Call it phablet, phonelet,
tweener or super smartphone, but the clunky mobile phone – closer in size to a
tablet than the smartphone of a couple of years back – is here to stay.
A surprise hit of 2012, it is drawing in more users, more handset makers and is
shaping the way we consume content.
“We expect 2013 to be the Year of the Phablet,” said Neil Mawston, UK-based
executive director of Strategy Analytics’ global wireless practice.
While Samsung Electronics Co Ltd has blazed a trail with its once-mocked Galaxy
Note devices, now other manufacturers are scurrying to catch up.
At this week’s Consumer Electronics Show in Las Vegas, Chinese
telecommunications giants ZTE Corp and Huawei Technologies Co Ltd will launch
their own.
ZTE, which collaborated with Italy’s designer Stefano Giovannoni for the Nubia
phablet, is scheduled to launch its 5-inch Grand S, while Huawei brings out the
Ascend Mate, sporting a whopping 6.1-inch screen, making it only slightly
smaller than Amazon’s Kindle Fire tablet.
“Users have realised that a nearly 5-inch screen smartphone isn’t such a
cumbersome device,” said Joshua Flood, senior analyst at ABI Research in
Britain.
Driving the phablet’s shift to the mainstream is a confluence of trends. Users
prefer larger screens because they are consuming more visual content on mobile
devices than before, and using them less for voice calls – the phablet’s weak
spot.
And as WiFi-only tablets become more popular, so has interest among commuters in
devices that combine the best of both, while on the move.
According to the latest Ericsson Mobility Report, the monthly data traffic for
every smartphone will rise fourfold between now and 2018 to 1,900 megabytes.
The upshot is a market for phablets that will quadruple in value to $135 billion
in three years, according to Barclays. Shipments of gadgets that are 5 inches or
bigger in screen size will surge by nearly nine-fold to 228 million during the
same period, though estimates vary because no one can agree on where smartphones
stop and phablets start.
But that’s the point, some say.
“I think phone size was a preconceived notion based on voice usage,” said John
Berns, a Singapore-based executive who works in the information technology
industry. He recently upgraded his Note for the newer Note 2 and bought another
for his girlfriend for Christmas. “Smaller was better until phones got smart,
became visual.”
The Asia-Pacific is, and will remain, the world’s biggest market for phablets,
says ABI’s Flood. Last year, the region absorbed 42 per cent of global
shipments, a proportion that will expand steadily over the next few years to
account for over 50 percent of shipments by 2017, according to ABI figures.
“Countries like Japan and South Korea will be major markets for phablets,” Flood
said, adding that China, India and Malaysia would see increasing demand for
larger screen devices as they roll out 4G networks extensively.
Samsung has been both the engine and beneficiary. While other players shipped
devices with larger screens earlier – Dell Inc launched its Streak in 2010 – it
was only when the Korean behemoth launched the Galaxy Note in late 2011, with
its 5.3-inch screen, that users took an interest.
“The Streak was launched at a time when 3-inch smartphones were standard and the
leap to a 5-inch Streak was a jump too far for consumers,” says Strategy
Analytics’ Mawston.
“The Galaxy Note was launched when 4-inch smartphones had become commonplace,
and the leap to 5-inch was no longer such a chasm.”
The bigger, the better
Since then Samsung has bet big on bigger: its updated Note has a 5.5-inch screen
and its flagship Galaxy S3 – the best-selling smartphone in the third quarter of
2012 – has a screen that puts it in the phablet category for some analysts.
Samsung accounted for around three quarters of all phablets shipped last year,
according to Barclays’ Taipei-based analyst Dale Gai.
Samsung’s marketing heft has paved the way for others. LG Electronics Inc
accounted for 14 percent of shipments in the third quarter of last year,
according to Strategy Analytics.
HTC Corp’s 5-inch Butterfly – called the Droid DNA in the United States – has
been selling well in places where Samsung is less dominant, according to
Taipei-based Yuanta Securities analyst Dennis Chan. The first batch sold out
soon after its December launch in Taiwan.
“I don’t think we can say that Samsung invented phablets,” said Lv Qianhao, head
of handset strategy at ZTE. “But it did do a lot to promote this product
category, which helped create tremendous demand.”
Phablets are also proving popular in emerging markets.
A poll of nearly 5,000 readers of Yahoo’s Indonesian website chose Samsung’s
Galaxy Note 2 as their favorite mobile phone of 2012, ahead of the iPhone 5.
Kristian Tjahjono, a technology journalist who posted the poll, said phablets
were a natural fit for Indonesians who liked tablets but also liked making phone
calls.
But while those in such markets who can afford them are going for the high-end
devices, the door is opening for cheaper models. Tjahjono pointed to Lenovo’s
5-inch S880, which has a lower resolution screen and sells for about $250, which
is around a third of the price of Galaxy Note 2.
Sweet spot
Falling component prices will add to demand. The total cost of an upper-end
phablet, its bill of materials, will likely fall to 2,000 yuan ($323) this year,
says Gai from Barclays, and will halve within two years.
“One thousand yuan is a very sweet spot for China,” he said.
India is also a fan.
Vivek Deshpande, who manages global strategy for Shenzhen-based mobile phone
maker Zopo, says that while the Indian and Chinese markets are different, they
both share a common appetite for aspirational devices: phones big enough for
their owners to show off. This is changing the direction of lower end players.
“Zopo’s primary focus is now on phablets,” said Deshpande.
Even Samsung is pushing its own creation downmarket: In Las Vegas it will unveil
the Galaxy Grand, a 5-inch device that lacks some of the resolution and muscle
of its bigger brethren but will be aimed at markets like India. There is a
version offering a dual SIM slot, a popular feature for those wanting to
arbitrage cheaper call and data plans.
As phablets slide into the mainstream, handset makers are trying to find ways of
differentiating.
As well as hiring Italian designer Giovannoni better known for his minimalist,
sleek bathrooms, ZTE also came up with an onscreen keypad that inclines to one
side of the screen, depending on whether the user is left- or right-handed.
Samsung, however, not only has first mover advantage, it can also build on its
expertise in display.
Barclay’s Gai says Samsung is expected to introduce a thinner, unbreakable
AMOLED screen which will leave room for bigger batteries.
“That will put Samsung in good stead to still dominate the market,” he said.
Despite pressure in China, Gai estimates Samsung’s share of smartphones with
5-inch or larger screens to fall only from 73 percent in 2012 to 58 percent in
2016, which is still the lion’s share.
By then consumers will see the phablet for what it is, says Horace Dediu, a
Finnish analyst who runs a technology blog asymco.com. Its rise is part of a
wider march of computing power into wherever we reside – the living room, the
train, bed or work.
“It makes sense that we’re moving towards a time where we are served not by a
computer or a netbook or a phone, but rather that we have these screens
scattered around and available for us to play with,” he said. “In a way the
phablet is not a bulky phone but a very delicate computer.”