When talking about smartphones, Apple and Blackberry are somewhat alone in that they make their own hardware. Phones powered by Microsoft‘s OS and Android are built by OEMs like HTC, Nokia, Samsung, LG, Motorola, and others.
Back in the day, major companies like Dell, HP, Compaq and others would outsource the production of their devices to OEMs. Over time, these OEMs began to gain popularity and eventually brought hardware carrying their own brand to the market.
Ironically, Compaq, Dell, HP, and others have all but gotten out of the smartphone/PDA game, having been replaced by the OEMs that previously built their products. A flood of new OEMs are entering the market: OnePlus, Blackphone, Huawei, and others. Do the established brands have anything to fear from the newcomers in the battle of OEMs versus startups?
Outside the traditional business concerns, like expenses and revenues, there are two major components to take into consideration: brand loyalty, and product evolution.
I currently drive a Toyota. My wife drives a Toyota. Before that I drove a Saturn, and my wife drove a Saturn. I use Nexus 5 for my smartphone and a 2013 Nexus 7 for my tablet. My wife has a Nexus 4 and a 2012 Nexus 7. Why have we stuck with the same brands? They work.
That’s not to say that products made by others won’t work equally as well, if not better. However, once people come to like a particular brand, there is a high likelihood they’ll stick with that brand when they upgrade, and when making recommendations to their friends and family.
Evolve or Die
On the surface it sounds harsh, and it is, but OEMs find themselves in a difficult situation here. Everything that company is, including the product it builds, is a component of the brand. HTC has Sense. Apple has iOS. Samsung has its “S” everything.
Each OEM has branded its devices with a consistent look-and-feel. That look-and-feel makes up a major component of the user experience, and much of the brand.
Evolution, however, changes that. A new version of Apple’s iOS introduced a pastel color pallet that many didn’t like, and a “tilting” effect that made some ill. A new version of HTC’s Sense brought Zoe and Blinkfeed, two very integral parts of HTC’s UX — changes to which are met with vocal frustration. The examples go on and on.
Ultimately, OEMs need to continually evolve, but they must do so without alienating their customers, and soiling their brand. Change too much, and people leave. Don’t change enough, and people leave. What’s an established brand to do?
Startups and small OEMs have a distinct advantage: no one knows who they are. They don’t have loyal fan-bases, and they don’t have a long history behind their brands. They can afford to take risks and the sky is the limit. Innovation can be seen pushing the envelope in each of these new names, and phones based on their aggressive development and marketing pushes can bring better price points, and new innovations to all of us.
Does the old guard have anything to fear from new outfits? Absolutely yes. They also have the power to crush them by innovating and bringing their loyal customers what they want. Which will win out, OEMs versus startups? That remains to be seen.