Samsung Alias2 Brings E-Ink to Phones

| May 11, 2009 | Mobile Devices | Competitive Update

| Analyst: Avi Greengart

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

May 11, 2009 -- Verizon Wireless and Samsung announce the availability of the Samsung Alias 2, the next generation dual-hinge messaging phone with the convenience of an E-Ink transforming keypad in a unique flip-style format. The Alias 2 costs $79 after rebate with a two year contract.

Analytical Summary

• Current Perspective: Positive on Samsung’s Alias 2 because the use of E-Ink under the keypad solves the original Alias’ ergonomics problems while Verizon Wireless’ $79 price point makes it affordable. The Alias 2 is the sequel to the SCH-u740/Alias, a super-thin featurephone with two hinges, allowing it to be opened vertically for voice or horizontally for texting. It sold extremely well in Verizon Wireless’ limited messaging lineup; its chief competition was the bulkier enV/enV2 from LG. However, the Alias’ keypad layout was an ergonomic nightmare, combining both a numeric keypad – with labels in one direction – and a QWERTY keypad – with labels rotated 90 degrees from the numbers. Samsung solves that problem on the Alias 2 with E-Ink, a version of the technology used in the screen of e-book readers such as Amazon’s Kindle and Sony’s Reader. The E-Ink key labels change to match the orientation of the device and E-Ink only uses power during the switch – a solution that is both extremely practical and extremely cool. Given its price point and the relative dearth of QWERTY competition at Verizon Wireless compared to, say, AT&T’s lineup, the Alias 2 should be a hit.

• Vendor Importance: High to Samsung because using an E-Ink keypad bolsters its brand reputation as a technology innovator while keeping the vendor in the thick of the QWERTY featurephone market. Samsung is also first to market with AMOLED screen technology in the Impression over at AT&T, another QWERTY messaging phone.

• Market Impact: High on Consumer Handsets because consumers are increasingly choosing between smartphones and messaging-centric featurephones. The Alias 2’s new keypad technology bridges the gap, and for once, Verizon Wireless isn’t charging consumers extortionary rates to buy it. The immediate competitive impact will be felt when LG’s touchscreen and QWERTY featurephones at Verizon Wireless drop in price. The longer term impact of the Alias 2 will be seen once someone uses E-Ink for something other than standard 12 button or QWERTY keypads. LG’s Venus was a step in that direction, using a small LCD touchscreen for menus and scroll bars, but that implementation was inferior to full touchscreen devices. E-Ink offers interesting possibilities, especially given its minimal impact on battery life.

Recommended Competitor Actions

• LG has products that can compete with the Alias 2, but only if their prices get cut in half. The env2 ought to be $49, not $99, and the Versa should be $99, not $199.

• Another way to make the Versa more compelling would be to bundle the Versa’s game controller in with the standard package. The game controller is too limited to make sense as a $29 accessory. In our testing, it failed to make a single game better, and actually made several worse (the return rates must be off the charts). However, if it was another option included in the box, it would add to the Versa’s modular value proposition.

• HTC is only competing at the high end of the smartphone market (not just at Verizon Wireless, but at all its U.S. carrier partners). Where are the inexpensive messaging oriented smartphones that could entice Samsung and LG QWERTY featurephone buyers to move to an HTC product instead?

• Motorola can point out that it pioneered keypads that change not based on orientation, but on the context that the user is in (zoom keys for the camera, media control keys for the MP3 player on the ROKR E8 at T-Mobile). However, Motorola needs to get more QWERTY messaging phones (like its Hint QWERTY slider) picked up by the national carriers, not just the regional players.

• Nokia’s return to the Verizon Wireless lineup with three models after a two year silence deserves a round of applause, but the fact that all three models boast the same boring form factor (thick clamshells) is simply irrational. Verizon Wireless’ lineup is weak in terms of QWERTY messaging phones and Nokia should take advantage of opportunity and diversify its own portfolio by adding multiple QWERTY devices to the mix.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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