Reg man says '拜拜' to Honkers, ponders Asia's future role in tech world

A bigger picture

Smartphones may be the hot new category of endpoint device, but when one considers tablets and PCs Asia is nowhere near as dominant. Samsung comes top followed by Apple, Lenovo, HP and Huawei, according to IDC stats cited by Chau. Aside from Xiaomi, innovative challengers capable of reaching this premier league are hard to find, she argued.

“There are vendors like LG, Sony and Coolpad, but I think the market is more likely to consolidate than any of these move up to the big league,” said Chau. “The industry is less about hardware-driven innovation now and more about software and services.”

As for India, although its smartphone market is currently “dwarfed by China”, it’s already the size of southeast Asia and will catch up to the Middle Kingdom over the next five years, explained Chau. However, its domestic handset players like Karbonn and Micromax are still at a fairly immature stage of development and unlikely to be able to take their business model outside the country anytime soon.

Nor are we likely to see a resurgence of the once-mighty Japanese tech giants. Many are struggling to shake-off the legacy of years of poor strategic decisions, and a bloated workforce. In 2013 alone, Fujitsu announced plans to dissolve a chip JV with NEC and NTT; Panasonic and NEC pulled out of consumer smartphones altogether; and Sony said it was selling its struggling PC business. The overall trend in the Land of the Rising Sun is very much still of streamlining, reducing headcount and refocusing on core areas.

One counter-example is Softbank, which has a potentially-lucrative 37 per cent stake in Chinese e-commerce giant Alibaba and acquired US player Sprint in a $22bn deal last year, with its eyes now on snapping up T-Mobile US.

Innovate much?

If it’s true traditional PCs are in irreversible decline – 2013 was the worst on record according to Gartner – and that smartphones have to a great extent become commoditised, then the best chance Asian tech companies have of setting global agendas may lie in online services.

Again, however, it is hard to find much local innovation. Believers will point to mobile messaging from the likes of Tencent’s WeChat, LINE and Kakao Talk. Facebook’s recent $19bn outlay on Whatsapp has suddenly focused public attention on these instant messaging services, as several have colossal user bases. WeChat is said to have had about 270m active users in January and a global marketing campaign featuring Barcelona superstar Lionel Messi to boot. Estimates put active users for the other two – both owned by South Korean companies – at around 100 million, but growth outside of Asia so far has been restrained.

Nevertheless they are innovating on functionality and in so doing driving the industry forward, perhaps more so than Whatsapp.

“WeChat is now increasingly becoming an access point for companies and organisations to distribute information and to serve customers,” Canalys analyst Nicole Peng explained.

“It successfully demonstrated through its Hongbao ‘red pocket’ campaign that, with its own payment system, it can open up many possibilities for companies to innovate in the ways they reach customers and differentiate around customer experience through its platform. This can help them generate significant commercial opportunities.”

What’s more, innovation isn’t necessarily about filing a patent but about how an existing technology is deployed, IDC’s Chau added.

“WeChat popularised the voice note system and influenced Whatsapp. It wasn’t the first but it was very easy to use. There’s a fine line between whether you need to create something or just position it in a way to make it successful, in order to be ‘innovative’,” she argued.

“You could argue that in terms of hardware specs on the first iPhone there was nothing that didn’t already exist, but it was put together in a way that was very easy for people to use – an innovation in itself.”