Difference between revisions of "OLED Mobile Phones Market Research and Analysis Report"

Revision as of 14:23, 18 June 2009

Summary

This report analyzes the OLED (Organic Light-Emitting Diode)-based mobile phone industry in terms of products, applications, market size and structure, competitive environment and technology, and determines its future prospects. OLED technology is rapidly evolving, and these improvements are changing the dynamics of mobile phone displays.
Many companies using OLED in secondary displays are now introducing new models with OLED primary displays, particularly in the smartphone category.
The report covers the technological background of OLED. It also covers the Cluster Analysis performed and determines the segments which are likely to move to OLED based mobile phones.

Bass Diffusion Model is applied to forecast sales of OLED display based mobile phones. This forecast is arrived at by modeling the sales behavior of Apple iPhone among the TFT-LCD phones (since it was found that users of Apple iPhone are 'display sensititive). To validate this modeling, we also tried to predict sales of OLED based mobile phones based on sales data of analogous products like LCD TV, Plasma Display TV and LCD monitor (these displays replaced CRT's).

The study reveals that by 2012 cumulative sale of OLED based mobile phone is expected to reach 183 mn units. It also includes various graphs depicting the adoption rate of OLED based mobile phones.

Prediction for OLED based phones are considered in light of market drivers - like use of mobile internet for video downloads etc.

Objective

To estimate the market for OLED mobile phones.
To forecast the adoption rate of OLED mobile phones.

Methodology

A three stage analysis was conducted:

1. Technology Overview

A brief understanding of the technology behind the OLED screens forms the introduction to this report.

2. Cluster Analysis

Cluster Analysis was used to determine a class of mobile handsets that is most likely to use OLED screens. Cluster analysis is a technique used to assign objects to groups (called clusters), such that objects from the same cluster are more similar to each other than objects from different clusters. To determine the cluster, certain attributes of a handset like input mode, display Size, camera resolution, etc. were considered.

3. Bass Diffusion Model

The Bass Diffusion Model was used to forecast the adoption of the OLED based mobiles by consumers. The Bass diffusion model is a quantitative tool that describes the process of how new products get adopted as an interaction between users and potential users. In this analysis, the model was employed to forecast the sales of a new product by utilizing historical sales data of analogous products from the same product category as well as from a diverse product category. The market penetration for mobiles with OLED screens is arrived at with result for both the proxies.

OLED Technology - An Overview

OLED (Organic Light Emitting Diodes) is a flat display technology, made by placing a series of organic thin films between two conductors. On applying an electric current, a bright light is emitted. OLEDs use organic semiconductor material instead of inorganic semiconductor material used in conventional Light Emitting Diodes (LEDs). Through a process called electrophosphorescence, OLEDs emit light in the presence of an electric current. Like any other diode, OLEDs permit electric current to pass only in one direction. Unlike diodes made from inorganic semiconductors, OLEDs are very flexible because they are only 100 to 500 nanometers thick - the human hair is 200 times thicker than it. As a result, OLED screens are very flexible and can be made in very large sheets. OLEDs use lesser energy than LEDs as well.

The easiest way to understand OLEDs is to compare them to LCDs. LCDs are made by placing a color filter over a white backlight source – filtering out the colors that are not wanted for each pixel. If you want to display blue, you'll have to filter out green and red. OLEDs, on the other hand, are emissive, which means that you simply need to display the colors you need for each pixel, which is made from three color (RGB) OLED “pixels.”

OLED Construction

An OLED can be made of a single layer of organic material but multiple layers increase efficiency and effectiveness. A typical OLED is comprised of five layers of material:

Source: How Stuff Works

Types of OLED construction

OLEDs can be constructed in a variety of ways to serve a variety of functions. While each type of construction uses the layers described previously, the manner in which each layer is built alters the way the OLED functions. The five most common types of OLEDs are as follows:

Source: MarketResearch.com

Applications of OLED

The ten most prominent applications for OLEDs over the next eighteen months would be:

Television: Source: Techfresh.net	Cell phone: Source: Justamp.com	Video Camera: Source: Image Acquire
MP3: Source: Engadget.com	Near Eye: Source: Defense Update.com	Games: Source: 360 degrees
Media Players: Source: gayakuman.com	Digital Still Camera: Source: megapixel.net	Car Audio: Source: Slashphone.com

Source: Electronicsweekly.com

Key Players

The key players in the OLED screen mobile phone category are:

Source: asdreports.com

Advantages and Disadvantages of OLEDs

Source: MarketResearch.com

Cluster Analysis for TFT Display Mobile Phones

The table here summarizes the objective, methodology, procedure and result of the cluster analysis

Source: Statnotes, North Carolina State University

Selection of model

Using the analysis, one cluster of smart-phones likely to move to OLED technology was identified for each of the two categories. For the next stage of the research - that of forecasting sales - would need the historical sales data of one particular model. For this purpose, Apple iPhone from the 2nd cluster of candy-bar phones was selected because of constraint of availabilty of sales data for other models like Blackberry, Nokia N96, HTC Dreamers etc.

Detailed Analysis

The detailed cluster analysis can be viewed here:
Cluster Analysis for TFT LCD Display Mobile Phones

Bass Diffusion Analysis

One of the most important functions during the launch of a new product is to forecast the demand for that product, as it guides many other critical decisions faced by the company. Companies can schedule their production activities once they have an idea about the demand in the coming months or years. At a high level, Bass Diffusion Model is used to determine the shape of the curve representing the cumulative adoption of the new product. Bass describes the individuals who decide to adopt an innovation independently of the actions of others as innovators. Those who respond to the influences of the social system and obtain information about a new product from those who have already adopted the product are termed as imitators.

Some of the terms used in the model are:

Three key parameters used in the Bass Diffusion Model are:

Some of the formulas used are:

Bass Model Equations:

Adoption curve for new product are generally called S-curves because of their shape.

Predicting OLED phone sales using Analogous Products

Assumptions for Choosing Analogous Products
It is assumed that the segments of customers that are display sensitive are likely to be early adopters of OLED mobile phones. These customers are likely to pay a premium price for technology that provides better display parameters. Some of the analogous products that replaced older technology on display characteristics in recent past are LCD TV (replaced CRT TV), Plasma TV and LCD monitor (replaced CRT monitors). LCD TV’s and monitors provide better visual impact (their contrast ratios are higher than CRT’s and they display a significant higher number of colors) but it may be argued that they are preferred since they save on space. However, while LCD’s do save on space, they have mostly replaced CRT’s for their demand despite their higher price.

We have considered the following products from different product categories as analogous to OLED phones:

LCD TV
Plasma Display TV
LCD Monitor

Estimation of Parameters

LCD TV

We determined the past sales data from 2002 to 2008 through secondary sources.
Calculated the cumulative sales till last year for each year i.e. N(t-1)
Ran Non-Linear regression to determine a, b and c.
Calculated m, p and q from the values of a, b and c by putting them in the above mentioned formulas.

Same procedure is followed for Plasma Display TV and LCD Monitor.

OLED Mobile Phone projections based on Analogous Products

1. Weighted p and q are calculated based on the analogous products such as LCD TV, Plasma Display TV and LCD monitor.

i. To judge the similarity of analogous products to OLED, we examined two criteria.

a. Market Structure

b. Product Characteristics

ii. Depending upon the importance of the criteria, weighing factors were given to them. 0.4 for Market Structure and 0.6 for Product Characteristics.

iii. Based on the similarity of the analogous product numerical weights were assigned to them on a scale of 1 to 10 for each criterion.

iv. Weighted average p and q were calculated based on the p and q values of analogous products and the corresponding weights assigned to them. click here to view details

2. Market potential of OLED phones is taken as the m value of smartphones segment which is 884.07 mn.click here to view details

3. Then forecasted the adoption rate of OLED using the basic equation of Bass Model.click here to view details

In 2009 and 2010 OLED Mobile Phone market will grow at a slow pace because the sale is mainly caused by innovators.
From 2011 to 2015, market will grow at a very fast pace because of the large number of imitators started buying the product at this time. Sales will be driven by early adopters.
In 2016 and 2017, market will grow at relatively slow rate, sales will be mainly caused by late adopters
2018 onwards growth is very less, sales will be caused by laggards. Also the market approaches it saturation point.
From 2016 there is a dip in the sales, so, there could be a substitute by that time.

Comparison of Adoption rate of Innovators with those of Imitators

We determined the sales caused by innovators and imitators in each year based on the values of p, q and m.
m for each year is taken as m-N(t-1), it represents the number of consumers who have not previously adopted by the start of time t, this is the pool from which the new adoptions in the current period can occur. click here to view details

From the above graph we can see that the model is dominated by imitators than innovators. OLED Mobile Phones will get off a slow start in first 2 years. However, once a critical mass is reached by year 2, strong imitative effects will take over and the number of new innovators to adopt the product will slowly diminish over time.

OLED Mobile Phone Projections Based on I-Phone

p, q and m values are calculated for I-Phone from the past data .
We forecasted the cumulative sales or adoption rate of OLED TV based on the p, q and m values.click here to view details

From Q1, 09 to Q3, 09 OLED Mobile Phone market will grow at a slow pace because the sale is mainly caused by innovators.
From Q4, 09 to Q4, 10 market will grow at a very fast pace because of the large number of imitators started buying the product at this time. Sales will be caused by early adopters.
In Q1, 11 and Q3, 11 market will grow at relatively slow rate, sales will be mainly caused by late adopters
Q4, 11 onwards growth is very less, sales will be caused by laggards. Also the market approaches it saturation point.
From Q4, 10 there is a dip in the sales, so, there could be a substitute by that time.

Comparison of Adoption rate of Innovators with those of Imitators

We determined the sales caused by innovators and imitators in each year based on the values of p, q and m.
m for each year is taken as m-N(t-1), it represents the number of consumers who have not previously adopted by the start of time t, this is the pool from which the new adoptions in the current period can occur. click here to view details

From the above graph we can see that the model is dominated by imitators than innovators. OLED Mobile Phones will get off a slow start in first 3 quarters. However, once a critical mass is reached by Q 3, strong imitative effects will take over and the number of new innovators to adopt the product will slowly diminish over time.

Comparing OLED Mobile Phone projections

After projecting the adoption rate of OLED Mobile Phones based on Analogous products and based on IPhone, We compared both the projections to cross validate our results.click here for details

Looking at the forecast of OLED screen Mobile Phones based on Analogous products and on I-Phone, we can see that both are almost similar to each other and moving in tandem, and finally converging at one point.
This also validates our forecast.

Key Market Drivers and Constraints for OLED adoption

Market Drivers

Mobile Internet - According to Nielsen Mobile, mobile internet in the US has reached 40 million active users and is growing rapidly . Consumer video constitutes majority of this traffic.(Marketingchart.com)

Multimedia Applications – Increase in online video viewing will act as a major growth driver. Bigger screens alongwith greater visual clarity are expected to be preferred by this segment.

Technological Innovations – Recent technologies like 3G and 4G emphasize more on data and video content.

Online Gaming – Online gaming content is skyrocketting which is evident from the fact that since November '07 to '08, this industry has witnessed YoY growth of 291% driven by the high end phone category, mainly the iPhone and Blackberry ( iPhone owners accounted for 14% of mobile game downloaders in November '08 )

Source: Seekingalpha

Two major inferences that may be drawn from the above are:

1. Consumers' emphasis on viewing is fast becoming a major factor for today's mobile industry.

2. Use of OLEDs will enable the mobile manufacturers to provide all these features in a better manner owing to its wide viewing angle, faster response time and high contrast ratio.

Market Constraints

The major constraints to adoption of OLED technology may be summarized below:

Cost of OLED – Although the performance benefits of OLEDs surpass LCDs, the decreasing cost of LCDs and enhancement in LCD technology is key factor constraining the industry. LCD manufacturers will continue to improve their products and search for ways to reduce production costs.

Sunlight Readability – OLED’s emit light. Bright sunlight interferes and washes out the image.

Source: trulydisplays.com

Sneak Preview of some models using OLED technology

1. Apple iPhone - It’s nothing official at the moment, but word on the street is that Apple might have chosen a series of OLED displays for its next round of handsets. Such a move would certainly be in the best interests of battery life, as the iPhone isn’t noted for its battery capabilities. Considering the amount of new features that were announced in the iPhone 3.0 firmware update, it would be fairly practical to have a capacitive OLED display in the future.

Source: appleiphoneapps.com

2. Nokia - Nokia 6600 Slide Mobile Phone is a 3G device with large OLED display and 3.2 megapixel camera. It has curved edges and with a weight of 110g is a bit heavy to hold. The 2.2” screen supports 16 million colors and comes with QVGA resolution. The dimensions of the phone are 90 x 45 x 14mm.

Source: Mobile Phone Reviews

3. Samsung - Samsung A877 features include a 3.2-inch WQVGA AMOLED touchscreen, a 3 megapixel camera, GPS, HSDPA and Bluetooth.And as well at it supports AT&T’s 3G service.

Source: ATT Phones

4. Sony - Sony Ericsson Z555 features a 1.9-inch LCD display, an OLED 128×36 external display, a 1.3 Megapixel camera with 4x digital zoom.

Source: Itechnews

5. LG - One of the first handsets to get the new AM OLED, is already advanced LG SH150 DMB TV phone.

Source: Unwiredview

6. Motorola - The MOTO U9 is a Quad-band phone with a 2-inch QVGA LCD display, a 1.45-inch secondary OLED display, integrated music player, Bluetooth, 25MB internal memory and a microSD card slot.