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Handset makers go big on smartphones

Smartphones are going against one of the long-held rules in portable electronics, that smaller is better.

Year by year, computers, storage devices and music players have shed size and weight. And for decades, it has been happening with cellphones, too.

But now cellphones, and smartphones in particular, are going the way of the television: They just keep getting bigger and bigger. And people keep buying them.

The trend became even more apparent this week, as handset makers introduced a number of big-screen smartphones ' from five diagonal inches to more than seven inches ' at the Mobile World Congress trade show in Barcelona, Spain.

Samsung Electronics, Sony and the Chinese manufacturers Huawei and ZTE, among others, are all betting that consumers find images and video to be more vivid and engaging on a bigger screen, and that they may prefer to carry a larger phone instead of both a smartphone and a tablet.

The turn to bigger screens is a sharp departure from the dominant strategy of phone makers just a few years ago, when critics often and loudly mocked devices with big screens, joking that people would never buy them because they would not fit in the pockets of tight hipster jeans, or because people would not want to be seen clutching big devices to their skulls.

But Samsung, the No. 1 phone maker in the world, pushed hard on phones with bigger screens, and the effort has paid off with millions of units sold, particularly in Asia.

Samsung has said its research found that people liked bigger-screen phones because they wanted a device that was good for handwriting, drawing and sharing notes. Asian-language speakers found it easier to write characters on a device using a pen rather than typing.

Now Samsung and other phone makers believe they will find a more receptive audience outside Asia, too, including in the United States and Europe.

"The cultural difference is not much," said Lee Young-hee, head of marketing for Samsung's mobile division. "Most people like the bigger display ' it's more and more welcomed by people around the world."

Demand for big-screen phones is clearly strong. IDC, the research firm, estimates that at least 20 percent of all smartphones shipped last year in China, the largest smartphone market in the world, were five inches or larger. It predicts that number will balloon to 50 percent by 2017.

IDC also recently predicted that the growth of tablet sales would slow this year, partly because many people are gravitating toward larger phones and shifting away from smaller tablets.

"In some markets consumers are already making the choice to buy a large smartphone rather than buying a small tablet," said Tom Mainelli, an IDC research director who follows tablets.

The most extreme example of a big phone announced this week came from Huawei, which introduced the MediaPad X1, a smartphone with a seven-inch screen, usually a size used in tablets. Because the device has a phone connection, Huawei calls it a phablet.

Roland Sladek, a vice president for international media affairs at Huawei, said the company found that people liked to spend at least an hour a day on mobile devices, and that has driven the demand for larger screens.

Other makers are pushing slightly smaller versions. Samsung this week introduced the Galaxy S5, its latest flagship smartphone, which, at 5.1 diagonal inches, is just a smidge bigger than its predecessor. Sony unveiled the Xperia Z2, a 5.2-incher. ZTE introduced the Grand Memo II, a six-inch phone; last month it introduced the Boost Max, a 5.7-incher that the company hopes will help it gain some traction among American buyers.

"In the U.S., people live in the big house, drive a big car and I think they'll also like big phones," Lixin Cheng, chief executive of ZTE's American division, said in an interview.

He said that with software becoming more sophisticated and data networks speeding up for watching videos, people just want bigger screens.

Reception to big-screen phones is still relatively muted in the United States. The NPD Group, a research firm, said that out of the 121 million smartphones sold in the United States last year, only 3.3 million were 5.3 inches or larger, what NPD considers a phablet. In the fourth quarter, phablets represented only 4 percent of United States smartphone sales, NPD said.

That is largely because Apple, the No. 1 phone maker in the United States, has refrained from making a bigger iPhone. Some analysts say they are skeptical that large phones will take off in the United States unless Apple releases one.

Rumors abound that Apple is already planning to release at least one bigger iPhone this year. Timothy D. Cook, Apple's chief executive, has said the company would consider releasing one only when the technology was good enough to meet Apple's high standards for quality. Starting with the sixth-generation iPhone, Apple increased the size of the iPhone screen to four inches, up from 3.5 inches in the earlier models ' still considerably smaller than many devices coming from its Asian rivals.

Natalie Kerris, an Apple spokeswoman, declined to comment for this article. But the global market data, along with the traction that Apple's Asian competitors are gaining, show a clear opportunity for Apple to expand sales with a bigger iPhone, perhaps among affluent customers in China, where the company hopes to be a more dominant player.

Apple could position a bigger iPhone as a premium product, costing even more than its current high-end iPhone, said Milton Pedraza, chief executive of the Luxury Institute, a research firm. It could be marketed toward wealthy older customers who would enjoy a bigger screen because their vision is becoming worse and their fingers are not as dexterous, he said.

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Laurence Isaac Balter, chief market strategist at Oracle Investment Research, which has clients that own Apple shares, thinks it is necessary for Apple to introduce a larger phone. It would clearly appeal to people who want just one device instead of both a phone and a tablet, he said.

"The fact that today many Apple users walk around with an iPad Mini and an iPhone is ludicrous," Mr. Balter said. "In the end the manufacturer that delivers the one device that does it all will be the winner."

Lenovo, the Chinese company that is buying the handset division of Motorola from Google, said that there seemed to be no turning back from supersizing smartphones in markets around the world.

Liu Jun, executive vice president for Lenovo's mobile business group, said: "Simply put, more and more people are using their smartphones for entertainment, and people like viewing their photos, TV shows and movies on a larger hand-held screen."

A vendor selling phone cases in Guangzhou, China. Samsung's bigger-screen smartphones have sold well in Asian markets.

More information at: www.cnbc.com


 

 


 

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