Game On in Smartphone Market

Will There Be Demand for Razer’s Gaming Smartphone?

Razer, a maker of laptops and accessories aimed at gaming, is rumoured to be introducing its first smartphone on 1 November 2017. Razer is a niche, but successful player in the market for computer hardware. Can it develop a similar position in the smartphone market?

Gamers know the Razer brand well and are familiar with its iconic neon-green, triple-headed snake logo. The company from San Francisco has created a cult-like atmosphere with its products, an impressive accomplishment considering its rivals consist of the largest PC makers in the world. Now, it will have to duplicate that feat in the fiercely competitive smartphone environment.

Razer’s CEO, Min-Liang Tan, previously confirmed that the company would enter the smartphone market before the end of 2017, and Razer announced that it would unveil a “gaming and entertainment” mobile device in the same year.

Razer has certainly been eyeing the smartphone market for several years. With shipments projected at about 1.5 billion units per year in 2017, according to our latest forecast, it’s a segment of the consumer electronics market that can’t be ignored. This is particularly true for Razer, given the potential encroachment of smartphones and tablets on the market for laptops.

At the beginning of 2017, Razer bought Nextbit, a crowdfunded smartphone start-up that also aimed to compete against the likes of Apple and Samsung with a niche mobile device called Robin. The handset relied on the cloud for network-based virtual storage, replacing expensive on-board memory. It gained support from eager fans on Kickstarter and the company reached its funding goal of $500,000 within 12 hours. It was a well-conceived vision, but Nextbit faced several challenges, not least battling its way through the complexities of operator certification. In the end, its Robin phone had a limited release, being sold through online channels and in India.

With its acquisition of Nextbit, Razer attained both smartphone talent and mobile vision, something it’s been working to convert into a presence in the handset market. According to reports that have appeared online, the upcoming Android-based Razer mobile phone will feature top-notch components including Qualcomm’s Snapdragon 835 octa-core CPU and Adreno 540 graphics processing unit, a 5.7-inch screen with 2560 x 1440 resolution and 64GB of internal storage. It will also have 8GB of RAM, which would be ideally suited to gaming.

Given the high-end specifications and limited volumes, it wouldn’t be a surprise for the device to have a similar price to that of recent flagship Android phones from Samsung and others, potentially making this at least a $700 device. Razer is unlikely to convert many iPhone users, as retention rates are very high. It will have to pull users away from Samsung, Huawei and LG on the premise of a strong mobile gaming experience. This will be a challenge if it is Razer’s strategy.

In the past, companies such as Nokia and Sony Ericsson have launched smartphones targeted at gamers, but they didn’t have much impact on the market. Razer, which certainly has a dedicated fan base among gamers, is crossing into foreign territory.

There’s certainly evidence of mainstream interest in mobile gaming. The summer of 2016 was the season of Pokemon Go, an augmented reality game that crossed generations and quickly reached critical mass. Both Apple and Google have been developing ecosystems to optimise augmented reality technology in their respective platforms. This capability will become a common part of the mobile experience.

Razer is entering a tough market where margins tend to be paper-thin or non-existent for all but the largest rivals. A disruptive strategy could be a critical factor in reaching success. Perhaps Razer could adopt a content-based business model, choosing to drive revenue beyond hardware alone.

Razer will certainly get attention from fans and the media when it releases its smartphone — the level of interest to date reflects this. But what will really count is the follow-up. It remains to be seen if temporary excitement will turn into a successful product for the company’s long run.