Touchscreen mobile phones: Added value stimulates rising popularity

Suppliers of mobile phones in China are increasingly adopting touchscreen technology under efforts to add value and improve their market position. Riding on strong iPhone sales and growing demand for similar products from Nokia, LG, and HTC and its subsidiary Dopod, many makers are projecting that such handsets will be a key trend in the next few years.

More companies are keen to change their low-end ranking and believe that developing upscale units such as touchscreen phones will help them penetrate the midrange or high end. They expect these models to eventually boost sales, which are forecast to dip this year.

IDC projects that the global market will register -8.3 percent growth in 2009. The outlook is based on a dismal 4Q08, during which worldwide shipments fell 11.6 percent YoY, the fist time in seven years that the holiday period did not record a double-digit increase.

China remains the largest manufacturing base for handsets worldwide with a 50 percent output share, but suppliers anticipate a slight downturn in production and exports as consumer spending slows. Data from the Ministry of Industry and Information reveals that the turnout in the first two months of 2009 totaled 79.67 million units, an 11.2 percent decrease from the same period last year. Overseas shipments declined by 17.2 percent in January-February.

Some companies said they reduced their export volumes by 30 to 50 percent in recent months. Shenzhen Yingtailong Technology Co. Ltd, for instance, now ships only 35,000 to 50,000 units, half of its monthly average in early 2008.

The minimum requirement has also dropped from 2,000 pieces at the end of last year to just about 500 as of March. Some overseas clients have lowered their order quantities from 10,000 to 5,000 phones.

In addition to slumping sales, tighter competition could lead to a consolidation that might push smaller companies out. Makers said even large enterprises are reporting losses because of the rising manufacturing costs amid thinning margins.

Several suppliers have announced plans to reduce output this year to avoid increasing outlay further. A few are concerned about expanding their inventory in the face of declining demand. Some are hoping that the central government's revitalization plan for the electronics industry will spur sales and bolster eroding margins. Under this program, mobile phones are entitled to a 17 percent export-tax rebate.

A growing number of companies in China believe that touchscreens will be the biggest trend in coming months. Many, however, admit there are challenges ahead that could slow product development and manufacture.

While demand for touchscreen phones has been rising significantly in the past two years, there will still be a large base of users that will prefer 'regular' handsets such as flip- or slide-type models. One factor that could affect adoption is the high outlay. A touchscreen LCD panel now lists at $:5.60, up from $:4.50 in 2008.

In addition to their rising costs, the unstable supply of mobile phone components is another cause for concern. According to Tianma Microelectronics Co. Ltd, a mobile phone LCD panel provider, the output of 2.2 and 2.4in panels has been declining. CCID Consulting attributes this to a production cutback in anticipation of slower demand due to the financial crisis.

The quality of the touch LCD panels is another issue. China-made panels deliver lower sensitivity and resolution than those from international brands.

Output of touchscreen modules is, however, expected to rise steadily to match demand. The worldwide market is projected to hit 833 million units by 2013 at a 19.5 percent CAGR, according to iSuppli.

Most touchscreen mobile phones from China are targeted at the midrange and low-end segments. The mainstream models have 2 to 3.5in TFT LCDs. They feature dual SIMs with a dual-standby mode. The handsets integrate 1.3 to 2MP cameras and support 1GB memory cards.

Priced from $:40 to $:60, low-end versions typically come with 2, 2.4 or 2.6in screens. They have dual SIMs and 1.3MP cameras. Some enable Bluetooth connectivity.

Midrange units are available for $:65 to $:100. They incorporate 2.8 to 3in LCDs and combine mobile TV, Bluetooth and 2MP camera functions.

Upscale models use 3.2in or larger screens. They integrate mobile TV, MP3/MP4 players, 3MP cameras and Bluetooth. These go for above $:100.

The AYCZ5800 from Shanghai Etrony Network Information Technology Co. Ltd features a 3in high-definition QVGA display. This dual-SIM, dual-standby phone supports Bluetooth 2.0 and has a camera.

Touchscreen smartphones list at about $:200. Some of these units are equipped with GPS navigation. Many companies admit they do not plan to develop models with such capability in the near future because of the high production costs. GPS functionality adds nearly $:30 to the outlay.

More than 80 percent of China-made touchscreen mobile phones use MTK chipsets. In addition to their lower cost, these solutions are easily accessible.

The adoption of the same chipset is, however, flooding the market with products that have the same features and functions. This is stoking the price war and forcing companies to take R&:D a step higher to differentiate their phones. Even so, most efforts are centered on housing design innovations.

Prices in the high end will likely dip in the next six months as companies try to boost their competitiveness. With some players exiting the line, however, quotes will start inching up and stabilize in early 2010.

Most touchscreen mobile phones from Taiwan fall under the smartphone and PDA phone categories. The majority are 3G handsets, typically equipped with 2.8 to 3.8in displays, GPS and multimedia features. The latest releases run on Windows Mobile 6.1 Professional OS. Suppliers in the island use mainly 4-wire resistive touchscreen panels.

The Market Intelligence and Consulting Institute predicts more Taiwan-made feature phones will enable the touchscreen function this year. Factors that will speed up adoption is the continued decline in handset prices and the growing popularity of the Android platform. The HTC Dream and HTC Magic from HTC Corp. are based on this solution.

Enlarging the screen size is a priority for many makers. They are also putting emphasis on enhancing the resolution and developing trendy housing designs.

AsusTek Computer Inc.'s P565, for instance, features a leather-wrapped rear cover. This 3.5G HSDPA phone uses a Marvell 800MHz CPU and runs on Windows Mobile 6.1 Professional OS.

Companies such as HTC are introducing touch-sensitive zoom bars to enable faster viewing. HTC integrates its TouchFLO 3D interface with a customized version of Windows Mobile 6.1 to offer easy navigation and intuitive operation.

The adoption of touchscreen technology is accelerating among suppliers of mobile phones in Hong Kong. Encouraged by the rising popularity of handsets with this feature from leading international brands, an increasing number of entry-level and midrange models from the territory now pack touchscreens.

Even while admitting that the touch-sensitive display is not the main selling point of their mobile phones, makers said it is a growing trend, especially in multimedia-centric units. In addition to such screens, latest releases from Hong Kong have dual SIMs, Bluetooth, analog TV tuners, microSD support, digital cameras, media players and G sensors. Many also support handwriting recognition. Upcoming models will boast slide-to-unlock now available in popular brands.

The absence of alphanumeric keys distinguishes these phones from those without touchscreen capability. Usually retained are directional buttons, joysticks, and call, reject, forward and back buttons. Some large handsets still have keypads.

Most handsets adopt MTK solutions. Besides adding value, makers are emphasizing external design innovations to differentiate products.

This article "Touchscreen mobile phones: Added value stimulates rising popularity" is originally posted in Global Sources.

Huayu Industry(HK)Co.,Ltd.
Shenzhen Taixing Digital communication Co., Ltd.
Shenzhen Widetel Communications Co.Ltd
Shenzhen Yingtailong Technology Co.Ltd
Tintele Global Co., Limited