Will The Smartphone Market Soon Mirror The PC Market?

Oppenheimer analyst Andrew Uerkwitz sees a major transformation happening in the smartphone market, and he believes that the latest news from Chinese handset maker OnePlus is a further indication that this change is coming sooner rather than later. In a new report, Uerkwitz discussed what the announcement of OnePlus’s latest phone means for competitors such as SAMSUNG ELECT LTD(F) (OTC: SSNLF), Nokia Corporation (ADR) (NYSE: NOK) and Apple Inc. (NASDAQ: AAPL).

OnePlus 2

OnePlus is only about two years old, but the small company has already shipped more than 1.5 million units globally. The company recently announces its second phone, the OnePlus 2, which the company claims will have “one of the most advanced camera systems on the market.” Features include updated optical image stabilization, larger camera sensor and laser auto focus.

In addition to the advanced camera, the phone’s Oxygen OS, which is a customized version of Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Android 5.1, features off-screen gestures, customizable buttons, Waves MaxxAudio and a SwiftKey Keyboard.

Related Link: China's 3G/4G Subscribers Grew 39% Last Month: Here's What It Means

Change Is Coming

According to Uerkwitz, the features contained in phones produced by value-oriented Android phone makers like OnePlus leave very little market for high-end Android manufacturers. “2Q preliminary smartphone market share data from IDC confirmed again our long-term thesis that global tier-1 Android handset makers will continue to see their market shares decline,” Uerkwitz explained.

Oppenheimer believes that smartphone consumers are now focusing on platforms rather than features when buying phones.

What Does It Mean?

Uerkwitz predicts that the smartphone market will begin to mirror the polarization that occurred in the PC market within the last several years. Once the notebook market reached a point where there were very few differences in features between the products of value-oriented Microsoft Corporation (NASDAQ: MSFT) Windows-based notebooks and high-end Windows notebooks, Windows device manufacturers were left to compete mostly on price, leaving only Apple as the remaining premium brand.

Uerkwitz believes that the smartphone market is moving in an identical direction. While Android-based manufacturers go head-to-head in a pricing war, Apple will be left as the lone premium smartphone brand with pricing power.

Image Credit: Public Domain