With consumer confidence stabilizing in the mature markets bringing some hope back for the next step in emerging market growth, strategic OEMs in the smart wireless devices (SWD) space continue to place importance on geographies and demographics for device placement and pricing. No, this is not a new strategy or marketing trend, to be sure, but what is of interest in the past quarter, is the renewed emphasis on this type of diversification as we clearly saw in the first quarter trade shows and events.
The quest for "just right"
This week's smart device news highlights the level of intent for targeted strategies to address market demographics in the tightening hot device space: Apple's new 8Gb iPhone 5C was released in strategic markets where 4G LTE is really just taking hold and can provide consumers with a device to step up to without too high of a price. Rather than replacing the iPhone 4, the 8Gb 5C is a targeted market device to add more options in the device maker's line-up in select markets. Seeking Alpha also reported on the new iPhone 5C strategy:
That the 8GB variant has been launched only in the U.K., France, Germany, Australia and China shows that Apple is looking to target those markets where 4G LTE is either being introduced or is only in the initial stages of adoption. This is probably why the model hasn't been launched in the U.S., where LTE is a far more established 4G standard.
A similar market strategy for Apple's iPad was launched simultaneously, but with a device swap-out. Unlike the iPhone 5C addition with iPhone 4 retention, the 2011 iPad 2 was removed from sales and replaced with a same-priced fourth generation version iPad with improved display among other upgraded features. The strategy behind Apple's recent iPad swap is seen as directly addressing increased competition from other tablet OEMs offering improved features in similarly priced devices, as argued in the WSJ.
At the core of the strategy for tablets is the tightening market with many new devices and now hybrid laptop-tablet devices, combined with slowing in feature upgrades that has slowed consumers' replacement pace leading to an anticipated decline, as the WSJ reminds us. However, IDC forecasts are far more positive for the SWD and tablet/hybrid (2-in-1) market based on 4Q13 sales, seeing continued uptake during 2014: "the market will continue to grow in 2014, supported by continued product expansion while accelerated adoption in the business space will give the market a further uplift from 2H14 onward."
A world of differences and opportunities (at the right price)
While the Apple news is the latest this week in SWD strategies and announcements, what it illustrates is the definitive return to device differentiation based on geographic and demographic targeting. Given the maturing SWD market, most anticipate a slowing in the rapid growth that we've seen thus far for smartphones and tablets. To offset this natural pattern for "hot" devices, we've seen the branching out into emerging markets and lower-price demographic markets globally by OEMs.
Last year's Nokia launch of a wide mobile phone line-up at MWC 2013 reminded everyone that they had not lost sight of their core strength in lower-priced devices globally. This year we saw even more OEMs directly targeting similar markets, such as Blackberry's decision to launch their sub-$200 smartphone for Asian markets, among many others following this savvy strategy.
The bigger question on the table is, will 2014 be the year we see a return to rising emerging markets after a few years now of quiet holding patterns due to economic and political unease on the global scene? There are strong undercurrents that point to early, positive signals for growth opportunities for the semiconductor and electronics industry in emerging markets and in lower-priced device markets globally. We'll be taking stock of these trends in the upcoming Smith MarketWatch Quarterly, stay tuned.