Company / division: Samsung
92% of US iPhone Users Plan to Buy Another (May 19, 2017)
We’ve seen some of these stats before, and they bounce around a little from survey to survey, but it’s always good as a reminder of just what makes the iPhone installed base so valuable: the combination of very high loyalty to the platform and the ability to sell a variety of other devices and services to iPhone users. This Morgan Stanley survey released this week says that 92% of current iPhone owners plan to stick with the iPhone when they buy their next smartphone, among the highest levels MS has seen, while Samsung comes second at 77% and other Android vendors score considerably lower. That means that even if smartphone upgrade cycles are lengthening, nearly all of the 100 million or so US iPhone users will eventually buy another, many of them likely this fall with what’s expected to be a big upgrade. With iPhones roughly two thirds of Apple revenue, that’s already tremendously important to its future prospects, but the other key part of this is that those iPhone buyers are likely to buy apps and content from the App and iTunes stores, subscribe to Apple Music, iCloud storage, and so on, and also buy other Apple devices like Watches, iPads and Macs. One of the challenges Apple faces, conversely, is that this loyalty rate isn’t as high in every country, with China one notable exception. Though I’ve only seen one survey referenced on this topic, and I’n not convinced the absolute numbers are right, it certainly seems to be the case that iPhone loyalty has been lower in China recently, with at least some iPhone owners shifting down to a cheaper Android phone from rising stars Oppo and Vivo. If Apple can turn that trend around with this fall’s phones, of course, that could lead to a massive rebound in growth in China.
Though Google spent much of its I/O keynote talking about apps and features like Photos and the Assistant, it did devote a few minutes to the topic of AR and VR, which will have a second deeper-dive keynote of their own tomorrow. On the VR side, the key announcement is that Google is extending the Daydream platform beyond mobile VR to standalone headsets, which in the first instance will be built by partners Lenovo and HTC and supported with chips from Qualcomm. Daydream so far has been limited by the fact that the biggest Android smartphone vendor has its own competing platform, so the news that Samsung’s Galaxy S8 phones will support Daydream through a software update in the summer is a big deal. My guess is that Samsung will still favor its own Gear VR system with its usual bundling and discounting deals, but the fact that Daydream View and other compatible headsets will now work with Samsung devices should increase its appeal. Daydream’s system is better than Samsung’s in a number of ways, though the recent Gear VR update closes the gap a bit, so the playing field should be a leveled a little going forward. Also worth noting are a couple of AR announcements, including a new “Tango phone” to support Google’s indoor mapping technology, and VPS, an indoor equivalent of GPS which will enable precise directions within large stores and the like. Neither of those feels remotely mass market yet, which means Google’s AR efforts are far more marginal than the phone-based efforts from Facebook and Snapchat (and likely soon Apple too). Interestingly, VR head Clay Bavor outlined his vision for the space in a blog post today too, and it’s remarkably similar to Microsoft’s in that it envisions a continuum or spectrum that includes both VR and AR, though Bavor’s favored term is immersive computing rather than mixed reality and he’s less pejorative about the VR and AR terms everyone is already using.
Strategy Analytics Says Apple Top Wearables Vendor in Q1 (May 8, 2017)
Back in December, Microsoft announced its equivalent of Amazon’s Alexa platform for third parties in the form of its Cortana Skills Kit and Cortana Devices SDK. A week later, Harman Kardon announced its was working on a speaker that would feature Cortana, and said it would launch in 2017. Five months later, the two companies have provided a name (Invoke), pictures, and some capabilities for the device, but there’s still no specific launch date (beyond “Fall 2017”) or pricing. On paper, the Invoke looks a lot like Echo in both its design and its capabilities (it even has an Echo-like 7-mic array), and the main difference is that it will do Skype voice calls, which is something that’s been rumored for both Echo and Google Home but isn’t yet supported by either. One advantage Harman would have over Amazon or Google in this space is that it’s a speaker maker, so it may well have better audio quality in its version than those companies have in theirs, something that’s been a shortcoming in this category so far. And of course, it’s interesting given Samsung’s ownership of Harman Kardon that this speaker is running neither of the assistants Samsung itself supports – its own new Bixby assistant or the Google Assistant – though this partnership obviously began before the Samsung acquisition closed. Pricing is an interesting question: whereas Google and Amazon both have broader ecosystems which benefit from such a device and therefore justify subsidizing or selling it at cost, Harman obviously needs to make money on it, so it may end up being priced higher (as Apple’s version likely will be too). Lastly, we might see other ecosystem devices using Cortana announced at Microsoft’s Build developer conference this week.
IDC Says Q1 Tablet Shipments Were Down 8.5% Year on Year (May 5, 2017)
Counterpoint Says Apple has 80% Share of Premium Smartphones in China Despite Overall Fall (May 4, 2017)
Counterpoint, which I’ve referenced previously here as a solid source on smartphone market share and so on, especially in Asian markets, has an update on Q1 smartphone performance in China. The headline is that Apple, Xiaomi, and especially Samsung saw their shipments drop significantly year on year, while local companies Oppo, Vivo, and Huawei did better, in a market that grew just 4% year on year. The Apple drop is worth noting because China performance has been a major talking point on its recent earnings calls (including this week) and there are lots of explanations flying around about why it’s struggling there. I linked to this piece a while back, and Ben Thompson had an interesting piece this week on Stratechery about the role WeChat plays in China and how that impacts Apple. But it’s worth noting the details on the premium market in China in this Counterpoint post. It argues that Apple’s performance in China (as elsewhere) is highly cyclical, but that it consistently takes 80% of the $600+ market. In other words, Apple’s share remains very strong in the segment where it competes, but much of the activity in China is at lower levels where Apple doesn’t compete. In that sense, there’s nothing new here, and the growth of the sub-premium segments is to be expected in a maturing market that’s reaching lower income tiers of the population. But if the premium segment is actually shrinking in real terms rather than just relative terms, that’s more problematic because it would indicate consumers who could afford iPhones are nonetheless choosing to buy the cheaper alternatives. So far, I’ve seen little evidence of that, but it’s worth watching future numbers from Counterpoint and elsewhere to see if that pattern starts to emerge. For now, I’m still more inclined to read what’s happening in China as part of a cycle which is already starting to correct and should do so more meaningfully later this year.
★ Samsung Uses Google Music as Default Option on Galaxy S8 (Apr 21, 2017)
The review embargo on the Samsung Galaxy S8 lifted this morning and so a slew of reviews was published. The consensus appears to be that the hardware is beautiful and generally very good, while the software is mixed at best. Which is about the least surprising sentence anyone ever wrote about a Samsung phone, but is also bad news given the extent to which Samsung emphasized software this time around. On the hardware side, reviewers seem to love the screen, the dimensions of the display versus the overall footprint, and the feel in the hand. The one knock from a hardware perspective is the fingerprint sensor, which bafflingly is high up on the back and right next to the camera, where it’s both hard to reach and easy to miss and smudge the camera lens instead. From a software perspective, the main criticisms revolve around Bixby, which is missing its voice feature in the US and seems redundant and gimmicky, but the other criticism is around face unlock. As I said when it launched, face unlock is a sop to users who miss the fingerprint unlock on the front and want a simple way to get into their phone without typing in a passcode, but Samsung arguably hasn’t done enough to make clear that it’s a pretty insecure way to actually lock a phone. As such, it’s fine for grandma but not for the corporate IT department, and Samsung needs to make that clearer, especially given that iris scanning is also present as an option. This certainly won’t be exactly the debut Samsung wanted, but the positive reception to the hardware will do a lot for it. Also worth noting: Samsung provided a review unit to the Wall Street Journal but not the New York Times, whose reporter Brian Chen has been very critical of Samsung over its customer service among other things.
This actually isn’t news, at least if you paid attention a couple of weeks ago when Business Insider UK reported (and I noted) that Korean would be the launch language for Bixby, and that American English would follow in May, with British English later in the year. However, it appears that Samsung provided a somewhat different steer to US press, telling them that the assistant would be available at launch on April 21st. News of the later US launch is now filtering out through US reps too, however, and will be received as bad news by those who pre-ordered the phone (apparently in large numbers) ahead of reviews and the release of this news. Given that Bixby is at least on paper one of the headline features, at least some of those early buyers will be disappointed, though the screen is another big selling point and that should perform as advertised with the caveats I mentioned in my first comment on the S8 and in the podcast episode I did on the Samsung announcements. Releasing Bixby late is better than releasing a buggy version not ready for launch, but the delay had better not be too long, nor the version it does release too unpolished. Both are risks at this point.
At this point, I’m pretty sure the only people still worrying about the Note7 and the impact the recall has had on demand for Samsung phones are reporters. All the evidence from consumer surveys right from the start has suggested that (a) no-one’s views on Samsung were changed all that dramatically by the recall, and more importantly (b) those with recent direct experience of Samsung products budged least in their views. In other words, if you’d used lots of Galaxy smartphones and they’d never blown up, you had reasonable confidence the next one you owned wouldn’t either. These new statements from Samsung back that up, and it looks like the phones are doing even better than last year’s, which shouldn’t be surprising because they really do look pretty compelling, at least on paper (reviews should be coming out in the next week or so and that may change demand for the better or worse). Given that sales are mostly going to be coming from existing owners of Galaxy S phones, none of this should surprise anyone. And I know from talking to them that Samsung employees are desperate to put the Note7 behind them, and quite reasonably so at this point.
Samsung sees bounce in Q1 ahead of Galaxy S8 – CNET (Apr 6, 2017)
The first part of this article suggests that the strong Q1 results Samsung is forecasting would be a bounce back from the Note7 debacle, but the reality is that Samsung already saw that bounce back in Q4 2016, which was its best-ever quarter for operating margins and flat revenues year on year despite the hole left by the Note7. This quarter would improve margins still further while also potentially maintaining flat or slightly increased revenues year on year again. What Samsung doesn’t tell us in these preliminary results notices is where the money is coming from, but last quarter semiconductors made a big contribution, and it’s likely that this division is the big hero again this quarter. It’s by far the company’s most profitable division, and although it contributes less revenue than the mobile segment, its contribution has been growing there too. So although the Note7 rebound narrative is attractive, this is really about components not phones, as the phone business continues to be roughly stagnant rather than thriving.
It’s unfortunate that we have to rely on stats from a porn site to measure VR market share, but beggars can’t be choosers. Obviously, there may be reasons why the usage this site sees isn’t representative of the market as a whole, but the numbers here are far from surprising: Gear VR is by far the largest chunk of usage, which absolutely aligns with the numbers we’re seen in terms of devices sold / in use. Google’s Daydream, meanwhile, has a tiny fraction of the market, which is also unsurprising given its relative newness and the limited distribution of headsets and compatible phones. Gear VR has become the de facto standard for Android VR and mobile VR more broadly, and Daydream VR will only do well if essentially every other Android vendor supports it in their handsets and pushes it aggressively to consumers. So far, that hasn’t happened, with predictable results.
We’re talking here about Tizen, Samsung’s alternative operating system which it uses for smartwatches, TVs, and to a lesser extent phones, and some security researchers are claiming there are widespread security vulnerabilities in that software. Some of the characterizations in this article seem like a bit of a stretch – it would be very odd indeed if Samsung had done as little to provide security in Tizen as the researcher quoted suggests. But these allegations are becoming part of a pattern recently in relation to Samsung, between the Wikileaks smart TV story, the more recent (and more serious) story on smart TV hacking through broadcast signals, and now this. It’s particularly problematic for Samsung because it has worked so hard over the last few years to develop Knox, its enterprise security solution, which is best in class in the Android world. It simply can’t afford to get a reputation for poor security when it’s trying to become the de facto standard for Android devices in the enterprise, and needs to address these vulnerabilities – and the broader claims – quickly and definitively.
via The Verge
Google has today announced a patent licensing alliance which is intended to provide cover to member companies using each other’s patents. The idea is that any member can use any other member’s patents without fear of being sued, something that’s actually been quite common between members of the broader ecosystem over the last few years. The alliance has only nine members to start with, about half of which are smaller smartphone brands, but the members do include Samsung, LG, and of course Google itself, as well as Foxconn. Those members alone apparently have 230,000 patents between them which will now be freely available to other members within the context of Android devices. This is a fascinating move, and it’s impressive that Google was able to get Samsung and LG in particular on board without also having some of the other big Android vendors. Of course, none of this will stop these companies from suing those outside the Android ecosystem (or this alliance), but it might help temper some of the animosity that has sometimes characterized competition between Android OEMs.
Whereas the CIA / Wikileaks stories about Samsung smart TVs being hacked were somewhat overblown (they largely affected older TVs and required physical access to sets), this hack is more worrying because it would affect newer TVs and could be delivered remotely. However, for any kind of widespread effect, it would require hacking into a broadcast or IPTV stream, which in itself would be no mean feat, and of course would only work on TVs that happened to be accessing that stream during the time when it was compromised. Still, the broader worry here is, once again, that any device connected to the internet is at least theoretically vulnerable to hacking, and devices such as TVs with less sophisticated security systems than computers and smartphones are often the most vulnerable and hardest to patch.