Weekly Mobile Notes: Apple, BlackBerry And Samsung

by Trefis Team
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The past week saw quite a few developments in the mobile sector. Rumors about a cheaper iPhone mini entering production gained ground, with multiple reports claiming that Apple (NASDAQ:AAPL) has favored a Qualcomm (NASDAQ:QCOM) Snapdragon over its in-house A-series chip for the handset. BlackBerry’s (NASDAQ:BBRY) long-awaited BB10 launch in the U.S. was finally announced this week, with AT&T (NYSE:T) and Verizon (NYSE:VZ) beginning pre-orders for the handset before its imminent launch. Towards the end of the week, Samsung (PINK:SSNLF) unveiled its latest flagship smartphone, the Galaxy S4, at a promotional event in the U.S. – the first-ever American launch for the company.

Apple

In a move that might see Apple give up control over a very important component of smartphone experience, the rumored ’iPhone mini’ may come packed with a Qualcomm Snapdragon chipset instead of its own A-series app processor. According to several recent reports in the media, Apple is looking to incorporate one of Qualcomm’s 28nm integrated chipsets in the low-end iPhone to be able to better protect its margins. While Apple could also choose one of its older A4/A5 app processors to cut down on costs, the tight baseband integration is touted to have tilted the scales in Qualcomm’s favor given that Apple already sources its standalone baseband chip from the semiconductor giant. Also, since most of Qualcomm’s chipsets are manufactured by TSMC, it fits well with Apple’s strategy of diversifying its supply chain away from Samsung.

However, since we think that the low-cost iPhone needs to be launched only in the emerging markets where the high-end iPhones have a very low market share, going with Qualcomm’s widely-deployed solutions will make it tough for Apple to stand out from the rest of the crowd. Also, using Qualcomm’s app processor means that Apple may have to rework the iOS to work as smoothly as it does with its own in-house solution. Given how tightly Apple likes to control the user experience of its products, using a Snapdragon app processor would be a remarkable departure from its traditional mobile strategy that has worked so well for the company in developed markets. (see Will Apple Give Up Design Control For A Low-End iPhone?)

BlackBerry

Ever since news about BB10′s launch in the U.S. came out, BlackBerry has been riding a wave of momentum. The latest news to perk up the stock was that Verizon will join AT&T in launching the Z10 in the U.S. later this month. While AT&T will get to launch the long-awaited full touch Z10 smartphone on March 22, Verizon will do the same a week later on March 28. However, prospective BlackBerry buyers on Verizon will be able to pre-order their handsets starting March 14. The pricing remains the same for both the carriers, i.e. $199 with a two-year postpaid contract. Other U.S. carriers have also expressed interest in BlackBerry’s new devices – T-Mobile started taking pre-orders for the Z10 from business customers since March 11, and Sprint is expected to launch the Q10, another BB10 handset with a Qwerty keyboard, soon.

The company announced that it has received an order of 1 million BB10 units from a single unnamed buyer, making it the single largest purchase order in its history. However, details about the deal were not made public, making it hard to draw any context out of the announcement. For example, we do not know if all those units will be shipped in a single order or delivered over a period of time. It is also not known who the customer is. If it is an existing major carrier partner that has signed a multi-year contract for not only the existing BB10 models but also the future ones, the contract may not be all that impressive. Keeping the abstractness of the announcement in view, we maintain our $12 price estimate for BlackBerry’s stock, about 25% below the current market price. An upside/downside to our price estimate completely hinges on the sustainability of the initial success and the kind of market share gains that BB10 sees in the coming months. (see It’s Too Early To Get Excited About BlackBerry’s Revival)

Samsung

Having seen the Galaxy S3 lift its brand to new highs, Samsung is looking to step up the assault on Apple’s home ground – the all-important U.S. market. For the first time ever, the South Korean giant chose the U.S. to hold the launch event for its latest flagship smartphone, the Galaxy S4, in what is a clear sign of the company’s increasing focus on the high-end. However, after the runaway success of the S3, Samsung decided not to take any risks with the overall design of the phone which is why the S4 doesn’t look very different from its older cousin despite the bigger 5″ screen. Under the hood as well, Samsung has gone for incremental upgrades only, with a better processor and a bigger battery that should improve the overall user experience, but nothing truly revolutionary. This did not go down well with the markets as Samsung’s stock slipped more than 1.3% in trading during the day.

However, the company has jam-packed the phone with software features in order to differentiate itself from the Android crowd as well as Apple. The S4 has many attractive features such as the ‘Smart Scroll’ and ‘Smart Pause’, each of which tracks eye movements to scroll web pages and pause videos. There is also the ‘Air Gestures’ feature which lets users scroll through photographs or web pages by simply swiping their hand, without touching the screen. One of the features offers the ability to translate nine languages, from text to speech and vice versa. Apart from these, there are several other features such as the S Health, the S Band and the Group Play, which Samsung has incorporated to make the S4 stand out. However, most of these features, although impressive, are already available though third-party apps or can easily be replicated by the same.

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