Getting the ‘big picture’ : Content driving larger, better handset displays

Even a casual observer of the wireless industry can’t fail to notice that newer handsets are sporting larger, clearer, more colorful screens.
Simply put, the advent of mobile multimedia and consumer e-mail is driving increases in size, resolution and “color depth” of mobile-phone displays, according to several analysts.
Think Motorola Inc.’s Razr2, which provides such a dramatic shift in screen size and quality from its predecessors that one analyst described it as “freaking huge” and another declared it “best in class.”
Multiple screens, one device
The trend toward higher-quality screens, largely based on liquid crystal display (LCD) technology, is boosting business for specialized vendors in Japan, Korea and Taiwan, according to Vinita Jakhanwal, display analyst at iSuppli Corp. Japanese vendors, in particular, have been favored by the trend toward thin handsets, Jakhanwal said.
The display market has tended to be based on demand for customized products, though demand is beginning to focus on fewer basic display platforms, bringing down costs, several analysts said.
Silicon Valley, however, is spawning a number of competitors to overseas vendors, according to Bill Morelli, analyst at IMS Research, who just completed a study on touchscreen input/output technology-set for the spotlight with Apple Inc.’s pending iPhone launch.
The basic display market, however, is driven by volume and basic display technology rather than bells and whistles, Jakhanwal said. According to iSuppli, the annual, global display output in unit volume exceeds handset volumes by about 30%, due to the trend of including two screens on many phones. Last year, for example, about 990 million handsets shipped, which drove shipments of about 1.2 billion displays.
Demand for clamshell phones, which drive sales of multiple screens, is leveling off, Jakhanwal said. (Candybar variants, including sliders, account for 70% of the market, with clamshells taking the remaining 30%.) Also, small display manufacturing capacity is increasing dramatically due to advances in television manufacturing, bringing down costs, the iSuppli analyst said. Thus, iSuppli forecasts a $13.6 billion global display market for handsets this year, which drops to $12.9 billion by 2010.
Expensive component
As display costs inevitably drop, vendors use the savings in entry-tier, emerging markets to drive down handset prices, which in turn drive handset volume sales, Jakhanwal said. At the higher end, in developed markets, these savings are used to deliver higher quality displays that, in turn, drive subscriber ARPU.
Handset vendors and their network operator customers are striving to find the proper balance between the cost of offering improved displays and the experiences they’re designed to deliver, according to several analysts. Display quality, reflected in phone prices, softened by subsidies, is required to drive uptake of multimedia offerings. But over-shooting means crippling one’s return on investment. Displays are the second-most expensive item on a handset’s bill of materials-about 15% to 20% of the total-after the baseband chip, according to Jakhanwal.
Once upon a time-say, a year ago-displays averaged between 1.5 and 1.8 inches, measured diagonally, and resolution was 128 x 60 pixels, according to Jakhanwal. Today, displays’ global average size is 2.2 to 2.4 inches and resolution commonly is 240 x 320 pixels. Display “response time”-how quickly the image can change without telltale image trails-and viewing-angle quality have also improved, courtesy of developments from the PC and TV industries.
In emerging markets, black-and-white screens and “character-segmented” displays (that is, no graphic qualities) in entry-tier products still drive the market.
“Everybody talks about displays getting fancier, but demand is still driven by the sheer numbers of entry-tier handsets that are sold,” Jakhanwal said.
Stuart Robinson, component analyst at Strategy Analytics, said that advancements in “color depth” also can be documented. His firm’s database contains 5,000 phone models launched since the 1980s. (New launches now exceed 100 models per month, he said.)
The “old” color standard was 65,000 colors, a metric driven by how many bits of information are generated by each of the primary colors. Today, color depth of 262k is common. In the future, 16 million colors, or 24-bit color-essentially, laptop quality-will be prevalent, Robinson said. The primary driver, apart from multimedia applications, is onboard imaging (i.e., the camera)-1.3 to 2 megapixels is common today, but that resolution is climbing to 3 and 4 megapixels, Robinson said. Essentially, consumers perceive the images on the device’s display to reflect the imaging quality of the onboard camera, though that isn’t accurate, according to the analyst.
The iPhone factor
That’s the basic picture, but the proverbial big picture encompasses the bells and whistles, which tend to attract attention. That’s where the wild card emerges: the impending launch of Apple Inc.’s iPhone, which famously has brought a spotlight back to touchscreens-and their pros and cons.
It is known that the iPhone’s screen comes in at 3.5 inches, considerably larger than the industry average, a dimension accentuated by its prominence on the iPhone’s real estate and the source of a good deal of the device’s visual attraction.
Displays, per se, function as outputs. Touchscreens handle input and output, a potentially awkward mix. Already, pundits are predicting that the iPhone’s second iteration-which may come as swiftly as this holiday season-will include an alternative input technology such as the traditional keypad to smooth consumer uptake.
“The iPhone is a good test case for touchscreen technology,” said Morelli, of IMS Research.
But the possible drawbacks to the iPhone’s touchscreen include the fact that “capacitive” touchscreens require contact with skin (no stylus or gloves), the input/output mechanism is one and the same-finger smudges may dilute the user’s visual experience-and durability of the display over the life of a two-year contract may become an issue. One upside that could drive volumes in Asia: touchscreens allow input in character-intensive languages such as Chinese.
“Apple’s reputation rests on its user interface and the touchscreen is integral to that, so this is a fair area to judge the company on,” Morelli said. Rob Enderle, principal at The Enderle Group, is among the contrarians who think that the iPhone’s touchscreen could prove both its most attractive element and, as an unfamiliar input technology, a barrier to its uptake. He predicted that the next iteration of the iPhone will offer an alternative input method along with its touchscreen.
“Apple is fast-tracking the iPhone’s replacement product, which may appear before the end of the year,” Enderle said.
Enderle also said that iPhone will prove primarily useful as a multimedia device, not as a phone. He favors a multiple-device future over the everything-but-the-kitchen-sink model, based on wide view that includes other consumer electronics.
Whether the iPhone boosts or stalls the touchscreen’s trajectory, the addressable market will remain “a niche within a niche”-that is, limited to very expensive media handsets such as iPhone, or the smartphone space, which remains a fraction of the overall handset market, Enderle said.
Robinson, at Strategy Analytics, differs.
Touchscreen technology has been awaiting a “blockbuster” product to gain prominence and the iPhone may be it, Robinson said.
“In five to six years, I can see perhaps 40 percent of all handsets using a touchscreen,” Robinson said. (Though he acknowledged that his colleagues don’t endorse that optimistic view.)
“The first iPhone may not be the ‘big thing,'” he concluded. “But it will spark a revolution.”