Opinion: Why Apple should sidestep the 'phablet'

While the category of pocket-busting phones may be growing, it's hardly iPhone-threatening.

While visiting what might otherwise be called respectable websites, you may have seen writers put forth the idea that "phablets" are eating Apple's lunch. "

If you don't know what a phablet is, get set to have your day ruined. Take it away, Wikipedia:

[Phablet is] a portmanteau of the words phone and tablet.

"Portmanteau"? Really, Wikipedia? Isn't that kind of fancy talk for wordplay that's about as sophisticated as pig Latin?

Well, whatever the etymology, the phablet is a roughly half-phone, half-tablet beast that current wisdom says is slouching toward Cupertino to wreak havoc. Personally, I think this is yet another example of pundits believing things that have no basis in fact.

A galaxy of note

By way of an example, James Surowiecki recently wrote in The New Yorker:

Apple's competitors are finally doing a better job of making the kinds of phones that customers want. The most notable of these is an oversized phone dubbed "the phablet" - Samsung's Galaxy Note is the leader in the category.

People usually hold up the Galaxy Note as the shining star of the phabletmania that's sweeping the globe. So, naturally, I found myself wondering how many Galaxy Notes Samsung has sold.

Of course, Samsung doesn't make figuring that out particularly easy, because unlike Apple, which announces unit sales every quarter, Samsung releases such numbers only when it wants to. Last August, however, the company said it had sold 10 million Galaxy Notes in the nine months since launch. Subsequently, it released the Galaxy Note II in late August, and by late November it had sold 5 million additional Notes. So, let's assume Samsung sold something like 17 million Galaxy Notes total through the end of November, and let's further assume that it has sold 25 million Notes to date. That's 25 million in 16 months, with maybe 7.5 million in the last three months.

Holy cow, that's millions and millions of Notes! And millions and millions of styluses! Possibly even more styluses, because they're easy to lose! And, more important, they're selling more and more Notes every day!

That's one way of looking at it. Another is to ask yourself, "How many iPhones did Apple sell last quarter?" The answer is a number that could disappoint only Wall Street: 48 million.

In other words, Apple sold almost twice as many iPhones last quarter as Samsung has sold Notes ever. So, who's making the kinds of phones that consumers want again? While the category of pocket-busting phones may be growing, it's hardly iPhone-threatening.

Phablets and reflections

Nevertheless, analysts at Barclays think that phablets are poised to take off (and not just because of the serious threat of aerodynamic lift they face). They predict that Samsung will sell 97 million smartphones with screen sizes over 5 inches in 2013. I don't have access to the numbers that Barclays is smoking, but based on the number of Galaxy Notes the company has sold to date, that would be an incredible jump. I'm not saying it's impossible, I'm just saying that the analysts at Barclays may be taking powerful hallucinogenics before they begin working on their spreadsheets every day.

Samsung does sell other gigantophones (I think this is much better than phablet, and I hope you will join me in making it the new term for this category), but the Note is the flagship and certainly represents the lion's share of sales--otherwise Samsung would be touting its other devices. The company is also reportedly working on a pants-challenging 5.9-inch phablet for later this year, so dig out those relaxed-fit jeans from the 1990s that you put in the attic.

One might as well be taking hallucinogenics when coming up with any such sales predictions. Go back three years, and you'll see people predicting that Symbian would still own more than a third of the smartphone market this year. Go two years, and you'll see predictions that Windows Phone would overtake Android in 2013.

Even if Samsung does sell 97 million 5-inch devices, that's still likely to be considerably less than the number of iPhones that Apple will sell this year, as Apple already sold half that number in the first quarter alone. Android device makers may sell a moderate number of these horribly named devices, and they may represent a viable category for manufacturers that rush to fill every moderate category, but that's not how Apple operates. If Samsung makes a phone as big as a bridge, does that mean Apple should, too?

Apple makes a smaller number of devices to maximize economies of scale in design and manufacturing. This also has ecosystem benefits, such as making things easier for third-party manufacturers and developers. Apple doesn't chase niche categories. Yes, it did create a smaller iPad, but it did so because that made the iPad better.

Despite this, Barclays analysts think Apple will respond by shipping a phablet of its own. I remain skeptical that this is a threat Apple needs to respond to, but one thing is for sure: If Apple does ship a phone with a screen that's 5 inches or larger, the word phablet will never appear in the company's marketing materials or be uttered by an Apple executive, unless it's dripping with derision.

(Gigantophone, Apple. Think about it. Call me.)

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John Moltz

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