There was a time when the smartphone market was straightforward. Portfolios were neat and manageable, and consumers could easily distinguish products by screen size, resolution and camera megapixels. In the U.S., smartphones were either free, $99 or $199 on a postpaid plan. Those days are gone. Feature set still matters, but chipset innovation, intense competition and the rise of Chinese brands have changed the rules in the positioning and pricing of smartphones.
Qualcomm's announcement of three new mobile platforms—the Snapdragon 665, Snapdragon 730 and Snapdragon 730G—marks an intensification of this theme. The platforms offer premium specifications and experiences in the key categories of artificial intelligence, imaging, gaming and performance. For example, the Snapdragon 730 chip includes a 4th generation Qualcomm AI Engine, Adreno 618 GPU with support for the Vulkan 1.1 API, as well as a Spectra 350 image signal processor with built-in computer vision acceleration The Snapdragon 730G adds specific gaming features and heightened graphics performance. It also adds support for Wi-Fi 6 before it becomes widely included in high-tier devices. The Snapdragon 665 and 730/730G see AI acceleration becoming a consistent feature for developers and users spanning a broader range of price bands.
But this commitment isn't new. Qualcomm has been bold in its efforts to "waterfall" premium features down the portfolio, getting advanced features into more consumers' hands faster. The launch of a new Snapdragon 7 series in 2018 addressed the gap between its top-tier, volume-driving Snapdragon 6 family and its flagship Snapdragon 8 series platform.
Extending the portfolio to this level at a time when global demand is waning inevitably raises questions. After all, the larger the portfolio, the greater the cost and the bigger the impact on margins. But doing so has become a competitive necessity and one that can be managed through careful positioning of feature sets.
The trend reflects an increasingly segmented market. The growth of open distribution means less carrier influence in emerging and mature markets, including China. Phone makers have greater flexibility in the prioritization of chipsets based on their own needs for differentiation. The explosion of the Chinese ecosystem in recent years has pushed demand across a wider range of price points. Moreover, the success of players such as Huawei, Oppo, Vivo and Xiaomi in their Chinese home market has built a firm footing for them to expand internationally. In the fourth quarter of 2018, these companies represented 31% of the global mobile phone market; a year earlier that number was just 23%.
The smartphone market is becoming highly segmented on multiple fronts: price, performance, specification and experiences. Catering to this level of demand is extremely difficult, yet failure to adapt opens the door to competition. Scale and a careful balance between a chipset's price and its feature set are the ingredients to success. Other important elements are software and IP compatibility. This makes the selection of a specific platform far easier for manufacturers. It enables consistency across the device portfolio, which widens the choice of chipsets and in turn strengthens their partnerships with silicon suppliers.
This scale and deepening relationship with manufacturers is allowing Qualcomm to continue expanding the range of platform options. The introduction of two variants of the Snapdragon 730 chip with a gaming-oriented version featuring up to 15% faster graphics and other enhancements illustrates the company's ability to broaden its portfolio to address an increasingly segmented market. This is only possible with scale, and it's likely to lead manufacturers to further refine their requirements.
This should be of considerable concern to Apple and Samsung. Qualcomm's chipsets have been a primary enabler of growth of the Chinese ecosystem, and further broadening of its solutions points to heightening competition in new segments and markets. This stands to strengthen Qualcomm's standing in mobile silicon and bolster the position of a growing number of Chinese licensees.
At the same event, Qualcomm announced the AI 100 accelerator for inference in the cloud. This is an ambitious step, but with AI in its infancy, scale will be a significant asset in its quest to compete from cloud to a diversity of endpoints.
Geoff Blaber is vice president of research for the Americas at CCS Insight. Based in California, Blaber heads CCS Insight’s Americas business and supports the range of clients located in this territory. Blaber's research focus spans a broad spectrum of mobility and technology, including the lead role in semiconductors. He is a well-known member of the analyst community and provides regular commentary to leading news organizations such as Reuters, the Financial Times and The Economist. You can follow him on Twitter @geoffblaber.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.