Mobile World Congress in Barcelona is a few weeks away and so is Team Android's long-awaited answer to Apple's iPhone 6 and iPhone 6 Plus. The big question is whether the likes of Samsung, HTC, LG and Lenovo can make a dent in Apple's high-end dominance, fend off low-cost rivals in China and manage to avoid killing each other in the process.
We all know the iPhone 6 story by now. Apple didn't have large-screen devices---smartphones and phablets. Enter the iPhone 6 and iPhone 6 Plus. Apple sold a zillion of them for the holiday season and now has momentum in China. Apple's most recent financial results were a thing of beauty---assuming you're into that capitalism thing.
Now Apple has addressed its size difference Android phone makers, which used to have a lock on the larger screen category, are plodding along.
Simply put, the smartphone profit spoils are going to Apple.
Canaccord Genuity analyst T. Michael Walkley said in a recent research report:
We believe Apple dominated handset industry operating profits and captured a remarkable 93% of Q4/C'14 handset industry profits based on data compiled from leading smartphone OEMs. In fact, the December quarter represented an all-time high for Apple's share of industry profits and improved from 75% in Q4/C2013. Demonstrating the shift of industry profits to Apple from the iPhone 6 product cycle, we calculate Samsung's operating profit share declined from 40% in Q2/C2014 to 18% in Q3/C2014 with the initial sales of the iPhone 6 to only 9% during Q4/C2014 or during the first full quarter of iPhone sales. In fact, Samsung's 9% of industry profits marked the company's lowest level since 2008.
As noted before, Samsung is being squeezed from above and below as Chinese local vendors undercut the market on pricing.
What's the Android team going to do now? The conventional thinking is that they're going to duke it out and lose more of the profit pie. In the Android ecosystem, it's unclear that any hardware vendor will really do well. It's difficult to play a high-end and volume phone game. Nevertheless, Android device makers will try. These vendors really have little choice because they need to scale.
Here's a look at a few major Android players and what's on the agenda for the weeks to come.
Samsung. Samsung at Mobile World Congress is expected to outline its Galaxy S6, the flagship smartphone for the company. Rumors abound, but an event is likely to feature a metal body S6, possibly an "Edge" version to mimic what Samsung did for its Galaxy Note and a bevy of software features that you may or may not want. Samsung will overlay its interface on the latest Android and likely create a hodge-podge experience.
What Samsung has going for it is a large installed base and an emerging business-to-business unit that has ensured that the Galaxy S6 is the lead Android device in the enterprise. Samsung will look to rebound from a Galaxy S5 launch that didn't keep its momentum going.
HTC. HTC is also likely to outline its plans and a new version of its One device. The company's financial picture has stabilized and HTC is viewed by many analysts as a mid-tier player. The catch is that HTC's standing means it gets squeezed from above and below even harder than Samsung does. Nevertheless, HTC's promise to offer a more pure version of Android has its appeal. HTC isn't likely to be a disruptive Android force.
LG. LG's lineup is also Android powered and the biggest item to note is that Samsung's cross-town rival has the scale to compete. Whether it has the phones to compete in every price range remains to be seen. But there should be a decent amount of buzz for the LG G4.
Lenovo. Lenovo could use MWC to really outline its branding strategy ahead. Lenovo's most recent quarter included 2 months of the Motorola unit, which was acquired from Google. Lenovo plans to keep the two brands. Lenovo execs noted that their smartphones have hit turbulence in China due to pricing pressure. Motorola represents a high end brand. What's unclear is whether Lenovo has had Motorola in the fold long enough to make a big splash.
Lenovo CEO Yuanqing Yang said on the company's Feb. 3 earnings conference call:
We will maintain Motorola as an independent brand and organization, so that they can keep this strong momentum. So actually, Motorola will keep the strong presence in North America and Latin America. So recently, also we have seen the first signs of success in India. Another important action is we bring Motorola back to China. That will help Lenovo to strengthen our product, the portfolio in the high end, in the middle to the high end in China.
The rest of the pack. While the big three Android players will outline their master plans, look for a bevy of smaller players to make a splash. The primary weapon for these players---ZTE, Xiaomi among others---will be price. After all, the Android market is a race to zero.
ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8am AEST in Sydney, Australia, which is 6pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and the US.
Previously on Monday Morning Opener:
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- Apple Watch: What does success look like?
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- Wishlist for 2015: The solutions we need in business tech
- Hunting the hackers: Tough and getting tougher, but more important than ever
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