the overall design of the phone is expected to remain largely unchanged. The vendor really needs to amend its channel strategy and continue to streamline its offerings if it is to truly turn its fortunes around.”

LG has worries of an entirely different kind in the GCC, having garnered just a 1 per cent share of the region’s smartphone market in the fourth quarter of last year. However, it should be noted that its flagship G series is lauded in the tech space, and as such its latest release will be hotly anticipated at MWC. Rumours suggest that LG’s new G5 will change the vendor’s design language and introduce a fingerprint scanner and a dual-camera set-up on the rear. There is also strong speculation that the phone will feature a “magic slot” that will enable users to swap out the battery and even add other features simply by inserting a module.

HTC and Huawei might also launch new flagship devices at the congress. Both vendors are well-respected brands in the GCC, but they are experiencing very different growth trajectories within the region. Huawei has improved its position significantly over the past two years, and now commands almost 11 per cent of the GCC smartphone market’s volume, up four percentage points from the fourth quarter of 2013. HTC, on the other hand, controls just 3 per cent of the market and shows little sign of improving that figure.

“Huawei recorded shipment growth of 136 per cent between the fourth quarter of 2013 and the fourth quarter of 2015, a feat that was driven by a combination of strong marketing initiatives and the excellent quality of its products,” says Nabila Popal. “These products typically offer great feature sets at incredibly competitive prices, and as a result Huawei has become the first vendor to truly dispel the negative connotations that have traditionally surrounded Chinese brands in this region.”

HTC, however, seems to have lost its mojo. Its latest flagship device – the M9 – is beautifully crafted and well-priced but still fell short of expectations, while the iPhone-esque One A9 was poorly received because of its high price point and uninspiring feature set. A key point to note here is that consumers are now much more knowledgeable about the technical features that go into a phone than they were a couple of years ago, and HTC is undoubtedly feeling the pinch in this regard.

Ms Popal says: “While it has managed to maintain a volume share of about 2 to 4 per cent in most of the GCC countries, a growing band of channel players are beginning to wonder just how long HTC can continue competing in this increasingly ruthless marketplace. Will the vendor be able to ever gain a significant piece of the GCC pie or will it eventually phase out like LG or disappear completely like Sony? ”

This is expected to be a tough year for mobile shipments in the GCC, as the region battles tough macroeconomic conditions and a sense that genuine innovation in the smartphone space has begun to stall. This malaise is driving more consumers to postpone their device upgrades because they feel as if they are not really missing out on anything new. By the time the month is out, we should know whether they have a point.

Nabila Popal is a research manager, and Saad Elkhadem is a research analyst, for mobile phones and displays at IDC MEA.

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