Various factors have conspired to create a unique U.S. launch cluster for the most high-profile smartphones of the year. Samsung’s (005930) Galaxy S IV now looks to be debuting in America in May after a European roll-out in April. Mixed response to iPhone 5 combined with Android’s market share surge in emerging markets may push Apple (AAPL) into launching one or two new iPhones in June. Delays with U.S. operator testing has pushed the first new QWERTY BlackBerry into May or June as well. The May/June time frame is a popular period to launch new phones, but this mega-cluster is definitely not what vendors would have preferred to have happen. BlackBerry (BBRY) originally planned to launch the Q10, its most important new model, in early 2013 in the United States and Apple has chosen late autumn for its recent iPhone launches. Much to the dismay of several smartphone contenders, these scheduling changes have enormous implications for the industry.
According to Qualcomm (QCOM), device sales growth in the U.S. smartphone market slowed down to just 3 million units between 2011 and 2012. The U.S. smartphone subscriber base has nearly stopped expanding and the pool of new buyers has shriveled to nearly zero. This spring will be a tough time to launch a new flagship phone even without the heightened competition created by scheduling so many heavy hitters within few weeks of each other.
This is a set-up for guaranteed flame-outs in a crowded field. AT&T (T) and Verizon (VZ) must allocate limited marketing resources to between four and five major models in early summer. A few of them will end up as runts of the litter.
HTC (2498) is trying to recover from a disastrous 2012 and its operating margin has slumped to just 1%. The beleaguered Taiwanese vendor now faces the prospect of launching the flagship M7 model in March, just two to three months before the epic Samsung-Apple-BlackBerry pile-up.
In a Citigroup note picked up by Focus Taiwan, the firm says component shortages have pushed first-quarter M7 shipments from planned 3 million units down to just 500,000. If this is the case, HTC will be wrestling with chronic M7 shortages in March and April — and then the company faces the prospect of ramping up production just when three new mega-phones debut in the U.S.
Naturally, the spring launch sequence also puts Nokia (NOK) in a very tough position.
Nokia has been leaning heavily on AT&T for its Lumia sales, as Verizon and T-Mobile support for Windows Phones has been tepid at best. AT&T is likely to give strong support to new HTC, Samsung, Apple and BlackBerry models in the April-June quarter. It is not clear just how much gas will be left in the tank to support the Lumia flagship model that Nokia is likely prepping for June or July.
The early summer smartphone pile-up may push the new high-end Lumia debut into August or September, which would mean that the Lumia 920 would have to carry Nokia’s spring quarter in America. The likelihood of American consumers sustaining an interest in this model is low. This is not a good time for the Windows Phone camp to lose momentum; particularly now that the Surface Pro is getting reviews ranging from dim to dismal.
Windows Phones appeal largely to the same group of consumers as BlackBerry devices. There may simply not be room for both in American consumer market, particularly if Apple opts to roll out a cheaper iPhone this spring.
The big question mark for the industry remains the pricing of a possible budget iPhone. Some observers believe Apple is preparing to launch just another high-end iPhone around June to counter Samsung’s rampant attacks, this time with a 4.8-inch screen. Some believe a budget iPhone will be rolled out simultaneously, possibly with a plastic chassis and a cheaper display assembly.
If Apple chooses to launch a budget iPhone with a full retail price around $350, operators would obviously start offering it as a free-on-contract model. The new high-end iPhone is likely to have a $650-700 retail price and a $200 contract price for the base model. How much damage a $0 iPhone with a new design would do to rival vendors is a very good question. Apple is currently selling a two-year old model at a lower price point, but U.S. consumers have not gone hog-wild; the full-priced iPhone 5 likely grabbed at least 85% of American iPhone sales in the most recent quarter according to estimates. Would a brand new, distinct iPhone budget line force a radical shift the U.S. smartphone market?
Right now it looks like there may be a six-week stretch between May and June that could be one of the most important periods in the U.S. mobile phone industry. It might mark a turning point in the Apple-Samsung rivalry, but it could also deliver devastating blows to HTC, BlackBerry or Nokia.[bgr-post-bug]