Here is how the flagship is reinventing itself under pressure

A company like HTC has three or four flagship phones catering to different price points, Sony launched two flagships in 2014

Written by Nandagopal Rajan | Updated: November 3, 2014 10:22 pm
Samsung launches Galaxy Note 4 and Gear S in India The Samsung Galaxy Note 4 is among the latest flagships to enter the Indian market.

Are flagships, the big heroes of the mobile world, slowly losing their clout? Not really, if you look at the sales of the Apple iPhone 6, the Samsung Galaxy Note 4 or the Sony Z3. But their lure for certain categories of buyers seems to be slowly waning as the best specifications are no longer the exclusive domain of the flagships.

There was a time when the flagship smartphone, the top product from a company, usually priced upwards of $600, would have the features which none of the other phones from even the same brand would sport. This was the true flagship, a product for which people aspired for and saved up for months to buy. Even if everyone was not able to afford the flagship, the devices create a ‘hero effect’, where those aspiring for the top-end phone end up buying an affordable device from the same brand.

With flagship smartphones, Sony is aiming to drive technology and design leadership. Sachin Rai, business head, Xperia, Sony India, said, “Within two years of the launch of our first flagship model, the Xperia Z, we have seen a significant growth in the smartphone category, with the Z series acting as a category image driver for Sony.” Samsung too milked this wonderfully well for many years with the Galaxy S series and still does so with newer phones in the series.

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While flagships still command a lot of eyeballs and eventual sales, they are slowly losing sheen primarily because the affordable phones are getting better. But with this low volume segment still accounting for substantial value for all companies, the manufacturers are reinventing how they sell the flagship. Earlier, you would have one flagship which would command a premium and drive people to buy a slightly lower cost model from the same brand—the so-called Hero Effect.

A company like HTC has three or four flagship phones catering to different price points. “The hero effect will always be there for our flagship M8. Those who can’t buy that will start looking at the Desire 816 a step below. But these consumers will always be looking to migrate to the top end device,” explained Jack Yang, president, HTC South Asia.

Samsung has three flagships at the moment, the Galaxy S5, Note 4 and the new Galaxy Alpha. Asim Warsi, vice-president, Mobile & IT, Samsung India, said, “We have positioned flagship products towards varied consumers such as Galaxy S5 for consumers seeking best possible technology and refined mobile experience, Galaxy Note 4 for the executives and Galaxy Alpha is for trendsetters and youth. We believe that offering consumers more choices is of critical importance.”

Similarly, Sony launched two this year in the Xperia Z2 and Z3. The Sony India business head said that with smartphone technology changing rapidly, Sony will continue to focus on its six-month flagship cycle. “So with the Z3 we are not just targeting the existing Xperia Z series users, but also users of other smartphone brands, who want to upgrade,” he said.

But with value for money phones offering top-end features like 13 megapixel cameras and octa-core processors a lot of people, even those who can afford flagships, are moving towards cheaper devices. “The budget Android segment is not a threat to the flagship model, but the value for money segment certainly is,” said Karan Thakkar, senior market analyst—Client Devices, IDC India. “Indian smartphone market has come a few steps ahead of the brand phenomenon. Every day the consumer is getting more informed and they are not only looking at the aesthetics, but also what lies under the hood and analyse how it will perform. This mix is ultimately compared with the price of related products,” he explained.

According to the IDC analyst, Samsung, Apple, HTC and Sony are still the key players in the flagship space. “Apple is expected to post good numbers in Q3 2014 while Sony is also doing well in the high-end with the Z series,” he added. Samsung, meanwhile, is trying to recreate its annual success with the just-launched Galaxy Note 4 and HTC will update the HTC One M8 with the Eye camera software.

But flagships still demand a premium and devices launched this year are pricier than the last batch. “India is a diverse market with different consumer requirements in the mobile phone segment. Samsung foresees immense opportunity in the exponentially growing Indian market with consumer demand coming from affordable, mid-segment and premium mobility category,” said Warsi. There are just a handful of flagship devices priced under R50,000 and prices go much further depending on the configuration.

In the end, the flagship is becoming a niche segment, mostly for geeks and people who want to splurge a bit of money. The market has changed with lot of alternatives available for each flagship and that too across various price points. But still the charm of the flagship remains, to an extent.

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