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The smartphone makers’ dilemma

Smartphone flagship battle (Apple vs Samsung)

Smartphone flagship battle (Apple vs Samsung)

The market for flagship smartphones is the most cut-throat tech market in the world. The stakes are enormous, product life cycles are incredibly short and rivalry is intense. The top ten players are constantly reminded of the fates of fallen giants on this battle field.

The smartphone market is full of contradictions. In some respects, it appears to be a commoditized mass market. At the same time, the smartphone is one of the most complex and advanced tech products on the planet. It is pushing the limits of performance and what is technologically possible to the brink. It integrates dozens of technologies into one small device – each of which is an impressive field of technology in and of itself. The flagship smartphone represents the pinnacle of 400 years of technological development.

In spite of the advanced technologies used in smartphones, the room to differentiate is rather restricted for the heads of product strategy at the major players. The intense competitive forces in this industry constrain their available degrees of freedom. The exception to this rule is Apple which to some extent can afford to go its own way.

Even though the flagships are a smaller part of the smartphone market, they are very strategically important for the vendors. The flagships set the highest reachable price point for each vendor and most of the market and media attention is focused on them.

The head of product strategy at the smartphone makers must use the latest high end chipset in next year’s flagship model. They also have to include the latest high resolution displays released from the component suppliers. Otherwise they are not in the flagship race. The subsequent product design is a balancing act between conflicting goals. If the processor is pushed to the maximum, the device will win the benchmark tests for performance, but will be criticised for short battery life and overheating. If the opposite is done and the device is designed to avoid overheating along with providing long battery life, it will fall behind in the benchmark tests for raw performance.

The entire product design and development process is full of these trade-offs. If a very bright, high resolution display is used, costs will go up and battery life will suffer. If the device is equipped with a high capacity battery the weight goes up. However, if it is designed to be as light as possible, its short battery life will be viewed as a minus.

The first player to include a new generation of technology (like LG did in 2014 with the super high resolution QHD display) risks integration problems. LG’s GPU and processor was not up to the challenge and the display became less responsive. But if a smartphone maker waits too long to integrate new technologies in their products, they will be considered a laggard.

Another trade-off is the thinness of the phone. If the phone is too thin there will be less space for a high capacity battery. In addition, for every millimetre that is carved away, the optical quality of the camera goes down exponentially. Apple tried to have it both ways in their latest iPhones. They chose a camera that sticks out from the body, resulting in a badly designed device that wobbles if put down on a flat table.

If a display is used which is larger than the competitors’, cost and weight will be higher. In addition, there’s the risk of losing customers who prefer a more lightweight model. A smaller display choice will result in nit-picking by the tech community, and customers comparing the device in stores will probably choose competing products with larger displays.

Time to market is extremely critical. A new flagship model can only be sold at full price for a few months, and sales will drop rapidly after 6 to 10 months. If a new model is rushed to market, there is a risk that serious prototype-stage flaws are left undiscovered. However, spending too long on perfecting a new model will shorten the sales window and cut deep into the revenue potential.

For second tier players in the high end segment such as Sony, this dilemma causes a vicious circle. If sales of the current flagship device drop off early, the vendor will feel pressured to launch a new model. But a hurried launch prevents the development of a really good product. The short product cycles combined with a string of rushed models further undermines these players’ brand value.

Tear down analysis of the inside of modern smartphones provides additional evidence of this dilemma. The market leaders Apple and Samsung manage to optimise space on the chipset, the boards, and compress the spacing of components. Struggling smaller players such as Sony lack the time and resources for that and the inside of their devices are far less optimised.

When it comes to software and sensors, the players are more or less forced to add as much functionality as possible. More apps and software add to icon and menu clutter but if something is left out, that omission will be criticised.

No matter what the smartphone vendors deliver, the professional product testers (GSMArena etc.) will find something to pick on. If the “perfect” smartphone were ever created, they would criticise it for being too expensive. And if it were sold at a lower price point, the shareholders and CFO would complain about low profit margins.

In addition to these restrictions is the unwillingness by almost all industry players to experiment with other form factors than the iPhone-style slate form. When flexible displays are introduced (soon?) all the major players will probably jump on the bandwagon. This will hopefully provide room for new innovative designs, though my guess is that most smartphones with a flexible display will look rather similar.


This market would appear less like a commoditized mass market if at least some players would be brave enough to innovate and deviate from the mainstream form factor. There are rare examples of this but they haven’t really been pushed by the industry. Samsung launched a thicker phone with a much better camera that had a real 10x optical zoom in 2014 (Galaxy K Zoom). Sony have introduced flagship models with much better sound quality than the market average. There are a handful of current models with physical keyboards on the market (from Blackberry and LG). The small Russian smartphone maker YotaPhone introduced a smartphone with a second always-on e-ink display on the backside that can be read in bright sunlight. LG added a very small banner shaped always-on second screen for notifications on the V10. There are a couple of newly introduced flip phones from Samsung and LG. Some models are waterproof, some flagship models come with a leather back, etc. (Smartwatches are of course innovative but they are a separate product category.)

It’s easy to say that smartphone makers should embark on bold innovations and radical new product designs. But from the market players’ perspective I can understand their trepidation. One major strike and they’re out. Considering how difficult it is to get everything right, I can understand them preferring to play it safe. Even Apple and Samsung make massive mistakes. It is not easy to integrate a new generation of components into a seamlessly working device every year. The most difficult part seems to be the ability to really understand the users’ context and micro-situation and to offer a seductive, intuitive and compelling user experience.


The smartphone market would be more interesting if at least a few vendors dared to differentiate from the mainstream. Apart from Apple, it seems the players don’t really trust their own judgement and their product design capabilities. Instead they resort to copying each other, and Apple in particular.

To differentiate successfully requires a strong team of product designers and UI/UX experts with the self-confidence to deviate from the mainstream market’s iPhone-style design. A group of bright people that respect users and don’t fall for fads such as flat UI design. That don’t believe their role is to teach the users to be “modern” and “cool” and that are strong enough to ignore peer pressure from other designers and techies.

As Michael Porter pointed out, strategy is about choices and deliberately making “no” decisions. To differentiate means to focus on certain market segments and ignore the preferences of other parts of the market. You can’t please everyone.

With smartphone sales in the billions of units there are certainly underserved user segments that want something other than Apple’s offer of “minimalist simplicity”. The first smartphone maker to discover and serve these user segments will be able to build a fiercely loyal user base.

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