It is no longer enough to build a technically superior mobile phone with top-of-the-line hardware features and hope to get a good response from discerning consumers. Instead, software and services have increasingly become the main differentiator for most handset makers, with at least one saying it has become part of delivering the total package providing good user experience.
Melissa Chau, research manager of client devices at IDC Asia-Pacific, told ZDNet Asia that the shift toward software and services as the focus for most handset makers' marketing initiatives was not new. This has been increasingly the case since Apple disrupted the industry with its iPhone device and accompanying Apple App Store ecosystem, which provides both software and services, she noted.
She pointed to the example of Taiwanese manufacturer HTC, which had a "strong technical background" in building good phones, but this strength has not been enough to compete with other handset makers with stronger ecosystem propositions. This was because people had "come to expect" good hardware specifications for their phones, which meant they were no longer a key differentiator, she explained.
HTC's first quarter performance appeared to corroborate Chau's observation. According to the company's statement Friday, HTC revealed a 70 percent drop in net profit ahead of the launch of its new One series of smartphones in April. However, there appears to be signs of recovery for the handset maker as its March sales reached NT$30.9 billion (US$1.05 billion), which is an improvement over February's NT$20.3 billion (US$688 million), based on its monthly revenue figures.
The Taiwanese company also bolstered its services by inking a new deal with cloud storage vendor Dropbox in February to offer 25 gigabytes (GB) of storage free for two years to consumers who purchased its HTC One X, according to a blog post by ZDNet Asia's sister site, CNET Asia.
HTC did not respond to ZDNet Asia's questions at the time of this article's publication.
Hardware still just as important
That said, there will continue to be a niche demographic that values hardware specifications above all other factors, the IDC analyst noted. She cited the Samsung Galaxy Note device as an example that has been "doing well", as its 5.3-inch screen size was different from every other smartphone currently in the market.
"Sometimes, a distinct hardware feature such as a larger screen size can be a welcome novelty in a device market that is starting to be filled with models that all appear to look alike," Chau surmised.
As such, there will be space for hardware, software and services to all play a role in being the main differentiator for upcoming product launches, she added.
One handset maker pointed out that it was the combination of all three aspects that will help the company to stand out from the rest. Motorola Mobility told ZDNet Asia that hardware was important, but it was "only one part of the equation".
"Rather than focusing on individual features, we want to combine hardware, software and services to provide an overall experience that makes the user's life better," the spokesperson said in an e-mail.
He pointed to the company's latest device, Motorola RAZR, as an example. Hardware innovation, he noted, was a pre-requisite when it came to designing the phone, which was why "unique" material such as Kevlar was used. What made the phone a "winning product", though, was the combination of the software and services such as Motocast, which lets users remotely access files from their computers with their phones, he noted.