MWC Day 1 – CES wannabe.

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MWC wants to become CES but misses the importance of software.

• From the fairground VR ride at Samsung to the Submarine at SK Telecom and the endless devices that have nothing to do with telephony, it is clear that MWC is becoming more like CES.
• Samsung launched the Galaxy s7 / s7 EDGE but most of the excitement was around the Gear VR, championed by Facebook, and the Gear 360 which captures VR pictures and video.
• Sony launched a series of products that aim to free the user’s eyes from the smartphone screen and define a new way of using Digital Life services.
• LG launched its flagship G5 device that both looks good but also enabled a series of bolt-on modules that enhance media consumption (with Bang and Olufsen) and the imaging experience of the device.
• HTC’s stand was split into two but while the phone area was very quiet, there was plenty of interest on its VR product the Vive.
• Huawei launched the most interesting tablet with its Mate Book being the thinnest, lightest, fully functional tablet PC I have seen.
• Huawei also takes the prize for spending the most money with a huge stand in Hall 3 and a customer area that takes up a third of Hall 1 that was also very busy.
• At the end of the day, the show this year is all about devices that do not connect to the cellular network.
• This is symptomatic of an industry that has realised that growth in smartphones has ground to a halt.
• This combined with the fact that Apple and Google have siphoned off almost all of the profit, leaves device makers having to look for other markets to chase.
• Consumer electronics is firmly targeted, but with everyone jumping on the same bandwagon at the same time could result in very aggressive price competition.
• This is why differentiation is so important and as always, this is going to be achieved through software.
• Software is the glue that will ensure that devices from the same company work optimally together and it is also what is needed to add the extra functionality needed to drive consumer purchase decisions.
• Unfortunately, no one is talking about software where it seems that the hope is that the plethora of new devices is so dazzling that no one notices.
• Furthermore, all of the companies grabbing the headlines are from Asia and software is something that Asian hardware vendors really struggle with.
• This is critical because it is the vendor that really gets to grips with software that will offer the best experience, get the best reviews and drive consumer device preference even if it doesn’t have the best hardware.
• Furthermore the added functionality that many (Sony in particular) are talking about requires a deep understanding of artificial intelligence and machine learning.
• Again this is not an area that any of these companies excel at opening the possibility of an M&A frenzy once they have realised what is really required to make this work.
• The net result is that growth is going to be very hard to come by this year as VR, AR, Wearables and IoT are still too small and too early stage to really plug the gap.
• I think when these issues are solved, then other devices can begin to take up the slack of the slowing smartphone market as it is those great experiences that will encourage users to splash out.
• Hence, what I am looking for at MWC is the seamless genius that allows the digital ecosystem to be delivered to users no matter which device they choose to use and of this, there is very little sign.
• Until then, there is very likely to be little change in the non-Apple segment of the device market where it will be Google that reaps almost all the profits.
• Microsoft, Samsung and Facebook remain my long term choices although Apple looks like a safe bet with little growth but a very low valuation to match.