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In 2015, phone makers banking on innovation

Samsung will debut low-end device while Google shows off Ara

Jan 05,2015
The new year has begun and several innovative smartphones are ready to make their debut in the global smartphone market after last year was dominated by low- to mid-priced devices from Chinese manufacturers Lenovo, Huawei and Xiaomi.

Google’s modular smartphone with interchangeable components, called Project Ara, is expected to take the smartphone market by storm when it is unveiled early this year. Google has been working on the customizable device for the past three years.

Samsung Electronics struggled with smartphone sales last year but has spent the past six months preparing for the release of its Tizen phone, which will be introduced in India this month.

The phone, which will run on Samsung’s own Tizen operating system, was set to come out early last year, but the release was delayed. A test version of the new smartphone was produced in June, but Samsung changed the release date for strategic reasons.

The Tizen Z1 will sell for about 100,000 won ($90) in India because of the popularity of affordable smartphones there.

Samsung has already released TVs and wearable devices in the Gear series that run on the Tizen operating system, but until now the company has stuck with an Android OS for its smartphones to avoid any backlash from Google.

In October, Samsung canceled a launch event in India, which led to rumors that Samsung was giving up on its Tizen phones.

“Tizen is not only for smartphones but is a platform prepared for the Internet of Things era,” said a Samsung Electronics spokesman. “It is essential to secure a platform to survive in an era when smartphones, wearable devices and home electronics are interconnected.”

The Tizen phone will have the cheapest starting price of any smartphone launched by the tech giant so far.

But Samsung will not get a break from the intense competition in the affordable phone market, as Xiaomi and Indian phone maker Micromax will also soon launch smartphones costing about 100,000 won.

India, with a population of 1.2 billion and a smartphone penetration rate of 20 percent, is an optimal place for Samsung to increase its market share in low-priced smartphones. And unlike in China, Xiaomi and Huawei have a relatively small market share in India.

The Tizen phone is expected to play a major part in Samsung Electronics’ marketing strategy this year.

In the premium smartphone market for devices that cost between 800,000 won and 1 million won, Samsung will continue to compete with Apple with its Galaxy S and Note series and will confront Huawei in the midlevel market for phones of less than 500,000 won with the Galaxy A series. In the low-price market, Tizen will compete with Xiaomi.

“Even if we lower the price, we can achieve a high volume of sales at a low margin of profit per unit if we increase production,” said a Samsung spokesman. “The release of the Tizen phone can help establish a Tizen ecosystem and recover our market share for low-price devices.”

Google’s Project Ara smartphone will be sold with a minimum amount of features so that users can buy and add on the components they need.

It is similar to purchasing a personal computer from Yongsan Electronics Market in central Seoul and customizing it for personal needs.

The basic phone costs $50, but the price could exceed that of a Galaxy S6 or iPhone 6, depending on the components that are installed, according to Google.

For instance, if a user spends a lot of time playing games on their smartphone, the user can get Google’s top graphics processing unit and as a trade off choose not to install a camera or choose the cheapest camera.

Ara is getting a lot of attention in the smartphone market because other tech companies are worried that the mobile devices could also become dominated by Google, and lead the company’s expansion into hardware.

There are concerns that phone manufacturers that run on Google’s Android OS could soon be reduced to supply companies that make parts for Google.

“As the number of consumers who buy components and parts from Yongsan Electronics Market and Techno Mart to build their own computer has surged, operating profits of existing PC companies nose-dived,” said an official at a mobile carrier. “When we look at Google’s market dominance, the same could happen in the smartphone market as well.”

In order to generate more attention for the Ara phone, Google will hold developer conferences on Jan. 14 and 21.

According to Google’s Project Ara website, at the conference, the tech company will demonstrate the Ara phone, along with the Project Ara Module Developers Kit version 0.20.

At the two events, which will be held in Mountain View, California, and Singapore, developers who do not work for Google, Apple or Samsung can ask questions of Google developers and share their views on the new phone.

The module will be manufactured by Motorola, which was acquired by Lenovo.

Other manufacturers are also taking an interest in modular smartphones.

China-based ZTE released a model of a modular smartphone called Eco-Mobius last year.

The small Finnish company Circular Devices recently announced that it is working on the PuzzlePhone, which is similar to a modular phone.

Russia’s YotaPhone is also worth paying attention to this year. The YotaPhone 2, launched on Dec. 3 by YotaPhone Group, is the first smartphone with two screens.

It uses a five-inch Amoled panel made by Samsung Display for the front screen and a black-and-white ink display for the back screen. It is a combination of a smartphone and an e-reader and has a slightly curved shape.

The YotaPhone project has support from the Russian government and has attracted large investments from Russian conglomerates. YotaPhone Group plans to sell the phone in 20 nations this year and wants to bring in additional investment of $100 million from around the world.

When Russian President Vladimir Putin visited China for the Asia-Pacific Economic Cooperation conference, he gave a YotaPhone 2 to Chinese President Xi Jinping and his wife Peng Liyuan.

However, there are still limits to the YotaPhone. Its battery capacity is lacking compared to other smartphones, at 2,550 mAh, much less than the 2,800 mAh of the Galaxy S5, 3,220mAh of the Galaxy Note 4 and the iPhone 6 Plus’s 2,915mAh.

“Even though YotaPhone Group says that the phone can run for two days on a full charge, its two screens will use up the battery much faster than that,” said an IT insider.

It is also not very affordable. Its launch price in England was 550 pounds, around 1 million won, much more expensive than the premium smartphones by Samsung and Apple.

BY KIM YOUNG-MIN [kjy@joongang.co.kr]



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