Analysts ambivalent towards new Maxis smartphone
By Sharmila Ganapathy-Wallace March 16, 2017
- Smartphone may not be a big revenue earner for Maxis
- Risk is high if Maxis is playing the IoT game
ANALYSTS appear ambivalent towards the recently launched Maxis own-brand smartphone NeXT M1, although the telco believes otherwise.
On March 3, in a move that surprised the market and consumers alike, Maxis launched a self- branded smartphone called NeXT M1, alongside a new entry-level postpaid plan. The device bundle costs RM78 a month and subscribers are tied to a 24-month contract, as is the norm with most device bundles in the market.
Digital News Asia spoke to a few analysts for their opinions on this latest surprise by Maxis. Says a telco analyst from a local investment bank: “Maxis’ subscriber numbers have been decreasing, perhaps this is their way of getting customers on board. I believe this (the smartphone launch) is more for branding, I don’t think it will be a big revenue earner for the company.”
A senior executive with a rival telco concurs. “I don’t think their margins will be big, the market is quite competitive out there for entry-level plans and devices,” he tells Digital News Asia over the phone.
IDC Malaysia market analyst, client devices, Jensen Ooi (pic, right) had this to say when asked for his thoughts on Maxis’ launching its own brand of smartphone: “It's a tough market for them as consumers are now heading to the replacement stage and they seek devices that not only come with great specs but also a strong brand name. The Maxis brand may be big in the telco industry but for devices, that's hardly the case. Those who opt for it will be those who are just trying out, or have a restricted budget for their purchase. Maxis will not see a significant amount of shipments in the long run,” he says via e-mail.
What does he think Maxis’s strategy is with the smartphone and how will that pan out? According to Ooi, this strategy could be a sign that they (Maxis) are looking into the IoT (Internet of Things) game, where the ideal plan is to have the entire ecosystem powered by the Maxis brand.
“However, this will only work for the long run and there's ongoing support and push from them. Alternatively, this could be a short-term plan where they could just be looking to increase their subscriber share in the 4G space,” he says.
To a question on what risks and opportunities Maxis needs to be aware of, Ooi said that if Maxis is planning for the IoT game, the risk is high as the local end users may take a while to adopt it entirely and only limited to city areas, thus taking a long time for them to get their returns.
“There's also the high risk of other vendors being involved in the IoT space as well thus creating a competitive space. Ultimately, when it comes to IoT it's not just one player who can dominate. All the players have to coexist in the ecosystem.
“If their strategy is to just gain subscribers in the 4G space by providing decent only smartphones, it will not last long and be ousted easily by the already existing players who have global marketing influence and experience in the channel distribution flow,” he opines.
Digital News Asia asked Maxis for their view on the matter. To a question on why they’ve launched an own-brand smartphone when the smartphone market competition is so high, Maxis says via e-mail: “It is a great opportunity for Maxis to introduce an unbeatable all-in-one 4G phone experience which will put our own branded high-specs device into the hands of our customers, allowing them to experience the difference on our 4G network. The unique differentiator of our own branded smartphone is the overall experience - high end spec smartphones and unbelievable value and amazing ownership experience.”
On the concerns of analysts that Maxis’ investment in the smartphone may not be justifiable given the limited margins from sales, Maxis had this to say: “Investment in the Maxis NeXT range of devices allows us to manage cost and subsidies much better while still delivering amazing smartphones with great specifications.”