MOBILE MARKET MISTAKES
Winners and Losers
I’ve written several posts over the past two months about the Galaxy Note 7 battery fires that led Samsung to remove it from the market. In my prior post, I reported, from a Wall Street Journal article, that “investors have shaved off roughly $20 billion in Samsung’s market value. The company has said the recall would cost it $5 billion or more, including lost sales.” The big question now is whether Samsung can rebound from this mistake, or if this is the beginning of the end.
If you doubt that a market mistake can sink a mobile product line, or even a company, consider that a decade ago the major producers of smartphones were Nokia, RIM (Blackberry brand) and Motorola, in that order. Apple had not yet entered the market, and Samsung was lumped with “Others” behind Palm and Sony Ericsson. Over the next few years, Nokia maintained its market leadership, and RIM even doubled its market share. But each company eventually fell victim to one or more mistakes that led to a quick market descent.
Motorola market share fell from 21% to 5% between 2006 and 2009.
RIM market share fell from 19% to 5% between 2009 and 2012.
Nokia market share fell from 35% to 5% between 2010 and 2012.
So it’s not inconceivable that Samsung may be sliding from market winner to loser. However, I’ve been considering an interesting thought experiment lately: What if, rather than battery failures, the Galaxy Note 7 had included a new, advanced lithium-ion battery that was safer with increased energy capacity?
Although we still don’t know the root cause of the Galaxy Note 7 battery failures, we do know that a rush to take advantage of what Samsung saw as an opportunity to overtake the Apple iPhone 7 Plus may have contributed to its fatal flaw. Initial reviews of the Galaxy Note 7, in August, were very positive. According to The Wall Street Journal, “For a moment, it looked like the Galaxy Note could win over users of Apple Inc.’s iPhone and cement Samsung as one of the world’s most dominant technology companies.”
Therefore, if the initial reviews had included longer battery life and if subsequent tests had confirmed that the battery eliminated the threat of thermal runaway and a resulting fire, the news reports over the last couple of months could have been very different. The Galaxy Note 7 could be hailed as the premier phablet with breakthrough battery performance, and business and technology reporters could be speculating on how Apple might respond.
This thought experiment is not without purpose. In 2012, an IDC report noted that [mobile device] vendors get away with only moderate levels of battery satisfaction because everyone suffers. When a real game-changer comes along in terms of significantly improved battery performance, that vendor will have an immediate market advantage.
Enovix is presently securing early-access customers for our 3D Silicon Lithium-ion Battery as we prepare to scale production for commercialization. So we are constantly assessing what effect it may have on the mobile device market when one of our customers can offer a battery benefit that a competitor cannot. For example:
Twice as much runtime between charging than a competitor’s fitness wristband.
An always-on cellular connection and GPS radio in a smartwatch for a wide range of communication, activation and transaction applications without a smartphone connection.
A smartphone battery that is immune to thermal runaway to eliminate the threat of fire aboard an aircraft.
Very little has changed in Li-ion battery design and production over the past quarter century. The safe bet has been to do nothing and live with the status quo. But, according to Lux Research, over $4 billion has been invested over the past decade for advanced battery commercialization, and change is about to come from companies that are evolving lithium-ion batteries through innovations in electrodes and electrolytes. There will be the winners and there will be losers. The question is which companies will be which?