Spillikins №161. Emotions vs. Specs

Working in sunny Barcelona is a crime – this city is so lively and full of all sort of temptations that it is really hard to get yourself into a working mood. But I think we have been successfully completing our objective in conveying news from the expo. We have got plenty of food for thought and today I want to talk about emotions and the air here certainly sets me in the right mood.
S&P has downgraded the credit rating of Nokia from BBB to BBB- which means that the company will have to take loans at higher interests so their debts will go up, doing business in general will become more expensive for Nokia. Related news from Russia: brand Nokia stores operated in Russia by 'Nosimo Ltd' (not affiliated with Nokia) are selling their stores and rental contracts. Nosimo focused on mid and high range phones from Nokia and since the latter has been failing to provide competitive products this mono brand retailer is experiencing serious difficulties and needs to get rid of a number of stores. I am pretty sure Nokia is going to call this an optimization of the retail network. The Vedomosti has published an article on this account.
Meanwhile, at MWC one announcement made quite a hype: Apple sent out invitations to the iPad 3 unveiling which is going to take place on March 7 right in the middle Eric Schmidt's speech. So instead of focusing on Google people were discussing the upcoming Apple presentation. On the 7th we are going to see what manufacturers are going to suffer the most from the hands of the new Apple tablet. I am expecting a big update and many owners of the 1st gen iPads who never switched to iPad 2 like me will probably want to upgrade. The week is promising to be very interesting, besides, a bit later, journalists will begin to receive invitations to the Samsung Galaxy S3 presentation – Samsung has already set up for the venue and time.

MWC Impressions: The Emotional Factor

The Barcelona expo made it clear that the world has changed and in a dramatic way. A long way back at CeBIT in Hanover I witnessed something similar – the expo was transforming from a consumer electronics show into a communication event. Consumer orientation and product announcements became a second priority. Something very similar is happening to the Barcelona expo. It is becoming more a place for carriers, manufacturers and retailers to share ideas. It makes me sad a bit but it is a natural change.
Many readers of Mobile-Review.com ask us: Is that it? Isn't there anything more worth our while? They were asking the same questions after CES in Las Vegas. There are few phones, no really big announcements, mainly products about to be released and become another also-runner. An industry crisis? By no means: the development time has never been this short and the number of great ideas is as high as ever. This is a rather classical case of a bad communication and market policies: manufacturers do not want to splurge on expos only to fail in real sales. And the sales of a product depends heavily on the release date. Today it is madness to announce a phone six months or even a year before the release as manufacturers used to. Today buyers are used to immediate availability and do not want to wait. It is not good or bad – these are the new rules. Just like many other devices mobile phones have lost the aura of high tech and from longed purchases transformed into mundane products. This means that manufacturers instead of engaging into a specs race are now busy making more user friendly devices. Let's look at Apple iPhone: if we consider its camera, performance, CPU, system memory etc. then we will see that it is by no means technological leader on the market and there are plenty of more advanced phones. However, its ease of use makes up for many downsides. The very first iPhone illustrates it perfectly: the UI made up for the fact that it was a very poor phone for making calls.
I have mentioned this many times in my articles: the market is entering a new race where the technology play a second fiddle. It is not as important to make the fastest device as to fill it up with emotions and give consumers something easy to use. Emotions become the most important component of any phone. The market has seen plenty of emotionally charged products and ways to create such. Like the recent Puma phone produced by Sagem for Puma. This phone is charged with emotion to the max and has an obscenely high price together with mediocre specs. No one would buy this phone for sensible reasons but the emotional charge makes up for all its disadvantages. The phone is very unusual and features very nice menus, animation and the general concept.

Review of PUMA Phone by Sagem

Of course puma phone never made it to the best seller list but I am sure everyone who purchased it was satisfied. They got the emotions they were looking for. This phone is a rare case of cooperation of two companies and it stands apart even among its own kind.
Let's get back to Apple iPhone once again. It may seem that iPhone does not have an emotional charge but it does in the form of the ease of use no other phone has been able to reach so far. Besides, iPhone is very kindred to iPod which had been the key Apple product, iPod had been a product that creates a fan base and loyalty to a brand. Apple successfully managed to transfer a part of users' love from iPod to iPhone. People rarely look at the market from this perspective: imagine a financial report full of charts with emotions, something abstract and ambiguous.
Back at MWC I ridiculed the announcement of Nokia PureView 808 – Nokia is making the same mistakes over and over again. Firstly, the megapixel race is over. Secondly, only the smallest manufacturers nowadays resort to megapixel comparisons. And, lastly, it is about emotions.
Imagine that you have a camera and you are shooting a recital of you kid in the kindergarten. He is running around dressed as an Indian and you are taking pictures of him. You are not thinking about the resolution of the matrix or the lens size or any other specs. It is important for you to save the moment. You will probably never even print them and only show them to your friends on your computer. The Kodak bankruptcy makes a point – in the digital times people prefer digital storage. The logic of a user is simple: I need a camera to save the moments I want. That is it. The emotion does not care about megapixels, the only important thing is to take pictures. Of course, the quality of pictures is important but as far as mobile phones are concerned there has not been a breakthrough in picture quality since Sony Ericsson K750.
Many of my friends purchased mirror cameras for one reason: they were not satisfied with phone camera pictures. And they take their cameras to any important event. Not because they do not have phones but because phones are not able to provide decent photo quality. However, people often leave cameras at home because they are bulky but I've never heard anyone say 'I am not going to take my camera because I have my phone to take pictures'.
If I were to create a measurement gauge for emotions in photography I would certainly use one picture as a unit. It is one picture that makes us smile or think. Look at the pictures of your parents and grandparents in family albums. Does the word resolution come into your mind? I cannot even imagine someone look at a picture of his great grandfather and say 'I don't like it. It is too bleak and it could use some resolution'. The quality is nothing when a picture means something.
That is why the camera resolution is not important. An average quality photo will satisfy most people and the manufacturer should listen to the market: any change for better or for worse usually has repercussions in the form of low sales. This is true for any specs not just the camera and few exceptions prove this rule. However, new categories are not exceptions: when the first camera phones were released and became a trend a new niche appeared on the market. And since then the phone camera quality has been steadily improving. At a certain point the quality ceased to improve and the market of camera phones went into maturity when any deviation from standards are detrimental even if they are good ideas.

MWC 2012. The second day, philosophical, full of thoughts

I want to throw in another example of a use of emotions. HTC has experienced a great number of leaks concerning new phone releases. But even a day before the announcement no one knew how HTC One X was going to look like. And it is not because HTC managed to keep it a secret: a few weeks before MWC the company decided to give the looks a complete overhaul. What they probably had in mind was 'We have made a good phone that is also very convenient in hand but it does not make you feel good when you see it'. The phone lacked an emotional charge.
I must say the difference between the original design and the one they finally resented is dramatic. The original design was neutral while the new one actually makes you feel something. It is these tiny details that are so important on the modern market and the one who cares enough about them is going to be successful. People long for emotions and hardware specs are not something that makes you happy.
The success of Galaxy Note is precisely a case of a right use of emotions and nothing else. Although, Samsung hit this target accidentally.
Back to the table of contents >>>

Phone Life Cycles: 12, 16, 18, 24 Months

There is a plethora of image rules like your watch must cost five monthly salaries. Or your car must cost your yearly income. These rules simply mean that a thing is as valuable as you see it. I wear cheap watches and expensive ones and I drive any mid range car and do not consider it a violation. I find image a shallow concept that people resort to when they have nothing else to present except for the things they own.
How much must a phone cost, what should it represent and what must it be capable of? Dozens of manufacturers and hundreds of thousands of their employees depend on answers to these questions. Let's try to answer the simplest one – the price. In the EU and the US mobile phones are subsidized and often you don't have to pay for the phone per se but purchase a carrier plan. The more expensive the phone is the more expensive the plan will be. And as soon as the contract expires you can either get a new phone or opt for a cheaper plan. About 95% of people choose to go for a new phone as they find their plan expenses acceptable. That is why on carriers' markets the average life cycle of a phone is as long as the most popular carrier plans: 12, 18 or 24 months. There is no subsidizing on the non carrier markets and we can observe a more pure and academic situation when the demand determines the supply. And Russia is the biggest market of this kind in the world.
How long does an average Russian use his phone and what makes him get a new one? The average life cycle of a regular phone in Russia is 19 months while smartphones live for 16 months. On the first look the situation seems to be the same as in the EU but in Russia people have to pay the full price for the phone at once. But if we consider a provincial Russian town then the average life cycle goes up to 39 months. There are still Siemens, Bosch and Sagem phones operating in the Russian networks. There are still operating phones made by manufacturers that ceased to be over a decade ago. And their owners are not rarity collectors – they are just pragmatic and use their phones until they die and only then will they buy a new phone. Such people do not care much for fashion and there are more of them than you think. It is usually the youth who are always seeking something new and some of them get a new phone every few weeks. However, most of phone users are rather inert, the mobile phone fashion is long dead so the life cycle of an average phone is growing. Some manufacturers believe that they can create demand for their phones but they are wrong. Most phone users simply ignore ads unless they need a new phone. There isn't a single phone feature that would make people buy it. In most cases people can be satisfied with their phones for 3-5 years.
Many visitors of Mobile-Review.com only read our website once in 2-3 years. Those people don't frequent our forum and don't read the mobile news. They come only to find advice for getting a new phone and as soon as they know what they want they are gone for another few years. Besides phone aficionados there is the majority who look at phones from a pragmatic point of view. The right point of view in my opinion. Everyone has got a hobby but most people do not make phones one.
As the performance of phones is growing the price is going up as well as the life cycle of phones. Many people are still using older iPhones. And the first Galaxy S that made the family so popular is still on sale today. There is a great many examples for this. It has already happened before: the life cycle of a phone grows while the rate of development of new features slows down. But that period was very brief and ended in a new turn of rapid development. However, today we may observe a situation when the better specs do not turn into higher sales or market growth. This is not a problem for the EU market where carriers dictate the rate of phone renewal. But Russia is not a carrier market and it is possible that as a free phone market it will shrink. I think it will happen in 2014 already unless the situation or the market model change. It is almost impossible to renew a third of a free phone market in a year unless the average life cycle is very short but it is only growing. So the Russian market player swill have to come up with a solution to this conundrum. This once again is a domain of emotions that have become the most important factor on the market.
P.S. I promise you a very interesting week ahead: we will be releasing quite a few articles doomed to create big discussions. I wish you a productive week and to be in the good spirits. I hope I will make it home soon and finish my Barcelona expo tales.