Sprint’s Virgin Mobile Goes iPhone-Only in Relaunch (Jun 22, 2017)
This is exactly the kind of speaking out of turn that Apple suppliers absolutely know not to engage in, so it’s baffling that Wistron’s CEO would have been so careless. Wistron, of course, is the vendor Apple is using for its first foray into manufacturing in India, and this is the kind of thing that tends to jeopardize those relationships. It’s not a huge revelation – Apple joined the consortium that manages the Qi wireless charging standard which it already uses in the Apple Watch a while back. But it’s one of a number of new hardware features that are likely to make it into the next iPhones – certainly not the headline feature, but one of a checklist of features that will be used to drum up demand. On the other hand, I remain skeptical of the value of mat-based wireless charging – though there’s some appeal to just putting your phone down to have it charge, that really requires several chargers in different places around your home and/or office to be useful, and it’s actually more limiting than traditional plugged-in charging for things like making phone calls or typing on your phone, where you might want to hold it while it’s charging. I’m still most curious to see whether Apple has made any advances in this regard and how it will both approach and sell wireless charging as a feature.
via The Verge
Amazon Reportedly Working on Cheap Smartphones for India (Jun 5, 2017)
I haven’t really seen this picked up anywhere yet, as it’s coming from a lower-profile news site, but it’s a fascinating bit of reporting. It suggests that Amazon is working on low-cost smartphones for India and potentially other markets, which would run the standard version of Android rather than Fire OS. That’s a huge shift from the Fire Phone strategy, but a sensible one given how poorly that phone performed and how hard breaking into the smartphone market is for brand new operating systems. But the target would also be very different, with a focus on low-end phones in emerging markets. Given how hard Amazon is pushing to take a major share of the Indian e-commerce market right now, building its ecosystem in other ways makes a ton of sense. The one part of this that seems a little odd is that Alexa allegedly isn’t on these phones. That’s likely partly because it’s not available in India at all at the moment, but this whole strategy only really makes sense if these phones put Amazon services front and center. Otherwise, Amazon is entering a crowded and fiercely competitive market increasingly dominated by Chinese companies, so it’s not worth it unless it’s going to meaningfully benefit the Amazon ecosystem and help grow its base of loyal customers in India and elsewhere.
Weekly Narrative Video – Maturing Smartphone Market (Jun 3, 2017)
This week’s Narrative Video is on the Maturing Smartphone Market narrative, which has been in the news a couple of different ways this week, with the announcement of Andy Rubin’s Essential Phone, and IDC’s updated smartphone forecasts. The reality is that the smartphone market is maturing in a couple of important ways: both in terms of mature market penetration, which is reaching the top part of the S-curve, and in terms of technology, which is now at the point that smartphones are very good and innovation is becoming more incremental than dramatic. The video talks through these and other trends, and subscribers can see it on the narrative page.
Samsung’s Bixby Further Delayed in US to End of June (May 31, 2017)
The Verge seems to have secured the first of two exclusive looks at Android founder Andy Rubin’s new phone, from his company Essential (Recode’s Code Conference will have an interview with Rubin tonight where I’d expect him to share more). So far, there’s nothing about the software, beyond the assumption that it’ll run Android. So the focus is entirely on the hardware design, including the materials, connectors, and a theoretical ecosystem of modular add-ons (for now, there’s just one: a 360° camera). The reporting on this is all a little breathless – Andy Rubin has quite a reputation and anything he launches will be accorded a fair measure of respect. But the pitch here feels so much like almost every other new entrant in the market, a mix of straw man arguments about the current state of the market, grandiose claims about how all that will change, ambitions to build an ecosystem without any evidence that any other player is interested, and nothing at all about distribution, which continues to be the key question in the US smartphone market. We’ll hopefully know a little more by tonight, but I’m extremely skeptical that this phone will do any better than any other recent attempt to change the smartphone market. In the meantime, that won’t stop this project from getting tons of positive media attention in the run-up to an actual launch sometime later this year. It’s worth noting that beyond the phone there are some other bits and pieces too, including a smart home OS and speaker with a screen, but again the details are so short and claims so grand that I’m inclined to ignore them until we actually know something specific about them.
via The Verge
★ Lenovo Reports March Quarter Earnings (May 25, 2017)
Apple Launches Website for Android Switchers (May 22, 2017)
A little under two years ago, Apple launched its first Android app, “Move to iOS”, which was designed to help Android users make the switch to an iPhone. Now, Apple has a new section of its website up which is designed explicitly to help (and help convince) Android users switch to the iPhone. Given that almost every buyer of an iPhone in mature markets is going to be an existing smartphone owner, the two key drivers of iPhone sales in those markets are switching from Android and upgrading from earlier iPhones, and both have been a consistent theme on recent Apple earnings calls. So targeting that audience of Android switchers specifically makes perfect sense. The site focuses on a few aspects of buying and owning an iPhone: ease of use, ease of switching, camera quality, speed, privacy and security, iMessage extensions, support from Apple people, and environmental responsibility. Out of all the possible things Apple could emphasize, that’s an interesting list – design, for example, isn’t one of them, though the word appears in other contexts three times on the site, and all the things highlighted here are functional rather than aesthetic. In fact, other than one oblique shot of an iPhone at the top, there isn’t a single full shot of an iPhone or any shot with the screen on until you get to the “buy” section at the bottom. Given how central the design message and product shots have traditionally been to Apple promotional material, that’s an interesting departure and likely reflects research on why people switch from Android. It’s also worth checking out a set of five short videos Apple has made to go along with the site.
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.
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.
Android is notorious for its poor track record in supporting older devices, but one of the supposed advantages of the old Nexus program and the new Pixel devices was supposed to be solving that issue by removing the carrier and OEM middlemen from the process of OS updates. However, Google has officially stated that the Pixel devices aren’t guaranteed to get further OS updates beyond two years from their launch, while they will receive security patches for another year after that. Given that these are Google’s current and only devices, the idea that someone would buy one today with no guarantee of OS updates after 18 months is a bit much, especially given that average upgrade cycles are lengthening towards three years. Bear in mind, for example, that all iPhones back to the iPhone 5 (now four and a half years old) run iOS 10. For Google to offer such limited upgrade support even on its own devices is baffling and a sign that it’s not yet taking its first party hardware seriously enough. My guess is that these are bare minimum timeframes and that it may end up prolonging support beyond these official dates, but the message it’s sending here isn’t great.