26 October 2016
NFC technology has been around for more than 10 years but Apple has only adopted it in the iPhone 6. Photo: CNSA
NFC technology has been around for more than 10 years but Apple has only adopted it in the iPhone 6. Photo: CNSA

Nifty new features don’t need the latest smartphones

After a relatively quiet year, smartphones are back with a bang.

Apple Pay debuted its Pokémon GO campaign in Hong Kong and Facebook launched its Mentions app that enables public figures to post updates, share photos and videos or host a live Q&A. It also unveiled a 360-degree photo function.

However, these new features are software innovation and have nothing to do with hardware.

It won’t encourage people to buy a new smartphone or upgrade to the latest models.

Investors should remember the tech rule of thumb — when in doubt, pick software over hardware.

For example, for mobile games using AR technology like Pokémon GO, players just need a mobile device with camera and GPS.

Old smartphone models such as the four-year-old iPhone 5 or Android phones run the game as smoothly as the latest smartphones.

Apple Pay, launched in Hong Kong Wednesday, uses near-field communications (NFC) technology built into iPhones and Apple Watch for contactless payment in stores.

NFC technology has been used in mobile devices for more than 10 years but Apple is only adopting it in the iPhone 6.

Facebook’s Mentions and 360-degree photos have an even lower entry threshold.

Users only need to a mobile phone with camera and the function does not need to high speed.

A friend uses a seven-year-old Android phone has a lot of fun exploring the game.

These new innovations may have limited appeal for hardware manufacturers since these are unlikely to entice buyers to change their smartphones.

Mobile hardware has evolved much faster in the past few years and most mobile phones already have cameras, GPS and NFC functions.

Related stocks are highly sought-after.

Software and mobile gaming stocks and chip plays have seen active speculation.

Some hardware companies are trying join the fray by teaming up with software and gaming firms.

Lenovo Group (00992.HK) surged nearly 10 percent in the first three days of the week after reports that it is working with mainland mobile game company iDreamSky to launch AR games.

Mobile phones are what home electrical appliances were two decades ago.

The hardware is well developed and can be easily commoditized.

But it’s tough to make great strides in hardware, so manufacturers have to find new ways to achieve growth.

The market is eagerly awaiting the release of the iPhone 7 in September.

Reports say the iPhone 7 Pro will have a dual-lens rear camera and a smart connector which allows connected peripherals to simultaneously share power and data.

That might bring some fresh air into the hardware market.

This article appeared in the Hong Kong Economic Journal on July 21

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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