Topic: Smartphones
Cheaper Rivals Eat Away at Apple Sales in China – WSJ (Feb 1, 2017)
This is a story that’s been going for a while now – China’s sales in China have been down, but ironically the quarter just reported was the first in quite a while in which its revenues in China itself were actually flat, per Tim Cook’s remarks on the earnings call yesterday. In other words, in China (as opposed to the Greater China region) Apple grew in constant currency by 6% year on year, its best performance in a year. However, as with other smartphone markets around the world, as the Chinese market continues to grow, more new users will choose cheaper Android phones than iPhones as their first phones, and those who prioritize price will always choose something other than an iPhone. The reason Tim Cook always emphasizes switchers and new users is that this is where future growth will come from, even as Apple’s market share falls – new users become upgraders in the next cycle, and as the market saturates, Apple’s share tends to rise. It’s too early to know yet whether that will happen in China, but that’s what Cook is banking on, not steadily increasing market share in a market that’s far from maturity.
via WSJ
Phone startup Nextbit has stopped production and is selling its assets – Recode (Jan 30, 2017)
Chalk another one up to either the Hardware is Hard or Android is Hard narratives (I’ve tagged this against both). Another Kickstarter-backed hardware company which had an intriguing approach to an established category and got lots of interest from tech bloggers and reporters calls it quits and gets bought by a bigger existing hardware player. I was always skeptical on Nextbit – it just didn’t feel like its few unique features and design were enough to overcome the massive barriers to entry that exist around scale, distribution, and dominant existing players in the Android market. I can’t say I’m surprised to see it fail, though it’s disappointing because the team had some interesting ideas and the design was definitely more interesting than your average phone. Razer seems an unlikely buyer – this Recode piece says the group the Robin team is going to has been focused on gaming, so it doesn’t sound like we’re going to get a Razer phone from these guys anytime soon.
via Recode
In Move to Facebook, Barra Leaves Unfinished Expansion at Xiaomi – Bloomberg (Jan 30, 2017)
This is a good overview of how the international part of Xiaomi’s business fared over the last several years, while Hugo Barra was in charge, and it argues that Xiaomi’s progress during that time was limited to some countries and mostly symbolic elsewhere – gaining mind share but not market share. And of course, it still hasn’t fully launched in the US, which can be considered the biggest failure of Barra’s leadership of the international business, with the company’s first big CES press conference one of his last official actions in the role.
via Bloomberg
For Apple’s iPhone Sales, Size Matters – WSJ (Jan 28, 2017)
This article is a good counterpoint to another I commented on recently, which suggested a shift to older devices and therefore lower average selling prices for the iPhone last quarter. As I said with regard to that piece, I’m seeing little evidence of the trend mentioned, and in fact I’d expect a shift to larger devices to push ASPs up, if anything, This WSJ piece quotes some data to that effect, and has some good numbers around the mix between the base and Plus models and how it’s shifted over time. Apple clearly does sell older devices too, so this mix shift among the 7 variants isn’t the only factor, but I still think ASPs should be pretty healthy when Apple reports its results for last quarter.
via WSJ
China Smartphone Shipments Reached an All-Time High in 2016 – Counterpoint (Jan 27, 2017)
I cited some Counterpoint data on India the other day, and in that context said that they do a good job with these non-Western markets – these numbers are solid, although it’s interesting to see these results for China come out before Apple and several other companies have reported their results for the fourth quarter. Unlike India, China is a major contributor to Apple’s overall results, and there’s usually lots of commentary about the rate of growth there, so it’ll be interesting to compere these numbers with what Apple releases next week. In the meantime, there’s lot of interesting stuff here – over the full year, Xiaomi and Apple fared poorly out of the major vendors, though Apple’s Q4 sales held up a lot better than in Q1-Q3. Lenovo’s year in China was a disaster, and it will be very grateful once again that it has Motorola in the rest of the world to buoy things up a bit. The big story is Oppo and Vivo, which have broken into the top rankings globally off the back of a strong showing in China, but Huawei also did very well. It’s also interesting to look at the data in here on individual models, where the two iPhone 6s variants both score in the top 10, and two Oppo phones are in the top 5, including the number 1 slot. The whole post is well worth a read if you’re interested in the Chinese market.
via Counterpoint
Source: Google’s Pixel 2 to feature improved camera, CPU, higher price, but ‘budget’ Pixel also in works | 9to5Google (Jan 26, 2017)
Lots of interesting stuff in here, but of course none of it certain to pan out in the actual product. To my mind one of the most interesting aspects is that the price of the Pixel 2 is expected to be $50 higher than the first-generation Pixel, which was already priced at premium levels – that part doesn’t ring quite true to me, unless it’s an Apple-like creation of an additional tier above the standard ones. Pricing its only phone higher than the base iPhone model would unnecessarily limit the market, and that seems unlikely. The camera focus makes sense – the first version majored on the camera and the Assistant differentiator should have been eroded relative to other Android devices by then, so hardware features will be important. The budget version is also interesting in the context of the recent reports about Google bringing Android One to the US – it certainly wouldn’t be unprecedented for two parts of Google to be working on essentially the same problem in different ways, but the hardware strategy there has been more joined up lately. The other thing to note is the details about chips, as Google is apparently testing both Samsung and Intel components as well as something it’s built itself. There have been repeated rumors about Google building ARM-based servers, and it’s possible that it’s also experimenting with its own ARM-based chips for smartphones too, though this would be a massive multi-year effort, especially tough without an acquisition of significant existing skills a la Apple/PA Semi.
via 9to5Google
Apple iPhone Price Under Pressure as Buyers Seek Cheaper Devices – Bloomberg (Jan 26, 2017)
This piece suggests falling ASPs due to iPhone buyers plumping for older models like the 6S rather than the new iPhone 7 models, but only quotes one analyst at Barclays to back up the claim. We’ll know soon enough what the ASP numbers for the December quarter look like, but they did fall this past year relative to the year earlier, in part because of the iPhone SE launch. It’s certainly also true that people are hanging onto phones longer, because they’re more capable, and that new installment plans from US carriers make the price of phones more transparent than the old subsidy model, and reduce the monthly cost once a phone is paid off. For all these reasons, I’m definitely seeing longer upgrade cycles for smartphones, but I see very little evidence that people are buying older phones new – in fact, all my conversations with carriers suggest the opposite – moving from an upfront cost to a monthly cost is driving people to higher-priced phones. In addition, the mix between the 7 and 7 Plus looks to have moved in favor of the larger device relative to earlier models, and that and interest in the jet black finish will also drive up ASPs. Color me skeptical at this point.
via Bloomberg
This is the Samsung Galaxy S8, launching March 29 – VentureBeat (Jan 26, 2017)
Evan Blass, who used to publish leaks anonymously under the pseudonym Evleaks and has a great track record of accurate reporting, claims these are pictures of the forthcoming Samsung Galaxy S8. The main changes are a full screen front, with the fingerprint sensor moved to the back, while charging switches from micro USB to USB-C, and Samsung retains the headphone jack. The smaller bezel approach has been widely rumored for the next iPhone this fall, and I think what we’re seeing here to some extent is the same rush into smartwatches in the year or two before the Apple Watch emerged, driven by rumors of where Apple was going. In the smartwatch category, we saw a variety of failed attempts to create something compelling only for the Apple Watch to dominate the market when it launched, and you always have to wonder with this pre-emptive following whether competitors will really be able to crack the concept in a way that’s as compelling as whatever Apple releases. Xiaomi already has an essentially bezel-less phone, LG is reported to be moving in that direction, and now Samsung supposedly is too. It’ll be very interesting to see how this space looks at the end of the year once all these phones (including a new iPhone) are on the market.
via VentureBeat
Can Huawei Catch Apple and Samsung? – Fortune (Jan 25, 2017)
This piece somewhat acts as if Huawei came out of nowhere into the number 3 spot behind Samsung and Apple in the global smartphone market, and while it’s risen rapidly to the top in individual markets, its global rise has been happening for much longer. It’s been the number three for the last six quarters (likely seven once Q4 2016 is reported on), and has been in the top ten since at least 2011. It may well have crept up on US observers, many of whom don’t tend to focus on emerging markets as much as the US and Western Europe, but this story has been underway for quite some time. Huawei is the big global success story among the ranks of Chinese smartphone vendors, most of whom have done well in China and some emerging markets but less well elsewhere. But Huawei still hasn’t cracked the US, where the carriers I’ve spoken to seem to be reluctant to put a relatively unknown Chinese brand on shelves next to premium products from Apple and Samsung. I don’t think Huawei needs to succeed in the US to be successful, and perhaps not even to catch Apple in raw market share terms, but it’s obviously never going to match Apple in terms of profits.
via Fortune
LG posts $224 million loss as ‘weak’ selling G5 smartphone drags it down once again – TechCrunch (Jan 25, 2017)
LG’s smartphone business has been struggling for at least 18 months now – it briefly went into the black in late 2014 and early 2015, but with that exception has been struggling for even longer, posting losses for the last six straight quarters and eleven of the last twenty. Shipments are falling on an annualized basis – they were 55 million in 2016, compared with 59.7 million in 2015 – but the company is also spending more on marketing and its flagship phone isn’t making the waves past versions did. The modular G5 wasn’t well received and LG will abandon that approach in favor of the smaller-bezeled strategy others are pursuing too ahead of an anticipated launch of a similar phone from Apple in the fall. LG’s troubles just reinforce both the overall challenges of doing business in a maturing smartphone market and trying to compete using Android against many others using the same operating system.
via TechCrunch (slide deck with full results available from this page on LG’s website)
Statement from Chairman Elliot F. Kaye: Samsung Galaxy Note7 Recall – CPSC.gov (Jan 24, 2017)
While Samsung was rightly hammered over its early handling of the Note7 battery issues, since it decided to kick into full gear and issue a full recall, its performance has been far better. This official statement from the chairman of the CPSC, the US body responsible for recalls, praises Samsung and the US wireless carriers for their response and their success rate in getting devices recalled – 97% of devices have now been returned. Taken together with Sunday’s announcement of the conclusion of the investigation, which was thorough even if it didn’t go far enough on the culture side, this seems like a decent conclusion to the saga. It’s worth noting that most of the statement is devoted to complaining about the CPSC’s small budget and lack of resources to do its own in-depth investigations.
via CPSC.gov
India’s smartphone user base topped 300 million in 2016 – The Economic Times (Jan 24, 2017)
Counterpoint Research has good data on the global smartphone market, and especially in emerging markets like India, so the numbers here are broadly reliable. India is a fascinating market – Apple and others have often compared it to China, but though the size is similar the demographics and wealth are very different, even if you compare India today to China a few years back. I’m not yet convinced that India is going to look like China does today anytime soon from a smartphone perspective, and that makes life very tough for a brand like Apple, which was tenth in the overall market share rankings. It did capture 62% of the premium market in Q4, but the premium segment is only a tiny fraction of the overall Indian market, which continues to be dominated by cheaper handsets, increasingly coming from Chinese vendors. You might be interested in this piece I wrote a few months ago about Apple’s prospects in India.
Why The LG G6 Won’t Have Snapdragon 835 – Forbes (Jan 24, 2017)
This is sourced reporting from a Forbes contributor who (as far as I am aware) doesn’t have a long track record in scooping news like this, so take it with a pinch of salt. But on the face of it, this makes sense – Qualcomm’s 835 chip is brand new, and Samsung would logically need bucketloads of them for its next Galaxy S phones, potentially gobbling up all the supply available and squeezing other OEMs out in the short term. Apple is famous for securing long-term access to the components it needs and squeezing others out in this way, and given the timing and Samsung’s scale in smartphones, it makes sense that it would be able to secure all the available supply of 835 chips on a short-term basis too. That’s going to be tough for other OEMs launching handsets in the first half of 2016 – even though the article downplays the jump from the 821 to the 835, there are some significant additions in the new chip which will create better performance in areas like battery life, VR/AR, and so on.
via Forbes
Super Mario Run will be available on Android in March – The Verge (Jan 23, 2017)
Super Mario Run was an iPhone exclusive when it first launched, and as such was featured in Apple’s Fall 2016 keynote. However, that exclusive won’t last forever, and it appears that the game will be coming to Android in March, despite the criticism of the business model and other features of the game. What’s not clear is whether the business model will be the same – while getting people to pay for iPhone games is hard, getting Android users to pay up is much harder still, so I wonder whether the additional investment will be worth it if Nintendo sticks with the $10 unlock model. More broadly, there will be additional games for both iOS and Android later this year, so Nintendo is clearly still committed to its smartphone game strategy. However, we still haven’t seen the symbolically important release by Nintendo of any of its highly popular original games for smartphones, something almost every observer seems to think it should do, but which it chooses for some reason to resist for now. It’s also worth noting that Super Mario Run (though not the next game) is another example of iOS first, Android later – a trend that continues to be one of the biggest hits against Google’s Play Store and Android in general.
via Super Mario Run will be available on Android in March – The Verge
Samsung Electronics Announces Cause of Galaxy Note7 Incidents in Press Conference – Samsung (Jan 23, 2017)
See the Techmeme link below for full coverage of the press conference by reporters; the full press conference can be viewed here, with the conference starting around 29:30; and there’s some more detail on testing and other elements here. The related narrative has also been updated today to reflect the latest news.
My to-do list for Samsung at this press conference was as follows: demonstrate that the company really had found the root causes of both sets of battery fires, in a way that was credible; where possible have third parties involved; and talk through the changes to manufacturing processes to avoid these issues in future. It checked off each of these items at its press conference, so in that sense it did exactly what it needed to do: so far, so good. On the other hand, the results indicate that the manufacturing processes at Samsung’s battery partners were in some cases pretty shoddy, and that its own designs put pressure on batteries. So it’s not just the battery manufacturers at fault here, and a big part of the problem is lack of quality control –Samsung’s third party investigators were able to find faults in batteries that hadn’t caught fire, and replicate the conditions in which devices caught fire. The big question is therefore why Samsung wasn’t able to do so. All this suggests a lack of care around product testing and likely also a rush to market for competitive reasons which then shortchanged the manufacturing process. I have confidence that Samsung will make big process changes going forward, but less confidence that the culture that led to these problems will change in the same way.
via Samsung Electronics Announces Cause of Galaxy Note7 Incidents in Press Conference – Samsung Global Newsroom (full coverage on Techmeme here)
Google’s Big Marketing Push Pays Off for its Pixel Phone Over Holiday – Bloomberg (Jan 19, 2017)
This piece is an interesting counterpart to a couple of others I’ve recently linked to – another quoting Wave7 estimates for Pixel sales, and this WSJ analysis from earlier today on how hard Alphabet has been pushing sales of its hardware on Google search, given what this piece says about heavy TV advertising by both Google and Verizon around the Pixel. It’s also worth reading this Verge piece, which takes a much harsher stance on what these sales numbers and the supply shortages mean, though it focuses almost exclusively on the 128GB model. The point is, Pixels are in short supply, and there’s an estimate in this Bloomberg piece of around half a million sales, so this is a very different supply shortage from Apple struggling to meet demand for over 70 million phones per quarter – in other words, this isn’t about hitting up against theoretical maximum capacity for building phones, but about very conservative planning on Google’s part. Half a million isn’t bad, but it’s fairly clear sales could have been a lot higher with better supply. Presumably Google will learn from this experience as it looks to update the Pixel, possibly later this year.
via Google’s Big Marketing Push Pays Off for its Pixel Phone Over Holiday – Bloomberg
Minecraft Pocket Edition will no longer receive updates for Windows mobile devices | Windows Central (Jan 19, 2017)
It’s becoming ever clearer that Microsoft is going to go through yet another revamp of its smartphone OS strategy, on top of Windows Mobile and Windows Phone (you could argue Windows 10 Mobile as it currently stands is already a third, but it was very much an update to Windows Phone in reality). Other developers have been abandoning their Windows Phone apps for some time now, but for Microsoft itself to do it is the clearest sign yet that there’s no meaningful future for Windows on consumer mobile devices as it currently stands. The article holds out hope for the full Windows on ARM strategy Microsoft is working on, but it still seems very likely that this will end up being a marginal and enterprise-centric play rather than something that gets Microsoft back into the consumer smartphone market.
via Minecraft Pocket Edition will no longer receive updates for Windows mobile devices | Windows Central
Google expressed its displeasure to Huawei re allowing Amazon’s Alexa to be built into its U.S. flagship phone – Amir Efrati (Jan 17, 2017)
Amir is a reporter with The Information, and has done sterling work lately on Alphabet and Google. This little scoop was only released in a tweet rather than expanded on in an article, but it raises a couple of important issues that affect both Amazon and Google. Firstly, Amazon needs to get Alexa onto smartphones if it’s to achieve ubiquity for users, and Android is really the only option for integration. Secondly, Google will put increasing pressure on its OEMs not to install assistants that compete with the Google Assistant, but it hasn’t yet made that assistant broadly available for OEMs to use, while Alexa is freely available. There’s a three-way conflict brewing here between the two giants and Google’s OEM partners, and it probably won’t be pretty for any of them.
Google’s New Stab at Boosting Android Brand in U.S. — The Information (Jan 17, 2017)
Android One has always been an attempt by Google to try to squelch some of the uniqueness of various OEMs’ versions of Android, which is arguably inimical to their interests, given that such customizations are often the main way OEMs can differentiate when running the same underlying OS. I had assumed Google was slowly sunsetting the program given how little it’s talked about it recently, so it’s a bit of a surprise to see it now apparently coming to the US (the main focus so far has been emerging markets). Given the low price point, this can be seen as a combination of Nexus replacement and Google Pixel counterpart – a vanilla Android experience for low-end buyers, with the promise of regular quick updates to the OS. It’s also reminiscent of the strategy Motorola began to pursue towards the end of its time as a Google subsidiary. Of course, the big question is whether any smartphones coming out of this program will get carrier distribution – that makes or breaks phone launches in the US for the most part.
via Google’s New Stab at Boosting Android Brand in U.S. — The Information
App downloads up 15 percent in 2016, revenue up 40 percent thanks to China – TechCrunch (Jan 17, 2017)
Two things are worth noting about all the data presented here: firstly, apps are still growing massively, putting the lie to the idea that native mobile apps are somehow dead, to be replaced by some combination of better web apps, bots, or something else. The number of apps being downloaded is growing rapidly each year rather than stagnating or slowing down. The second point is that there continues to be a massive disparity between usage and spending when it comes to Android and iOS. See the first and fourth charts in this article – the first shows massively more Android apps downloaded than iOS apps, while the fourth shows double the spending on those iOS apps relative to Android. It continues to be far more profitable for developers to make apps for iOS, even with a smaller user base and far fewer apps downloaded. That, in turn, seems likely to reinforce the pattern that the vasty majority of big new apps get launched on iOS first, and Android second (if ever). That continues to be one of Apple’s big ecosystem advantages.
via App downloads up 15 percent in 2016, revenue up 40 percent thanks to China | TechCrunch