Nothing phone (1): Space for another brand, but a tough market to please, say analysts

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‘Too much hype for Phone (1) imho’(sic): That’s what Nothing founder Carl Pei, previously the co-founder of OnePlus, tweeted last week ahead of his latest startup’s new product launch, which takes place later tonight. While Pei insists that this is not all marketing, there is no doubt that the Nothing phone (1) is one of the most awaited devices in recent times. But analysts caution that while there is space for another smartphone brand, Nothing has a tough market ahead of it.

Analysts that spoke to stressed that the current market was very different from 2014-2015 — when OnePlus just took off — and that Nothing has its task cut out. They also pointed out that given the overall macro factors, including rising inflation and fears of recession, this is a particularly challenging time for any brand to enter the market.

“A mid-single-digit kind of growth is expected for the India smartphone market. Demand is tapering. The real launches have been happening in Rs 25,000 to Rs 40,000 segment and that’s where we believe Nothing phone (1) will launch considering the brand which Carl Pei wants to bring, the vanity features, and the cosmetic features they are bringing in,” Navkendar Singh, analyst, International Data Corporation (IDC), a global market research firm, told

But he also noted that the unique design might work in the brand’s favour. “When you hold an Apple phone it’s easily recognisable. And we have to be aware of the fact that most people in India buy Apple because of the logo. There is a space for a unique Android phone here,” Singh said.

Nothing will be hoping it fills that space, given its transparent design filled with LED lights at the back, which had made the device a talking point. But the challenges of selling a new mid-range Android are very different in 2022 compared to 2015. According to Tarun Pathak, Research Director, Counterpoint Research: “Hardware has ceased to be a big differentiating factor.”

In his view, for a brand like Nothing, post-purchase behaviour and feedback will be key. “People also look at post-purchase behaviour, for example after-sales services. What is the service like, what about software updates etc? That is where I think they need to build going forward,” he said.

He also noted that Nothing has a slight advantage given they have managed to get some brand awareness thanks to their previous product, the ear (1) TWS earbuds. “Users who bought their Nothing TWS could also be their target audience. Otherwise, it is the other way around, you buy the phone and then get the accessories,” he said.

According to Singh, Nothing will need top-notch camera performance and general performance as he does not see users in this segment compromising on these aspects. It doesn’t help that the Rs 30,000 to Rs 40,000 segment is filled with phones from other brands which are running the older and more powerful Snapdragon 800-series chipsets. In contrast, Nothing is going with the Snapdragon 778G+ chipset, which will be perceived as being underpowered.

Options such as Poco’s F4 5G, iQoo Neo 6 are powered by the Snapdragon 870 chipset known for its good performance. Then there’s Xiaomi’s 11T Pro, and the OnePlus 9RT, which are all powered by the Snapdragon 888 series, though they are closer to the Rs 40,000-mark.

Singh also added that Nothing’s two-camera approach might be a tough one to sell especially in India. “It will be very difficult to sell two cameras that are better than three cameras. Only possibly Apple can do that. And Pixel has been able to do that, but Pixel hasn’t done well in India. That will be a discussion point,” he pointed out.

Even without the two cameras and chipset debate, Nothing’s entry into the market is taking place at a difficult time given the overall macro factors. According to Pathak, how the first set of consumers respond will be critical. “First-time users are critical for the Nothing brand. What happens in India will have implications in Europe and other markets they try to expand in,” he said.

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