Oxford firm’s splash proof technology can outstrip water resistant solutions from high-end rivals
Liquid. The killer of electronics, adversary to mobile phone manufacturers and once the damage has been inflicted, it can rarely fully recover. Yet on a daily basic we dance with this devil.
Messaging in the rain, music in the shower, gaming on the toilet, we take the device we live our lives through everywhere we go, often with nothing but a bowl of uncooked rice as an insurance policy.
The epidemic is a lot more widespread and serious than you might think. According to research from analyst house IDC from December 2016, more than 900,000 smartphones are damaged by liquids every day globally, making water resistant smartphones one of the fastest growing segments.
The research, published as part of its European Quarterly Mobile Phone Tracker, revealed manufacturers that have quickly identified the seriousness of the situation are helping customers protect against such damage.
Sony Mobile has hailed the level of waterproofing on its flagship devices since the launch of the Xperia Z in 2013. Since then, the likes of Samsung and Apple, among others, have followed suit.
IDC’s research revealed that the number of smartphones shipped offering resistance against water damage grew by nearly half (45.2 per cent) in the first nine months of 2016 on a like-for-like basis to 22.5 million, with their market share rising from 14.6 per cent to 23 per cent.
In contrast, shipments of non water-resistant smartphones fell 17.1 per cent year-on-year to 75.2 million, with market share in this segment declining from 85.4 per cent to 77 per cent.
IDC attributed this strong growth to the success of flagship Samsung and Huawei devices offering this feature, as well as Apple iPhone 7 and iPhone 7 Plus introduced in September.
It also found that liquid damage is the second-largest cause of damaged smartphones after broken screens, representing 35 per cent of
all devices repaired.
This, it added, results in “significant” costs to end users, device manufacturers, carriers and retailers, with the impact of liquid damage estimated to be worth nearly $100 billion each year.
However, only 27 of the 260 manufacturers tracked by IDC offered some type of resistance, representing a small percentage of smartphones shipped in 2016.
According to market forecasters GfK, this grew 6.6 per cent year-on-year to 1.32 billion units and is expected to grow five per cent in 2017 to 1.42 billion smartphones.
IDC claims that by 2020, more than 1.7 billion smartphones will be shipped at a market value of $398 billion, with the problem of liquid damage only becoming more widespread if it isn’t addressed.
This is where Oxford-based P2i comes in. The company was founded by chief technology officer Stephen Coulson in 2004.
After conducting his PhD research at Durham University, Coulson worked for the UK Ministry of Defence’s Defence Science and Technology Laboratory investigating liquid-repellent nano coatings to protect soldiers’ uniforms from being penetrated from nerve agents such as mustard gas.
Coulson says he quickly recognised how useful this technology could prove in other markets: “We quickly validated the technology in five different sectors: military, lifestyle, filtration, life sciences and electronics.
“It was the electronics area with hearing aids, where we first launched in 2009, grabbing 60 per cent of the market share a year later because everyone saw the benefit of protecting electronics from rainwater, sweat, humidity and prevent corrosion damage.”
P2i’s technology works by applying a nanometer-thin polymer layer over the entire surface of a product. Using an ionized gas (plasma), this layer is molecularly bound to the surface and is designed to not leach away.
The process confers superior oil and water repellency by reducing the surface energy to ultra-low levels, down to one third that of PTFE (polytetrafluoroethylene).
A separate survey by YouGov last year of smartphone users in the US found that 18 per cent of males and 13 per cent of females considered water resistance the feature they wanted most in their mobile phone – behind shatter-proof screens and longer battery life.
According to P2i, the 328 million smartphones that are damaged by water each year equates to nearly 900,000 handsets per day and a bill of $100 billion shared out by networks, manufacturers and insurance companies.
Of the smartphones damaged by water, SquareTrade Research found only six per cent of those are completely lost as a result of the damage. The rest of the damages are categorised as deep immersion (36 per cent), shallow immersion (16 per cent) and splashes and spills (42 per cent) the latter is where the liquid-repellent technology can improve the life of a device.
Coulson is confident that P2i has found an answer to an almost impossible and unsolvable problem as its technology prevents liquid from entering any point of the phone.
“The P2i technology on a splash proof level will provide protection to that 42 per cent,” he says. “The idea of the technology at a splash-proof level is to provide protection from water getting in the device, caused by splashes and spills.
“If water doesn’t get into the device it can’t sit on the electronics and it can’t corrode but if you look at the manufacturing and assembly tolerances in the device it’s virtually impossible to prevent any liquids getting in if you don’t treat it and make it repellent.
“This is why splash proof is so powerful, because we apply to the end of the line of the fully constructed product so it gets all the way in and prevents water from getting inside.”
Since its establishment 13 years ago, P2i’s growth has been rapid, with a number of high-profile manufacturers recognising the effectiveness of its technology and choosing to coat their device screens with it.
Making a splash
It made a splash in the mobile handset market in 2011 after partnering with Motorola to apply the technology to a number of its devices, such as the Moto C4, E, M, X and Z, as well as the Moto Droid Maxx 2.
In 2012 it began working with Bluetooth product manufacturer Plantronics to protect a number of its headsets and earphones, and two years later began covering products from Lenovo.
One of its most notable partnerships in recent times came with Huawei, using the nano technology to protect the P8 and Mate S smartphones, as well as last year’s P9 and P Plus, a range which sold in excess of 10 million devices within the first nine months of sale.
In addition, it also has partnerships with manufacturers Nokia, TCL Communications and BlackBerry.
The attraction to P2i’s solution from around the world has also led to global expansion. As well as its head office in the UK, it has three regional offices across Asia and 38 customer factories throughout the world. Its most recent established office opened in Taiwan in October.
In line with this, P2i used Mobile World Congress in Barcelona last year to announce it had coated its 100 millionth device, which has since almost doubled to 175 million in total.
Its most recent financial results for the 12 months ending December 31, 2015, which were submitted to Companies House in February, are also impressive.
P2i posted turnover of £11.045 million and gross profit of £7.7 million, which were both up marginally from the previous year.
The Group added it had gained significant commercial traction in the consumer electronics sector during the year and continues to gain new business with many of the world’s leading brands, which will likely drive growth in the coming years.
The liquid-repellent technology that P2i provides is a coating that can be applied to any solid object. The polymer coating is grown onto every component on the inside as well as the outside of the device in a low pressure process that is unique
In comparison, the likes of Samsung and Apple have been able to support their water resistant claims for the Galaxy S8 and iPhone 7 ranges by redesigning the devices to mechanically seal the important components of the respective device to prevent water penetration and any subsequent damage.
However, Coulson believes that this is not the best way forward for the industry because mechanical solutions have size and weight implications which, with phones getting thinner and lighter, are moving away from what consumers are after.
“Companies like Samsung and Apple have come out with a physical barrier which uses gaskets and rings but there are a lot of drawbacks to them.
“They can make the device very bulky and heavier. There are additional costs required, it can take a long time to design those in and often, what we find is, although it can be applied to one or two of the top end models that can justify the cost, it can’t be rolled out across the whole portfolio.”
Mid to high focus
The mid- to high-end of the handset market is where P2i has found the majority of success since entering this segment in 2011.
Partners such as Huawei and Motorola have been prominent figures in that market over the past six years, which saw a combined shipment of 445 million devices in the first nine months of last year.
P2i’s liquid-repellent coating is used on 35 per cent of the industry’s water protected smartphones, all of which come in the mid to high portion of the market of which P2i have treated 53 per cent of the mid price range and 64 per cent of the high
Group CEO Ady Moores took on leadership of the company in October 2016 having previously served as chief financial officer since 2008, as well as serving as chairman of all three wholly-owned subsidiaries of P2i.
He certainly sees a bright future for the mid- to high-end handset segment and is confident P2i can capitalise on the growing market for water resistance here.
“That market is growing at about a 32 per cent compound annual growth rate and will continue until 2020 which is why we are targeting this market where we already have more than a 50 per cent market share,” he said.
“From P2i’s perspective, there’s also a huge part of the market at the low end and we see ourselves progressing down through the price points with our splash proof technology that is on 175 million devices.”
Looking forward, P2i has the whole handset segment in its sights, with a strategy to move through the mid- to low-end of the market while also maintaining focus on other industries that could potentially take advantage of liquid-repellent technology.
P2i already has a 60 per cent share in the hearing aid market and has coated Bluetooth devices such as headsets and headphones for Plantronics and Samsung with the latter recently labelling the liquid-repellent technology “ideal” for Gear IconX headphones.
“As an organisation we are absolutely looking for those adjacent industries where we can take the technology into other sectors,” said Moores.
“We are a company of a certain size and we have to pick our battles but for us, mobile phones is that perfect mix of technology and commercials working together.”
The liquid-repellent coating can be grown onto any solid object which means that if there is a change in design throughout the industry, P2i are in the best possible position.
For this reason Moores sees new trends in design as an opportunity rather than a challenge and are ready for when new technology eventually comes in.
“We do constantly have dialogues with customers and address new trends from the perspective of developing our coatings and how they would work in different environments,” he added.
“What our customers are saying now is ‘our customers would like to see a high level of protection as we come through the price points’.
“We believe our technology is appropriate for that mass of the market below mid-priced phones.”
Ninety four per cent target
P2i has pointed to areas in which it can outstrip its high-end rivals.
The company claims that while smartphones such as the Apple iPhone 7 and Samsung Galaxy S7 are resistant to liquid splashes and spills, they can suffer when placed underwater due to the resulting pressure.
The company sees a gap in the market whereby it can advance its product to be able to withstand a sustained period of submersion in shallow water.
Coulson believes that P2i can fill this space and offer a solution to 94 per cent of liquid-related damages that occur every year, while also making water resistance a staple feature of the global smartphone market.
“We are finding the challenge is more to do with time frame and pressure but because we are not a physical barrier, pressure doesn’t really bother us at all because water gets in straight away.
“What we find is that if we can get deep immersion of one metre for 30 minutes then we will address 94 per cent of all damages today with the remaining six per cent being lost anyway. Therefore, that seems like the goal to aim for.
“It’s still an ambiguous technology, just like in the early days people would ask ‘well do you put a Wi-Fi chip or Bluetooth’ now you don’t even ask, you just expect it as standard.
“We want to sign the whole industry up to the splash proof technology and we expect the P2i technology to be built in as standard into electronics, initially in the consumer electronics sector and beyond.”