Can Apple, Microsoft reinvent mobile businesses with phablets?
October 16, 2013
Apple's newest iOS 7
As the rumors heat up that Apple is developing a phone-tablet hybrid that will compete head-on with Samsung, Microsoft and HTC, phablets are emerging as a way for manufacturers to jumpstart sales.
Up until now, Samsung has primarily controlled the phablet market with its Galaxy Note line of bigger mobile devices that blur the definition of a smartphone and tablet. When the devices originally launched, marketers were reluctant to embrace them, but with sales continuing to grow, phablets are beginning to gain more attention.
“Quite simply, the Samsung Galaxy Note family has sold well and the rest of the industry wants a piece of the phablet action,” said Scott Bicheno, senior analyst of wireless smartphone strategies at Strategy Analytics, Newton, MA.
“From the consumer side, among the drivers have been the apparent convergent form factor sweet spot of a six-inch smartphone, especially for female consumers, as well as a degree of status associated with screen-size in some markets,” he said.
Catching up to market
The rumors that Apple is developing a phablet should not come as a surprise to anyone that is familiar to the manufacturer’s wait-and-see approach to drastic forms of innovation.
As the market for bigger smartphones has grown in the past few years, Apple has tinkered with the size of its products so that the iPhone has gotten bigger while the size of the iPad is decreasing.
Apple's iOS 7
The reports that Apple is developing a phone larger than five-inches wide points to the manufacturer’s slowly sinking sales and the need to develop products quicker to compete with Samsung and other manufacturers as consumers increasingly expect to do more with their mobile devices.
“We saw the opportunity during the first half of last year, and it’s playing out the way we expected,” said Jeff Orr, senior practice director of mobile at ABI Research, Oyster Bay, NY.
“If anything, the momentum is growing,” he said.
Microsoft is also making a big bet on phablets.
Earlier this week, the company rolled out software developed for smartphones with five to six-inch screens that will feature a bigger start menu.
The move comes after Microsoft has struggled to gain a significant foothold in either mobile phones or tablets when competing with Apple and Google.
Compared to Apple’s move into a phablet device, Microsoft’s phablet plans seem to be more rooted in helping the company get some of its mojo back after PC sales, an area where Microsoft was successful, continue to diminish.
Microsoft’s approach to innovation is between that of Samsung’s, which is traditionally first to market, and Apple’s wait-and-see approach.
“It’s a reflection of them adjusting their strategy to the market that has embraced tablets less than 10-inches long,” Mr. Orr said.
HTC has also announced the launch of its The One Max phone that takes a couple of features from both Samsung and Apple. The phone features a 5.9-inch screen and includes a finger-scanning security feature similar to the iPhone 5S.
HTC's The One Max phone
As the phablet market increasingly becomes more crowded, HTC wants to differentiate its product with a stylus that lets consumers draw on the screen and multitask.
The manufacturers’ ability to support multiple marketing campaigns at the same time will also play a role in educating consumers about the hybrid tablet-smartphone devices.
“Samsung, for example, has a marketing budget extensive enough to maintain separate campaigns for the several hero devices, including the Galaxy Note family,” Strategy Analytics’ Mr. Bicheno said.
“There is a growing trend towards a dual-hero device strategy, incorporating both a smartphone and a phablet,” he said. “This has the additional benefit of enabling two major launches per year, which helps smooth out seasonal sales fluctuations.”
Race to the bottom?
As more manufacturers develop their own phablet devices, the devices are losing some of their allure as a premium-priced device.
With Samsung’s Galaxy phablet, marketers associated the device with wealthy and younger tech-savvy consumers, although that will likely change as more devices become accessible to consumers.
Similar to the smartphone market, manufacturers will be able to make devices for cheaper, meaning that the product lifecycle will continue to shrink and Apple will be forced to speed up the production of new products, which many in the industry already see as tarnishing the brand once famous for rolling out significantly different and sophisticated devices with each update.
At the same time, fragmentation across all of these manufacturers with a bounty of new devices shows no sign of slowing down.
Despite Samsung’s success with the Galaxy line of phablets, the devices have also made it more difficult for marketers targeting Android devices to know where to place their bets.
In addition to varying screen sizes, Android is also challenged with variation across battery and memory life, which could have an effect on other manufacturers such as Apple that have promised marketers a relatively stable ecosystem since the introduction of the iPhone.
The number of mobile devices available to consumers is only expected to increase and will eventually force marketers to stop supporting multiple operating systems, which is expensive.
“Responsive design may help to change that, but it seems likely that it will be a while before a given app can be truly optimized for all screen sizes without developers creating and testing separate versions,” said Dr. Mary Ellen Gordon, director of industry insights and analysis at Flurry, San Francisco.
“In the mean time, a smaller number of form factors with a larger number of users per form factor seems to be one of the reasons brands have tended to gravitate to iOS up to this point,” she said.
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