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Evolution to the global device

How market trends demand major shifts in traditional OEM device strategies

Overview

The mobile phone market has always been focused on innovation-driven rapid change and ongoing efforts to reduce costs.

It’s still that way today. The landscape continues to evolve, with many factors converging to redefine what it takes for OEMs to be competitive. The acceleration of 4G network coverage, greater smartphone availability and affordability, and changing channel dynamics are having the biggest impact. To continue their growth, OEMs need to develop global device solutions that enable access to mature and developing markets, support connectivity to all network generations and frequency bands, and provide compelling features in a price-competitive package.

DOWNLOAD EVOLUTION TO THE GLOBAL DEVICE: HOW MARKET TRENDS DEMAND SHIFTS IN TRADITIONAL OEM DEVICE STRATEGIES [PDF]

^{1 Euromonitor International: Consumer Electronics—World Smartphone Company Shares (2010-2015), 2016.}

Key Findings

Three factors are having a massive impact on mobile phone OEMs’ growth prospects:

Acceleration of 4G network coverage: The number of 4G LTE connections across 151 countries doubled between 2014 and 2015, to more than 1 billion. As a result, OEMs must deal with ever-greater network complexity that will continue to grow with the proliferation of the Internet of Things.
Greater smartphone availability and affordability: OEMs will ship an estimated 1.7 billion 4G smartphones in 2020, much of which will be comprised of midrange phones for consumers in developing markets. A strong base across the midrange market therefore will be key to OEMs’ growth.
Changing channel dynamics: Customers are buying more phones from the open channel and will continue to do so, while carriers are shifting sales strategies away from subsidies to leasing and installment plans. OEMs thus will need to boost their phones’ longevity and residual value to remain attractive.

Recommendations

To respond to changing market dynamics, OEMs must develop global device solutions that provide competitive advantage while driving profitable growth. Three actions are key:

Consolidate the number of SKUs across the product portfolio to reduce total cost of ownership and drive market upside by meeting customer demands globally with fewer devices.
Respond to shifting customer sales models with “future-ready,” carrier-agnostic devices that have high-quality features, longer lives and higher residual value.
Develop for features and functions that most closely meet carrier and customer preferences by negotiating improved roaming rates and carrier options and leveraging integrated mobile phone solutions.