Intel is realigning to focus on cloud services for enterprises, developers and operators with closing of its AppUp consumer app store
That means the end of Intel’s 4 years old Atom-based multi-OS app store saga started originally for netbooks. The beginning of the end of its consumer computing effort?
From Intel to close its AppUp online app store [ComputerWorld, Jan 30, 2014]
Designed originally for netbook computers, the Intel AppUp center was first unveiled in a beta program in 2010, with plans to expand its scope to smartphones, TVs and other consumer devices that use Intel processors.
The application store aimed to help develop the market for the products, attract developers to the platform and support customers. Intel Capital, the company’s venture capital arm, announced in 2011 a $100 million AppUp fund to invest in companies developing applications and digital content for PCs and mobile devices.
But the needs of consumers have since changed and so also the market environment, an Intel spokeswoman said late Wednesday. The company is realigning to focus on cloud services for enterprises, developers and operators, she added.
… What will happen to Moblin –> MeeGo –> Tizen operating system effort?
As on January 27, 2014 the company put silently this message on its Intel AppUp® center (http://software.intel.com/sites/landingpage/intelappup/):
As AppUp® closes,
innovation lives on.At Intel, we’re always thinking about the future, which often means making changes today. That’s why, on March 11th, 2014, Intel AppUp® center will come to a close as we focus on developing new and exciting PC innovations that will continue to shape your world.
As excited as we are about the future projects, we know AppUp® is important to you. For questions about AppUp®‘s closure, please visit our updated FAQ section with links to guided support to answer your questions.
Visit our FAQ page for further details
Thanks for rocking our apps, and our world.
AppUp® wouldn’t have been possible without loyal users like you. Thanks for enjoying the AppUp® experience and for every one of your downloads. It’s been a fun ride.
With much gratitude,
The Intel AppUp® Team
From FAQ only two questions:
1. When is the Intel AppUp® center closing?
AppUp® Center is closing March 11th, 2014, after which no new content or apps will be available for download.2. Why is AppUp® closing?
By closing Intel AppUp® center, Intel will be able to focus more than ever on developing the next generation of platform innovation. [What a bullshit!]
Look at the first year of AppUp history:
CES 2010: Christos Georgiopoulos about Intel AppUp and Pine Trail technology [channelintel YouTube channel, Jan 8, 2010]
The Software Ecosystem in 2015 [channelintel YouTube channel, Sept 16, 2011]: “Panel about the software ecosystem in 2015 with panelists Christos Georgiopoulos, VP and GM Intel Developer Relations Division; Lincoln Wallen, DreamWorks, Head of Research and Development; Mike Evans, Redhat, VP of Business Development; Sethu Meenakshisundaram, SAP, Exec VP of Technology Strategy and Product Architecture; Ken Schneider, Symantec, VP of Technology Strategy and Fellow.”
Intel AppUp Show for Developers 1 [Intel Software TV YouTube channel, May 18, 2011]: “The Intel AppUp(SM) show for developers debuts with this pilot episode. In this segment of AppUp RoundUp, Host Bob Duffy discusses an app called Glow for MeeGo developed by Intelloware, which is one of the first applications to hit the AppUp store for MeeGo. It is a unique painting application that was ported to MeeGo. Also in this episode, during the “TweetCap” segment, Host Rhonda Peters shows several interesting tweets, including a sneak peak video of The Game Creators My Doodle Game app, which is now available in the Intel AppUp(SM) Center”
Intel AppUp Show for Developers … 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36
Intel App Show for Developers 37 [Intel Software TV YouTube channel, Dec 6, 2012]: “Bob interviews Italian developer Michele Tameni during this show.”
CES: Intel, Industry Partners Unveil App Store Plans for Popular Netbook Computers [press release, Jan 8, 2010]
News Highlights
- Intel unveils beta program for Intel® AppUpSM center, an application (app) store aimed at the popular category of netbook computers found at www.intelappup.com.
- First applications — that will ultimately span business, education, entertainment, games, health, socializing and other categories — now available for free download and purchase. Many more apps will be added to beta store over time.
- Intel store unique in offering developers a choice of software via Microsoft Windows* and Moblin™-based operating systems; support for multiple runtime environments coming later this year.
- Over time, Intel and industry partner stores could host applications for Intel® Atom™ processor-based handheld devices, smartphones, consumer electronic appliances, TVs and more.
- OEMs Acer*, Asus*, Dell*, and Samsung* collaborating with Intel to bring innovative apps to consumers.
INTERNATIONAL CONSUMER ELECTRONICS SHOW, Las Vegas, Jan. 8, 2010 – As unveiled Thursday during President and CEO Paul Otellini’s CES keynote speech, Intel Corporation has launched a beta version of its software application (app) store — the Intel AppUpSMcenter — for the popular category of netbook computers. The first apps are now available for free download or purchase by visiting www.intelappup.com, where consumers can find the store. Four other Intel industry partners – Acer, Asus, Dell and Samsung — also announced store collaboration and plans.
“The Intel AppUpSM center offers netbook users quick and easy access to applications specifically tailored to their mobile lifestyle,” said Renee James, corporate vice president and general manager, Intel Software and Services Group. “Our store does the work of aggregating, categorizing and validating applications so consumers can shop, collect and install from one easy source. With today’s kickoff of our beta store, both developers and consumers will be able to take advantage of the rapid expansion of this new category of computing as the stores continually add apps.”
The first apps are now available for immediate free download or purchase. These apps cover education, entertainment, games, health, social networking and other categories. A sampling includes Arnold Palmer Golf, Boxee, Wikihow and Yoono.
The beta store will host applications for both the Microsoft Windows and the open source Moblin™-based operating systems, the first operating systems to target the popular netbook computer category powered by the Intel® Atom™ processor.
Over time, Intel and its partners expect to expand the stores to include applications for the large categories of handheld CE devices, smartphones, consumer electronic appliances, TVs and other devices based on future Intel processor families.
Developer Momentum
Early enthusiasm for the Intel® Atom™ Developer Program has been strong. Within 30 days of offering the program, thousands of developers signed up and downloaded the starter-kit, and more than 350 apps have since been submitted for validation or review.
By participating in the program, developers gain access to the fast-growing, consumer-centric computing netbook category. In addition, developers gain revenue opportunities from the netbook-installed base, and potentially hundreds of millions of other Intel® processor-based computers and devices — should Intel and partner storefronts expand into new market segments.
Through the Intel Atom Developer Program, developers have access to Intel services to help validate apps and software behind the scenes, and joint marketing and revenue-sharing opportunities. Developers can visit the program at appdeveloper.intel.com.
In addition to the Windows* and Moblin*-based operating systems, the Intel AppUp center will offer applications that use Web browser run-time environments such as Adobe Air* and Microsoft Silverlight* in the future.
Partner Stores
As previously announced, Intel is also working with partners to bring app stores to consumers. Partner stores access the developer and store services the Intel AppUp center offers, including validating and categorizing apps and utilizing a common transaction infrastructure to administer purchases and downloads for these tailored stores. OEMs Acer, Asus, Dell and Samsung are working closely with Intel on their stores.
“Acer was an early supporter of the Intel Atom Developer Program and we applaud the announcement of Intel AppUp center,” said Gianpiero Morbello, Acer Worldwide Marketing vice president. “Accessing the Intel AppUp Center catalog, we will be able to distribute innovative software downloads to Acer Atom processor-based netbook customers and move to easily support additional Acer customers on any device powered by an Intel processor.”
“Our customers love their netbooks and the new applications will help them use their netbooks in great new ways,” said S.Y. Shian, vice president and general manager of Notebook Business Unit, System Business Group, Asus Corp. “We are excited about the many netbook applications that will be available to our customers through the Eee App Store and the enthusiasm from developers and ISVs to build the next generation apps for these mobile devices. Asus plans to launch the Eee App Store powered by Intel AppUp center in the coming months.”
“Dell is committed to cultivating eco-systems that foster creativity for developers and value for the growing number of individuals and businesses that rely on netbooks,” said John Thode, vice president, small devices, Dell. “The Intel AppUp center opens the doors to developer inspiration and ingenuity, and this spring customers will be able to get their netbook apps from the Dell Mobile App portal.”
CES 2010: Dirk Neuneier, MSI, talks about Intel and new netbooks [channelintel YouTube channel, Jan 8, 2010]
Yoono on Joining the Intel Atom Developer Program [channelintel YouTube channel, Jan 25, 2010]: “Yoono VP for Business Development discusses why his company decided to join the Intel Atom Developer Program to get an early start at developing and selling netbook apps through the just announced Intel AppUp Center Beta.”
Sponsors of Tomorrow: The Future of Mobile Devices [channelintel YouTube channel, Jan 25, 2010]: “The Intel Software Network asked Sascha Pallenberg [Netbook News] what he thought about the next generation Intel Atom-based Handheld devices, and the future of handheld computing. For more information visit http://intel.com/labs and http://intel.com/appup.”
Mobile Last.fm client running on a Moblin netbook [channelintel YouTube channel, Feb 17, 2010]: “During MWC2010 we had the chance to have a preview look at native Last.fm client by igalia running on a netbook under Moblin.”
MeeGo Interview: Pankaj Kedia of Intel talks about MeeGo [Steve Chippy Paine YouTube channel, Feb 16, 2010]: “http://www.umpcportal.com interviews Pankaj Kedia about the MeeGo OS”
MeeGo 1.0 on a Netbook at IDF 2010 Beijing [channelintel YouTube channel, April 14, 2010]: “MeeGo 1.0 is the first version that comes from merging Intel’s Moblin and Nokia’s Maemo, and here it’s shown running on a netbook during the Intel Developer Forum in Beijing in April 2010. MeeGo is a Linux-based software platform that will support multiple hardware architectures across a broad range of devices, including pocketable mobile computers, netbooks, tablets, mediaphones, connected TVs and in-vehicle infortainment systems. Distributed by Tubemogul.”
Intel AppUp Center running on a MeeGo tablet – see how it works [camwilmot YouTube channel, June 5, 2010]: “http://www.tweaktown.com COMPUTEX Taipei 2010 – During our visit to the Intel booth during the show, we not only saw MeeGo running on a new Sony netbook, but we also got a chance to have a play around with MeeGo running on a new and unreleased Atom tablet.
Jim Huang, a Senior Technical Marketing Engineer chap at Intel, was on hand to give us a quick run-down on the Intel AppUp Center. What was cool is that we saw it running an app or two on an unreleased Atom-based tablet running the MeeGo Linux operating system. The particular tablet we saw is capable o five point multi-touch and as demonstrated in the hand painting app, it works rather well indeed.
If the big mighty Intel has its way and as we are led to believe by all the advertising around the Computex area in Taipei, Atom is everywhere and is changing everything, the AppUp Center could end up being a good win for the folks at Intel and disrupt things a little for Apple with its own app store on its mega popular i-whatever devices. Distributed by Tubemogul.”
Renee James Recaps IDF Keynote [channelintel YouTube channel, Sept 16, 2010]
Why AppUp? [Intel Software TV YouTube channel, Sept 8, 2010]: “Intel’s AppUp(sm) center is gaining support from developers, so we decided to ask a developers to explain to us why they are developing apps for AppUp. This is a short compilation of some of those responses. If you have your own thoughts on “Why AppUp?”, please tell us here or post your own video. For more information on developing applications for Intel’s AppUp(sm) center go to the AppUp(sm) developer center”
Intel Opens Software App Store, Offers New Intel Atom Chips [press release, Sept 10, 2010]
NEWS HIGHLIGHTS
- Intel® AppUpSM center for netbooks now generally available, with new Adobe AIR applications, Microsoft Silverlight, and support from Asus, Best Buy, Croma and Dixons.
- New Intel® Atom™ E600 SoC series creates amazing developer flexibility for markets such as car entertainment, Internet phones, and smart grid devices.
- Intel also outlines forthcoming Intel® Atom™ processor CE4200, the next-generation CE SoC that enables 3-D-TV video, “sync-and-go,” and power-saving capabilities for smart TV experience.
INTEL DEVELOPER FORUM, San Francisco, Sept. 14, 2010 – During keynote presentations today at the Intel Developer Forum, Intel Corporation executives outlined several software- and hardware-related efforts as the company intensifies its System-on-a-Chip (SoC) product plans based on the Intel® Atom™ processor family.
Amid predictions of billions of additional Internet-connected devices going online, Renée James, senior vice president and general manager, Intel Software and Services Group, and Doug Davis, vice president and general manager, Embedded and Communications Group, discussed the expansion of these processors into high-growth areas including netbooks, tablets, CE, embedded, and smart phones.
James: The Best Experiences Are Created on Intel Architecture
During her keynote at Moscone Center West in San Francisco, James outlined how tightly integrated and optimized software and platforms will deliver new levels of performance, along with fresh capabilities and the importance of creating an innovative experience across the personal computing continuum – from PCs to smart phones to tablets and cars, as well as any number of Internet-connected consumer devices.
Emphasizing a seamless experience across operating systems, James introduced general availability of the Intel® AppUpSMcenter netbook app store for consumers. The Intel AppUp center includes both free and paid apps for entertainment, social networking, gaming and productivity, optimized for a netbook’s mobility and screen size. To encourage consumers to try new applications, Intel AppUp provides “try before you buy” solutions, encouraging consumers to purchase apps they otherwise might not have. The launch was also marked by the availability of Adobe* AIR applications, as well as apps from companies including Accuweather*, Barnes & Noble*, Funkitron*, Gibson Guitars*, iWin*, Kaplan*, KONAMI*, and Lifetime*.
In an effort to reach netbook owners worldwide, James announced agreements with Best Buy*, UK-based Dixons* and India-based Croma* to outfit each retailer with the Intel AppUp center – pre-installed on netbooks the stores sell, as well as available for current netbook owners to download online. Similarly, James announced plans from ASUS* to ship its version of the Intel AppUp center on netbooks, the “asus app store,” starting in October.
During her keynote, James highlighted the Intel AppUp Developer Program, designed to drive innovative applications for end users and new revenue opportunities for independent developers and software vendors with programs such as the Intel Million Dollar Development fund. Rick Vanner from The Game Creators was recognized as winner of the “Most Innovative Application” in the Intel Atom Developer Challenge for his game titled, “Goals.” James also introduced the “On Intel AppUp” ISV identifier, designed to help developers promote their applications on Intel AppUp center.
James acknowledged seamless experiences are only part of the equation. Open operating systems – such as Intel and Nokia’s* MeeGo*, hosted by the Linux Foundation – allow developers to create, invent and innovate. Pointing to contributions from industry leaders, James discussed MeeGo ecosystem momentum, highlighting a variety of MeeGo-based devices and how third-party software developments and the upcoming MeeGo Web runtime, to be released in October, will make it easier to write applications for these devices. Internet TV pioneer Amino* also joined James onstage to demonstrate how the company is taking advantage of the flexibility and openness of MeeGo to deliver an innovative MeeGo-based smart TV solution.
IDF SF 2010 Renee James Keynote Highlights [channelintel YouTube channel, Sept 14, 2010]
…
Facebook’s radical change of strategy: diversify into mobile apps for specific use cases and targeted at particular audience rather than sharing to all friends through the News Feed
… as the company is celebrating its 10 years anniversary
Facebook launches mobile news app Paper for iPhone [ComputerWorld, Jan 30, 2014]
The app reimagines Facebook on mobile devices with a mix of news stories and content from the user’s personal feed
…
Facebook’s Paper app coming to iPhones only, Feb. 3 [Computerworld YouTube channel, Jan 30, 2014]
The basic user interface consists of a top half of the screen, which displays one post or story with an image, and a second section below, where a number of smaller thumbnails are displayed. Users can then swipe to view more content and tap to see it in detail. Images and videos can be showed in full-screen mode.
The interface has been built from the ground up for touch devices. Users can, for example, tilt their phone to show different parts of a high-resolution panoramic photo from corner to corner, and see faces and other important details up close, according to Facebook.
Paper is the first product from Facebook Creative Labs, which is working on “new apps to support the diverse ways people want to connect and share,” Facebook said.
Whether Paper becomes available for other mobile OSes, including Android, remains to be seen. For now, Facebook is only saying that it will “consider other devices down the line based on feedback.” It also doesn’t have any immediate plans for a tablet version of the app, a spokeswoman said via email.
Mobile is an area where Facebook hasn’t always been successful. Last year, the company introduced Home for Android, which added a new interface layer on top of Google’s mobile OS. It is still available, but hasn’t been a hit among users. With Paper, Facebook is trying to offer a new way to use the social network on smartphones that is much less disruptive than Home.
Since Facebook is a free service it has to add functionality to continue to grow, but it has to be careful and not become too invasive, according to Nick Spencer, senior practice director at ABI Research.
Mobile has become a much more important source of revenue for Facebook. Of the company’s total ad sales during the fourth quarter last year, over half came from ads placed on mobile devices. During the same period in 2012, only 23 percent of the company’s advertising revenue was derived from mobile, it said on Wednesday.
The app will compete with the likes of Flipboard. For an early look, users can visit the app’s website.
Introducing Paper [theofficialfacebook YouTube channel, Jan 30, 2014]
Facebook’s Plot To Conquer Mobile: Shatter Itself Into Pieces [TechCrunch, Jan 29, 2014]
…
Facebook has made a big deal about reorganizing talent to make it so every team builds its own mobile products. On today’s earnings call, it announced that it surpassed the halfway mark for the first time and now 53% of its ad revenue comes from mobile. But it’s the shift to standalone apps that Zuckerberg reveals in the quote above that truly makes Facebook a “mobile-first company”.
Over the next year we might see Facebook giving small teams more freedom to build apps that nail a specific use case and delight a particular audience. That matches The Verge’s Ellis Hamburger‘s sources who say Facebook is planning a suite of standalone apps in 2014. And today on Facebook’s Q4 2014 earnings call, Zuckerberg confirmed the company is focused on building separate apps that let people share different types of content with different size audiences, rather than sharing to all friends through the News Feed.
As Zuckerberg suggested, Groups and Events could be two features unbundled. Facebook launched Groups as a web-first product back in October 2010 and it hasn’t changed much since Facebook got serious about mobile. But today, Zuckerberg said there are now more than 500 million people using Facebook Groups, hinting Facebook might try to capitalize on that interest with a standalone Groups app.
Meanwhile, Events have become one of Facebook’s most unique features. It’s a popular place for organizing and promoting birthday parties, cultural events, club nights, and more. While Eventbrite is often used by organizers trying to throw ticketed events, for gathering people for free events Facebook is far and away the most popular choice. A standalone Events app that offered users a calendar of the upcoming events, discovery of nearby events they haven’t been invited to, and their friends birthdays could gain serious traction with Facebook’s most outgoing users.
And soon, Facebook is expected to launch a reimagined news reading experience we first caught wind of a year ago. More recently, Re/code’s Mike Isaac reports the product is called Paper and will let people share news stories from a variety of publishers and their friends, some of which are curated by human editors working for Facebook.
[Update 1/30/2014 5am PST: Facebook made good on this standalone app strategy by today announcing the upcoming launch of Paper, a curated visual news reader app. The iOS app was built by Facebook Creative Labs, a new initiative born to let small teams within the company build new experiences without worry about screwing up the core Facebook app.]
All of these center around a new insight Zuckerberg outlined on today’s earnings call: People don’t just want to share with all their friends at once. They want to share different types of content with audiences of a variety of sizes. That means sharing status updates and photos, but also links, games, parties, and more with a loved one, a small cluster of friends, a big group of acquaintances, or the general public.
That flexibility lets Facebook host content you might have been scared to share before for fear of annoying people with different interests. The term “Facebook Friend” has evolved a lot in the nearly 10 years since Facebook launched. While once it was just people from the same college, it now encompasses, family, co-workers, and distant acquaintances. There’s only so much that’s appropriate to share with everyone.
Facebook has tried and failed to get us to build friend lists that could stimulate “microsharing”, but the catalyst may be offering whole different apps for different sharing communities. If the strategy works, it could defend Facebook from single-purpose mobile competitors trying to bring it down with a ’death by a thousand cuts’.
“We want to build a handful of great experiences that are separate from what you think of as Facebook today” Zuckerberg said at the end of the earnings call. The path to making the world more connected starts with disconnecting Facebook from itself.
Facebook Turns 10 With New App Strategy [Bloomberg YouTube channel, Jan 30, 2014]
Introducing Paper – Stories from Facebook [news release, Jan 30, 2014]
Today, we’re introducing Paper, a new app that helps you explore and share stories from friends and the world around you.
Paper makes storytelling more beautiful with an immersive design and fullscreen, distraction-free layouts. We’ve also made it easier to craft and share beautiful stories of your own.
Your Paper is made of stories and themed sections, so you can follow your favorite interests. The first section in Paper is your Facebook News Feed, where you’ll enjoy inspiring new designs for photos, videos, and longer written posts. You can customize Paper with a choice of more than a dozen other sections about various themes and topics—from photography and sports to food, science and design. Each section includes a rich mix of content from emerging voices and well-known publications.
Storytelling and sharing have been reimagined in Paper to show stories at their best.
- Everything responds to your touch so you can pick up or thumb through stories with simple, natural movements
- You can tilt your phone to explore high-resolution panoramic photos from corner to corner, and see faces and other important details up close
- Fullscreen autoplay videos come to life and bring you deep into the action
- Beautifully detailed covers make it easy to spot articles from trusted publishers and decide what to read or watch.· Articles unfold in the app and appear fullscreen for a focused reading experience
- When you’re ready to tell your own story, you know exactly what your post or photo will look like because you see a live preview before you share it
Paper is the first product from Facebook Creative Labs, where we’re crafting new apps to support the diverse ways people want to connect and share. The app will be available for the iPhone in the US on February 3rd. For an early look, you can take a tour of Paper.
Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations
… first time after 9 years
The main attraction of Prime is that the shipping service is bundled with a mature streaming video service for the price of Netflix’ service only:
Amazon or Netflix [Brent Byron YouTube channel, Dec 5, 2012]
but wait:
- Is the Amazon Prime service worth it? [Clark Howard: Save More, Spend Less YouTube channel, Jan 17, 2014]
- Amazon’s miss on holiday quarter [CNBC, Jan 30, 2014]
Amazon.com posted quarterly results Thursday that fell short of expectations and handed in a weak revenue outlook.
Additionally, Amazon said during its conference call it may increase the cost of its popular Amazon Prime subscription by $20 to $40 due to higher fuel and other shipping costs.
There were no immediate details on when or how Amazon would make the decision during the call. The company did not disclose the exact number of Prime customers.
“We have added massive selection and digital content to the service—Kindle owners lending library, Prime instant video,” according to CFO Thomas Szkutak during the call. “It’s great value for customers. We see customers love it and we will continue to make that better over time.”
In December, Amazon said that its Prime service had a “record-setting holiday season.” According to the company, more than 1 million people signed up in the third week of December alone. Prime members get free two-day shipping on eligible items, free streaming of 150,000-plus movies and TV episodes, and free e-book borrowing from a library of more than 475,000 titles.
The world’s largest Internet retailer posted earnings of 51 cents a share on sales of $25.59 billion, versus expectations for 66 cents a share on sales of $26.06 billion, according to a consensus estimate from Thomson Reuters.
In addition, the company posted current-quarter sales guidance of between $18.2 billion and $19.9 billion, missing expectations for $19.67 billion.
The company said international sales gained just 13 percent, lower than Wall Street forecasts for around 14 percent to 15 percent.
Shares initially shed nearly 10 percent in extended-hours trading before gradually recovering from lows. The stock rallied nearly 5 percent during the regular session Thursday. (Click here to get the latest quotes.)
The stock has had a stellar run since the lows of 2009, with shares surging close to the $400 mark by the end of 2013.
“It’s a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays,” said CEO Jeff Bezos in the company’s press release. “In just the last weeks, Forrester, YouGov, and ForeSee have all ranked Amazon #1—and we believe we’re just scratching the surface of what world-class customer service can be.”
Earlier this week, the Wall Street Journal reported that Amazon plans to move into the mobile payments business, offering brick-and-mortar retailers a checkout system that uses Kindle tables as soon as this summer, citing sources.
Recently, Amazon also expanded its grocery delivery service to two new U.S. cities, introduced Sunday package delivery with the Postal Service and reached agreements to build warehouses in several states.
Amazon Prime TV Commercial via @RichBTIG [BTIGResearch YouTube channel, Jan 2, 2014]
From Amazon.com’s Management Discusses Q4 2013 Results – Earnings Call Transcript [Seeking Alpha, Jan 30, 2014]
Tom Szkutak – Chief Financial Officer, Senior Vice President:
For Q1 2014, we expect net sales of between $18.2 billion and $19.9 billion or growth of between 13% and 24%. This guidance anticipates approximately 30 basis points of unfavorable impact from foreign exchange rates.
GAAP operating income, or loss to be between a $200 million loss and $200 million in income, compared to $181 million in income in the first quarter 2013. This includes approximately $350 million for stock-based compensation and amortization of intangible assets.
We anticipate consolidated segment operating income, which excludes stock-based compensation and other operating expense to be between a $150 million loss and $850 million, compared with $441 million in the first quarter of 2013. We launched Prime in the U.S. nine years ago with free, unlimited two-day shipping on one main items in an annual membership priced at $79. Today Prime Selection is growing to over 19 million items.
Even as fuel and transportation cost have increased, the $79 price has remained the same. We know the customers love Prime as the usage of the shipping benefit has increased dramatically since launch. On a per customer basis, Prime members are ordering more items across more categories with free two-day shipping than ever before.
With the increased cost of fuel, transportation as well as the increased usage among Prime members were considering increasing the price of Prime between $20 to $40 in the U.S.
…
In terms of details of how we would roll out the Prime price increase that we are considering, you have to wait on that, but certainly as I mentioned, it’s something that we haven’t had any increase in the nine years. Customers certainly love Prime.
The available units for shipment have grown dramatically from one million to over 19 million over the last nine years. We haven’t had any price increase. Customer usage, on a per customer basis, has gone up pretty dramatically, given the selection and the convenience of the service. So that’s why we are considering, of course during this nine year period, shipping cost have gone up a lot, fuel cost have gone up a lot. So that’s certainly the basis for us taking a look at it but in terms of the details, we will be back when we make those decisions back to customers.
…
We have added a lot of new services to Prime beyond this shipping benefits you mentioned it owners and then library. Certainly video, Prime Instant Video we are investing very heavily, and so those are certainly costly. Those aren’t the reasons for the price increases that were contemplating. That decision again is just based on – we have not done our price increase nine years. Shipping costs have gone up if you look back very considerably over the nine-year period.
Customers like the service, they are using it a lot more and we have a lot more selection. They are using it lot more and so that’s the reason why we are looking at the increase.
In terms of the international growth, the growth was solid, with revenue [exchange] of 15%. The unit growth was considerably faster than that, primarily because third-party growth we saw very strong and certainly FBA [Fulfillment by Amazon – Build your Business with Amazon Services] is a component of that and when you think about the capacity that we built it for not only for retail, but also for our third parties and we are able to offer your our FBA items through Prime as well, so we are very happy with the capacity that we have built across the world, including our international operations and that’s reflect in the results that you are seeing.
…
Yes, we like it the way it is. Yes. But again, if you look back at what we have done, you can’t expect that we might do going forward, but certainly we have had, in the U.S., Prime in place for nine years. We have added a massive selection during that time period. We have also added, this is on the physical side and we have also added digital content as well to the service in the U.S. with Kindle Owners’ Lending Library as well as Prime Instant Video and so it’s a great value for customers. We see that customers love it and we are going to continue to try and make that even better for customers over time.
…
We are seeing customers like the digital content. We are seeing great engagement, we are not breaking out in terms of the form, but again we are seeing great engagement. We do track very closely the Prime customers to come from free trials for examples.
They come through the pipeline for digital content from free trial standpoint, we track those conversions and we see that’s growing very nicely. We do look at customers that use our Prime Instant Video, what are their shopping patterns look like both side of digital content.
Beyond the free content we have on there, do they buy more digital content and certainly we are seeing nice growth in digital content because of that, because they do. They also do a lot of shopping physical categories as well, so those things we are tracking very closely and it’s a great pipeline for us as customers look at the total value proposition for Prime, including digital content.
Amazon Prime Instant Video VS Netflix Streaming [DaVirtualGeek YouTube channel, Jan 23, 2014]
From: Amazon.com Announces Fourth Quarter Sales up 20% to $25.59 Billion [press release, Jan 30, 2013]
…
Highlights
- Amazon announced a record-setting holiday season for Amazon Prime, the annual membership program with tens of millions of members worldwide. Amazon is working hard to increase capacity for the Prime program. In December, Prime was so popular that Amazon limited new Prime membership signups during peak periods.
- Prime Instant Video selection increased from 33,000 to more than 40,000 movies and TV episodes in 2013.
- Selection in the Kindle Owners’ Lending Library in 2013 grew from 250,000 books to more than 475,000 books-books that Kindle owners with a Prime membership can borrow for free with no due dates.
…
- Amazon Studios debuted new original series Alpha House and Betas. The first three episodes are available for all customers to enjoy, with the remaining episodes available exclusively on Prime Instant Video.
- Amazon Prime Instant Video will be the exclusive premium subscription home for Extant [see: Amazon and CBS Corporation Announce Exclusive Content Licensing Agreement for New CBS Series Extant—Produced by Steven Spielberg’s Amblin Television and Starring Halle Berry [Jan 8, 2014]], a serialized drama starring Halle Berry and produced by Steven Spielberg’s Amblin Television. The drama will premiere on the CBS Television Network in June with unlimited streaming of all the series’ episodes available four days after their initial broadcast on CBS.
…
About Amazon.com
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More than a billion units worldwide were ordered from Marketplace Sellers, including local businesses of all sizes, on Amazon during 2013
The number of active Marketplace Sellers using the Fulfillment byAmazon service grew more than 65 percent year-over-year worldwide
Amazon today announced a record-setting year for Marketplace Sellers with businesses of all sizes selling on Amazon. In 2013, Marketplace Sellers on Amazon sold more than a billion units worldwide, cumulatively worth tens of billions of dollars. Marketplace Sellers around the world also continued rapid adoption of Fulfillment by Amazon (FBA), a service that Marketplace Sellers can choose to have Amazon ship their products directly to customers and offer Amazon Prime benefits, FREE Shipping, simple exporting to customers around the world, easy returns for orders placed on Amazon and great customer service. The number of active Marketplace Sellers using the FBA service grew more than 65 percent year-over-year worldwide.
The Amazon Marketplace, which consists of more than 2 million Marketplace Sellers of all sizes worldwide, experienced record growth during the busy holiday selling season. On Cyber Monday, more than 13 million units were ordered worldwide from Marketplace Sellers on Amazon, growing the total units ordered by over 50 percent year-over-year.
“It has been an incredible year for Marketplace Sellers including popular brands and businesses of all sizes selling on Amazon. Our customers have told us they appreciate the hundreds of millions of products listed by Marketplace Sellers that range from all types of apparel to a vast selection of electronics items,” said Peter Faricy, VP for Amazon Marketplace. “Our goal every day is to make selling onAmazon as easy as possible. Fulfillment by Amazon is a wonderful service as it gives all Marketplace Sellers the option of warehousing their inventory in our fulfillment center network. It has been a game changer for sellers because their items become eligible for Prime benefits, which drives their sales and benefits consumers with additional Prime selection.”
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“We experienced explosive sales growth for items listed on Amazon, 10x sales increases in some cases, when offering attractive holiday deals. For many items, all available inventory was sold out within an hour of the deal posting! We are already making selling on Amazon a core component of our marketing and sales planning for holiday 2014 and beyond,” said Mike Mitchell, COO for MMP Living, a home goods and toy retailer based in Colorado. “By leveraging Amazon’s FBA program we were able to focus on sourcing and offering products of the highest quality, knowing that Amazon’s world-class infrastructure will handle getting our products out to customers quickly. With the focus always on the customer coupled with the fastPrime Shipping options, Amazon is second to none.”
- Amazon and CBS Corporation Announce Exclusive Content Licensing Agreement for New CBS Series Extant—Produced by Steven Spielberg’s Amblin Television and Starring Halle Berry [press release, Jan 8, 2014]
Prime Instant Video to be the exclusive subscription streaming home for Veronica Mars TV show in deal with Warner Bros. domestic Television Distribution
With Prime Instant Video fans can catch-up on all three seasons of the Veronica Mars series before the movie debut on March 14
- Amazon and A24 Announce Exclusive Content Agreement Making Prime Instant Video the Only Premium Subscription Service to Offer Films from A24 [press release, Nov 21, 2013]
Exclusive film distribution deal brings A24 movies such as Spring Breakers and The Bling Ring to Prime Instant Video
- Amazon and Metro-Goldwyn-Mayer Announce Expanded Content Licensing Agreement for Prime Instant Video [press release, Oct 22, 2013]
Deal includes Vikings, the #1 new cable series of the year in the U.S. along with popular MGM films for Prime members to stream instantly
- CBS’s Under the Dome Now Available for Exclusive Online Subscription Streaming on Prime Instant Video [press release, June 28, 2013]
Amazon Prime members can now watch Under the Dome episodes on an unlimited basis just four days after their initial broadcast
Under the Dome is also available for purchase and download exclusively on Amazon Instant Video
- Amazon Expands Agreement with PBS to Bring Even More Popular TV Shows to Prime Instant Video [press release, June 26, 2013]
Prime members now have access to even more episodes of NOVA,Masterpiece, and documentaries from Ken Burns along with PBS KIDS programs such as Caillou, Daniel Tiger’s Neighborhood andWild Kratts
PBS KIDS programming available to customers with Kindle FreeTime Unlimited
- Amazon and Viacom Announce Multi-Year Video Licensing Agreement; Adds a Selection of TV Shows Available Exclusively on Prime Instant Video [press release, June 4, 2013]
Prime Instant Video is adding thousands of episodes fromNickelodeon, Nick Jr., MTV and COMEDY CENTRAL—including a collection of subscription TV shows customers won’t find anywhere else—with favorite kids shows like Dora the Explorer, Go, Diego, Go!,Blue’s Clues and The Backyardigans, all available to Kindle Fire customers with FreeTime Unlimited
Multi-year deal will bring Amazon customers the TV shows and movies they want to watch, when they want to watch them, and on any device they want to watch them on—including Kindle Fire, iPad, iPhone, Roku and more
- Prime Instant Video Adds Exclusive Subscription Streaming Access to Popular NBCUniversal Shows Covert Affairs, Defiance, Grimm, Hannibal and Suits [press release, May 16, 2013]
Also as a part of the agreement with NBCUniversal, popular children’s shows including Curious George and Land Before Time will be available to customers with Kindle FreeTime Unlimited
- Scripps Networks Interactive’s Popular Lifestyle Shows from HGTV, DIY Network, Food Network, Cooking Channel and Travel Channel Coming to Prime Instant Video and Amazon Instant Video [press release, Feb 28, 2013]
Prime Instant Video is now home to previous seasons of popular shows like Rachael Ray’s Week in a Day, Anthony Bourdain: No Reservations, Cupcake Wars, House Hunters, Iron Chef America, Chopped, and Throwdown With Bobby Flay
This is the first online-only subscription distribution deal for Scripps Networks Interactive
- Amazon’s Prime Instant Video Named the Exclusive Online Subscription Home of FX Series Justified [press release, Feb 26, 2013]
Fan-favorite series The Shield will also join the Prime Instant Video catalog for Amazon Prime members to instantly stream at no additional cost
Amazon recently announced that PBS favorite series Downton Abbeyand the anticipated summer series Under the Dome from CBS will soon be available exclusively on Prime Instant Video
- Amazon and CBS Announce Expanded Content Licensing Agreement [press release, Feb 13, 2013]
Amazon Prime members now have more of their favorite CBS series to choose from for instant streaming, at no additional cost on hundreds of devices
New programming now available to Amazon Prime members includes America’s Next Top Model, Everybody Loves Raymond, Undercover Boss, United States of Tara and more
- Amazon and CBS Corporation Announce Content Licensing Agreement for Prime Instant Video To Be Exclusive Online Subscription Home for CBS’s Under the Dome [press release, Feb 11, 2013]
New TV series based on Stephen King novel and produced by Steven Spielberg’s Amblin Television to premiere on CBS Television Network in June
Amazon Prime members will have unlimited access to series episodes just four days after broadcast and Under the Dome will also be available for purchase and download exclusively on Amazon Instant Video
- Prime Instant Video to be the Exclusive Subscription Streaming Home for Carnival/Masterpiece Co-Production “Downton Abbey” on PBS [press release, Feb 1, 2013]
Subscription streaming of “Downton Abbey” — the most watched TV series of all time on Prime Instant Video — to become exclusive toAmazon
Microsoft cloud server designs for the Open Compute Project to offer an alternative to the Facebook designs based on a broader set of workloads
… while neither Amazon nor Google publicize their server designs yet
Designing Cloud Infrastructure for 1m+ Server Scale [“cloud scale”] – Kushagra Vaid (General Manager, Cloud Server Engineering, Microsoft) [Open Compute Project YouTube channel, Jan 29, 2014]
“The chassis can take 24 servers”
Microsoft Contributes Cloud Server Specification to Open Compute Project [Microsoft Data Centers Blog, Jan 27, 2014]
Today Microsoft announced that it will be joining the Open Compute Project Foundation (OCP) and will be contributing hardware specifications, design collateral (CAD and Gerber files), and system management source code for Microsoft’s cloud server designs. These specifications apply to the server fleet being deployed for Microsoft’s largest global cloud services, including Windows Azure, Bing, and Office 365. This significant contribution demonstrates our continued commitment to sharing our key learnings and experiences from more than 19 years of operating online services with the industry.
Microsoft manages a global portfolio of datacenters across all continents, has an installed base of over one million servers, and delivers more than 200 services for 1+ billion customers and 20+ million businesses in 90+ markets. Deploying and operating a huge cloud-scale [Cloud-Scale Data Centers, Feb 11, 2013; see also Microsoft Cloud-Scale Data Center designs [Microsoft Data Centers Blog, March 26, 2013]] infrastructure requires careful attention to several system design principles:
- Simplicity of the design is essential, since at cloud-scale the smallest issues can get magnified and potentially cause unexpected availability issues for customers.
- Efficiency gains across cost, power, and performance vectors are required to deliver the lowest total cost of ownership (TCO).
- Modular system design provides flexibility to accommodate hardware changes necessary for evolving workload requirements, plus it helps streamline the integration of new technologies.
- Supply chain agility is essential for adapting to rapid variations in server capacity demand signals.
- Ease of operations is key to ensuring system management at scale and cost effective servicing for hardware failures in the datacenter.
- Environmental sustainability is an important part of our cloud strategy. This includes minimizing material use and ensure re-use of components wherever possible across the server lifecycle.
Based on these guiding principles, Microsoft has designed an innovative system architecture that we believe will drive design and operational efficiency beyond the conventional commodity servers currently available in the market. The key design features include:
Chassis-based shared design for cost and power efficiency
- EIA rack mountable 12U Chassis leverages existing industry standards
- Modular design for simplified solution assembly: mountable sidewalls, 1U trays, high efficiency commodity power supplies, large fans for efficient air movement, management card
- Up to 24 commodity servers per chassis (two servers side-by-side), option for JBOD storage expansion
- Optimized for mass contract manufacturing
- Up to 40% cost savings and 15% power efficiency benefits vs. traditional enterprise servers
- Estimated to save 10,000 tons of metal per one million servers manufactured
Blind-mated signal connectivity for servers
- Decoupled architecture for server node and chassis enabling simplified installation and repair
- Cable-free design, results in significantly fewer operator errors during servicing
- Reduction of ‘No problem found’ incidents from loose cables
- Up to 50% improvement in deployment and service times
Network and storage cabling via backplane architecture
- Passive PCB backplane for simplicity and signal integrity risk reduction
- Architectural flexibility for multiple network types such as 10Gbe/40Gbe, Copper/Optical
- One-time cable install during chassis assembly at factory
- No cable touch required during production operations and on-site support
- Expected to save 1,100 miles of cable for a deployment of one million servers
Secure and scalable systems management
- X86 SoC-based management card per chassis
- Multiple layers of security for hardware operations: TPM secure boot, SSL transport for commands, Role-based authentication via Active Directory domain
- REST API and CLI interfaces for scalable systems management
- Support for server diagnostics and self-health checks
- Up to 75% improvement in operational agility vs. traditional enterprise servers
The Microsoft cloud server is a revolutionary design that brings the benefits of commoditization and cloud-scale operations to the industry. The specifications we’re contributing to OCP embody our long history and deep experience in datacenter architecture and cloud computing, and our commitment to sharing our cloud infrastructure best practices with the industry since 2007. As part of joining OCP, Microsoft will be making the following contributions for our Microsoft cloud server design and manufacturing collateral:
- Hardware specifications
- Server, mezzanine card, tray, chassis, and management card
- Management APIs and protocols (for chassis and server)
- Mechanical CAD models
- Chassis, server, chassis manager, and mezzanines
- Gerber files
- Management card, power distribution board, and tray backplane
- Source code for Chassis infrastructure
- Server management, fan and power supply control, diagnostics and repair policy
Microsoft will also be engaging in the OCP community via active participation in the various sub-committees and engineering forums. I am pleased to announce that Mark Shaw, Director of Hardware Development on my team, has been appointed as the Chair of the Server committee via the OCP community voting process. Additionally, MS Open Tech is releasing an open source implementation of the Chassis Manager specification [“As part of this effort, MS Open Tech is releasing an open source reference implementation of the Chassis Manager specification. Today, this code, is available on GitHub, and implements functions such as server management, and fan and power supply control.”]. We would like to help to build an open source software community for this project within OCP.
Our hardware partners are developing products for Microsoft based on these specifications and we look forward to availability of commercial offerings from our partners in the near future.
We are excited to share our cloud infrastructure learnings and operational experiences with the broader community to help drive the industry efficiencies forward, reduce the cost of hardware for all participants, and accelerate the adoption of cloud computing. You can find more information about the Microsoft cloud server specification via my customer discussion video, our white paper and at www.opencompute.org.
Compare this to the current (certified) and upcoming (new) boards from Intel based on current OCP specification (Decathlete for financial services, and Windmill the Facebook design with Intel for the dense servers) particularly designed by Facebook, as well as the upcoming Leopard being the next-generation compute module for Facebook):
But keep in mind Intel’s advanced interest in:
All from Designing the Datacenter of the Future – Eric Hooper (Director, Cloud Service Provider Optimization, Intel Corporation) [Open Compute Project YouTube channel, Jan 29, 2014] video:
In that video there is also a testimonial part from Goldmann Sachs using the jointly developed Decathlete design (code named “Swiss Army Knife”).
Device businesses should have a China-based independent headquarter at least for Asia/Pacific if they want to succeed
Back in August I found that China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web [Aug 5, 2013]. That statement was strengthened even more recently with MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2 [Dec 22, 2013; Jan 27, 2014].
Latest Nokia vs Apple vs Android:
With a trend analysis of the importance of the Asia/Pacific market in general, and the Chinese market in particular one comes to an even more striking conclusion: except Samsung (as it is just nearby) all dominant players in the mobile device market of today, and especially tomorrow, have to operate from China based headquarters. Otherwise they are unable to take the relevant decisions (unlike what was possible for PC era, just from U.S. based headquarters). This is especially applied to the merged Nokia-Microsoft Device Business!
Sources:
– Analysys International: China Mobile Phone Sales Hit 100 Million in Q3, 2013 [Nov 8, 2013]
– Gartner sources: like the latest Gartner Says Smartphone Sales Accounted for 55 Percent of Overall Mobile Phone Sales in Third Quarter of 2013 [Nov 14, 2013]
– IDC Finds Worldwide Smartphone Shipments on Pace to Grow Nearly 40% in 2013 While Average Selling Prices Decline More Than 12% [Nov 26, 2013]
– For IDC look at Smartphones Expected to Grow 32.7% in 2013 Fueled By Declining Prices and Strong Emerging Market Demand, According to IDC [June 4, 2013] as well (for Worldwide Smartphone Shipments by Market Maturity i.e. emerging and developed). Here is the historical chart embedded there:
Developed Markets include: USA, Canada, Western Europe, Japan, Australia, and New Zealand.
With the latest news release of Jan 27 (Android ends the year on top but Apple scores in key markets) from Kantar Worldpanel Comtech one can compile an almost 2 years long representation of the smartphone trends in the key markets via a set of following charts:
The latest comments on that (from the news release) by Kantar Worldpanel Comtech:
Android ended 2013 as the top OS across Europe with 68.6% share, while Apple held second place with 18.5%. Windows Phone continues to show high year-on-year growth, but its share of the European market has essentially remained flat at 10.3% for the past three months.
Android finished 2013 strongly, showing year-on-year share growth across 12 major global markets including Europe, USA, Latin America, China and Japan. Apple has lost share in most countries compared with this time last year, but importantly it has held strong shares in key markets including 43.9% in USA, 29.9% in Great Britain and 19.0% in China.
Windows Phone has now held double digit share across Europe for three consecutive months. Unfortunately for Nokia the European smartphone market is only growing at 3% year on year so success in this market has not been enough to turn around its fortunes – reflected in its recent disappointing results. Its performance also deteriorated toward the end of 2013 in the important growth markets of China, USA and Latin America.
It’s no surprise that everyone is concentrating on high growth China, but currently local brands are proving clear winners. In December, Xiaomi overtook both Apple and Samsung to become the top selling smartphone in China – a truly remarkable achievement for a brand which was only started in 2010 and sells its device almost exclusively online. The combination of high spec devices, low prices and an ability to create unprecedented buzz through online and social platforms has proved an irresistible proposition for the Chinese.
Additional information for the period was provided by earlier Kantar Worldpanel Comtech news releases:
Android leads OS U.S. sales, as LG and Nokia see resurgence [Jan 7, 2014]
In the 3 months ending November 2013, Android maintained its lead of smartphone sales on the U.S., capturing 50.3% of the smartphone market. iOS follows with 43.1% of smartphone sales, an increase month on month, however, down 9.9% versus the same period a year ago, according to data on the U.S. market released today by Kantar Worldpanel ComTech.
Windows Phone, the third largest OS in the U.S, sold nearly 5% of smartphones in the 3 months ending November 2013, up 2.1% points from the previous year.
As with the previous period, Verizon maintained its lead as the top smartphone carrier, with just under a third of sales (31.7%). AT&T, in second, had 28.3% of smartphone sales in the 3 months ending November 2013. T-Mobile, overtaking Sprint as the third largest carrier had 13.3% of sales, and was the only major carrier to see growth year on year (up 6.3%).
The data is derived from Kantar Worldpanel ComTech USA’s consumer panel, which is the largest continuous consumer research mobile phone panel of its kind in the world, conducting more than 240,000 interviews per year in the U.S. alone. ComTech tracks mobile phone behavior and the customer journey, including purchasing of phones, mobile phone bills/airtime, and source of purchase and phone usage. This data is exclusively focused on the sales within this 3 month period rather than market share figures. Sales shares exemplify more forward focused trends and should represent the market share for these brands in future.
Kantar Worldpanel ComTech Global Strategic Insight Director, Dominic Sunnebo states, “The iPhone 5S and 5C were the two bestselling smartphones in the U.S for the 3 months ending November 2013. However, increased rivalry from Android brands and a resurgence of LG and Nokia, has made year-on-year share gains for Apple difficult. This is especially true on T-Mobile.”
On T-Mobile, the ‘UNcarrier’ strategy, launched earlier in 2013, has been successful because it has attracted first-time smartphone buyers, looking to upgrade to their first smartphone. Among T-Mobile smartphone buyers in November 2013, 55% of those that purchased an LG and Nokia smartphone were first-time smartphone buyers, compared to just 39% of Apple customers.
Sunnebo continues, “First-time smartphone buyers remain a key demographic for carriers and brand alike. The lower end iPhone 5C represents an opportunity for Apple to attract these customers. Thus far the majority of 5C customers have come from other smartphone platforms, though if historical trends hold, the lower end model (historically the older iPhone model following the release of a new iPhone), should be able to attract this demographic with its lower price and comparable specs.”
Apple launch momentum continues [Jan 7, 2014]
The latest smartphone sales data from Kantar Worldpanel ComTech, for the three months to November 2013, shows Apple’s share of smartphone sales continuing to grow month on month following the release of the iPhone 5S and 5C models. However, its share of most major markets remains lower than the same time last year as it increasingly faces challenges from its rivals.
While there’s no doubt that sales of the iPhone 5S and 5C have been strong, resurgent performances from LG, Sony and Nokia have made making year on year share gains increasingly challenging for Apple. Windows Phone, for example, is now the third largest OS across Europe with 10.0% – more than double its share compared with last year.
Apple now accounts for 69.1% of the Japanese market, 43.1% in the United States, 35.0% in Australia and 30.6% in Great Britain.
Strong sales of the iPhone 5S and 5C can be linked to high levels of customer satisfaction with both models, despite fears that the lower-end 5C could damage Apple’s appeal.
Some people worried that Apple was risking its historically high consumer satisfaction levels by releasing a lower cost, plastic iPhone. However, the latest data for the US shows that the iPhone 5C has an average owner recommendation score of 9.0/10 versus 9.1/10 for the iPhone 5S. Both devices attract different customers but crucially each group of owners remains very happy with their choice and are recommending it to others.
Android gains 3% market share each quarter in China [Nov 28, 2013]
Kantar Worldpanel ComTech is the first continuous panel to gather representative mobile phone data in China. The panel has been created to provide insight including mobile phone ownership, sales, usage, churn, loyalty and pricing in Chinese telecoms market.
The key points of Q3 report:
- Android’s steady growth in China is mainly coming from cheaper local brands, consumers are seeking for the ultimate value for money device.
- There were many speculations about the iPhone 5s and 5c prior their official launch. It actually made negative impact to iPhone Q3 sales, as people were holding out for the new models, and reduced Apple’s sales by almost 50% compared to the previous quarter.
- Almost a quarter of smartphone sales were made via online channels in 2013Q3. Even though online channels usually offer better price, the ability to test the phone is also a key purchase decision factor for Chinese customers, making it important for manufactures and leading retail chains to develop effective O2O strategies
- As most Android devices offer similar user experience, consumers are more focusing on cost effective devices.
¥ 1000 – ¥ 2000: US$ 165 – US$ 331
¥ 2000 – ¥ 3000: US$ 331 – US$ 496
¥ 3000- ¥ 4000: US$ 496 – US$ 661
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With Kantar Worldpanel Comtech vendor market shares be very careful as the latest Analysys International: Apple’s Share Declining in China Smartphone Market in Q3, 2013 is providing quite a different picture: The statistics from EnfoDesk, the Survey of China Mobile Terminals Market in Q3, 2013, newly released by Analysys International, shows that the sales of China mobile phone (excluding parallel imports and the cottage) hit 102.66 million, up 54.5 percent year on year with a sequential growth rate being 13.6 percent by 2013Q3. Samsung, Lenovo and Coolpad still ranked top three with market share being 18.1 percent, 11.4 percent and 9.0 percent. |
Nokia and Windows global momentum continues [Nov 4, 2013]
The latest smartphone sales data from Kantar Worldpanel ComTech, for the three months to September 2013, shows Windows Phone now makes up one in 10 smartphone sales across the five major European markets*, has overtaken iOS in Italy, and is gaining momentum in emerging markets. Android remains the dominant operating system across Europe with 71.9%, an increase of 4.2 percentage points compared with the same period last year.
Windows Phone, driven almost entirely by Nokia sales, continues to make rapid progress in Europe and has also shown signs of growth in emerging markets such as Latin America.
With the smartphone market in developed countries so congested, it is emerging economies that now present manufacturers with the best opportunity for growth.
Nokia dominated in Latin America for many years, and while its popularity declined with the fortunes of Symbian it now has an opportunity to regain the top-spot. The majority of consumers in Latin America still own a Nokia featurephone and upgrading to an entry level Lumia is a logical next step. Price is the main barrier in developing markets and the budget Lumia 520 opens the door to smartphone ownership for many.
…Local brands growing in China
China is increasingly dominated by Android which accounts for 81.1% of the market, up 14.6 percentage points from last year. Domestic manufacturers made up 44% of smartphone sales in the latest period, compared to just 30% the previous year. Huawei, Xiaomi, Lenovo and Coolpad handsets are particularly popular outside of China’s largest cities and represent a more value-for-money option than global brands.
Chinese consumers are prepared to make a huge investment in their smartphone, with some spending up to 70% of their monthly salary on a new device. With such a high investment, Chinese consumers want to get the best value for money and are increasingly opting for a high-spec local brand over a low-spec global equivalent. The message for global manufacturers is clear – Chinese consumers demand value, and overpriced entry-levels models no longer cut it against increasingly impressive local competition.
Kantar Worldpanel ComTech: Urban China Smartphone Sales Data to Q313
Windows Phone nears double digit share across Europe [Sept 30, 2013]
The latest smartphone sales data from Kantar Worldpanel ComTech, for the three months to August 2013, shows Windows Phone has posted its highest ever sales share of 9.2% across the five major European markets* and is now within one percentage point of iOS in Germany. Android remains the top operating system across Europe with a 70.1% market share, but its dominant position is increasingly threatened as growth trails behind both Windows and iOS.
Windows Phone has hit double digit sales share figures in France and Great Britain with 10.8% and 12% respectively – the first time it has recorded double digits in two major markets.
After years of increasing market share, Android has now reached a point where significant growth in developed markets is becoming harder to find. Android’s growth has been spearheaded by Samsung, but the manufacturer is now seeing its share of sales across the major European economies dip year on year as a sustained comeback from Sony, Nokia and LG begins to broaden the competitive landscape.
Windows Phone’s latest wave of growth is being driven by Nokia’s expansion into the low and mid range market with the Lumia 520 and 620 handsets. These models are hitting the sweet spot with 16 to 24 year-olds and 35 to 49 year-olds, two key groups that look for a balance of price and functionality in their smartphone.
A key milestone for Android in China [May 31, 2013]
Kantar Worldpanel ComTech, the global market leader in longitudinal Telecom research panels, reports at the end of Q1 2013, Urban China Smartphone penetration reached 42%, an increase of 1.2% compared to Q4 2012. According to Kantar Worldpanel ComTech’s latest research in China, most of Smartphone growth comes from new Smartphone adopters, with almost half of Featurephone owners who changed their device in last quarter upgrading to a Smartphone. Craig Yu, Consumer Insight Director at Kantar Worldpanel ComTech, comments:”Featurephones are losing their price advantage as Android Smartphones are rapidly becoming more affordable and delivering better value. We expect to see accelerated Smartphone adoption in China in the coming months.”
During the first quarter of 2013, Android continued its steady growth in China, marking a key milestone in reaching 50% share of Smartphone Installed Base. At the end of March 2013, Android widened its lead of Smartphone operating systems with a 51.4% market share, an increase of 2.8% compared to the previous quarter. Second and third place was taken by Symbian and iOS, whose market share is 23% and 19.9% respectively. Symbian has declined 2% in the last quarter, whilst iOS remained resilient. Following the same trend, Symbian looks likely to lose its second place to be the third in the next 2 quarters.
Kantar Worldpanel ComTech also tracks the performance of various mobile device brands, according to its latest report, many Chinese local brands have been working closely with carriers and demonstrated strong growth in the Smartphone market for the first three months of 2013. ZTE, Lenovo and Xiaomi all have experienced share increases.
The combined market share of above four local brands are at 20%, a 17.6% growth in the past 6 months. Huawei, ZTE, Lenovo, Coolpad & Xiaomi combined make up 1 in 5 of all Smartphones in active use in China-this proportion will continue to grow as Nokia’s existing dominance is challenged.
Yu continues:”Local manufacturer brands have been able to drive strong growth through bundling their handsets with carriers tariff offers, seeking out new sales channels & combining innovative product design with value to capture many first time Smartphone buyers and those residing in City tiers 2/3/4.
However, Samsung remains the fastest growing Smartphone brand in China, ended Q1 2013 with 15.2% share of Installed Base (1.5%pts). Craig Yu continues:”Samsung has recently launched the Galaxy S4, selling over 10 million units globally in less than one month-we predict the launch of Galaxy S4 mini in the not too distant future will greatly increase its product reach in urban China.”
Apple achieves its highest ever Smartphone share in US [Dec 12, 2012]
The latest smartphone sales data from Kantar Worldpanel ComTech shows Apple has achieved its highest ever share in the US (53.3%) in the latest 12 weeks*, with the iPhone 5 helping to boost sales. In Europe, however, Android retains the highest share with 61% of the market, up from 51.8% a year ago.
* 12 w/e 25th November 2012
Apple has reached a major milestone in the US by passing the 50% share mark for the first time, with further gains expected to be made during December.
Meanwhile in Europe, Samsung continues to hold the number one smartphone manufacturer spot across the big five countries, with 44.3% share in the latest 12 weeks. Apple takes second place with 25.3% share while HTC, Sony and Nokia shares remain close in the chase for third position.
Although Windows sales in the US remain subdued, Nokia is managing to claw back some of its share in Great Britain through keenly priced Lumia 800 and 610 prepay deals. The next period will prove crucial in revealing initial consumer reactions to the Nokia 920 and HTC Windows 8X devices.
Nokia continues to find it tough to attract younger consumers in Great Britain. Over the past six months, just 28% of Nokia Lumia 800 sales have come from under 35’s, compared with 42% of all smartphone sales. With the Nokia Lumia 920 being one of the few handsets available on EE 4G, new tariffs may help to change this by attracting early adopters in the coming months.
Smartphone percentage penetration in Great Britain hit 60% in the latest period, with 83% of all mobile phone sales over the past 12 weeks being smartphones.
iPhone 5 release slows Android gains [Oct 30, 2012]
Recent smartphone sales data from Kantar Worldpanel ComTech shows Android continuing to gain share across Europe in latest 12 weeks of sales* increasing its share to 67.1% share, up from 50.9% a year ago. However, its rate of growth has slowed as week one of iPhone 5 sales show iOS gaining in the US and Great Britain.
My insert (see Q4’12):
* 12 w/e 30th September 2012
(Apple iPhone 5 released on 21st September in US, GB, Germany & France. Italy & Spain on 28th September. Not yet released in China & Brazil).
Apple has increased its share from 18.1% to 28.0% in the past year across Britain, while in the US its share increased by 14.2 percentage points.
While this latest data set only includes one week of iPhone 5 sales, we can see that in markets with a large number of existing Apple customers, sales have already seen a significant boost. We expect this momentum to be fully realised in the next set of results.
Tomorrow the UK joins the likes of the US, Germany and much of Scandinavia with the rollout of EE’s superfast 4G network.
Chinese consumers are rarely loyal to their brands [June 29, 2013]
Bain & Company, a global business consulting firm, and Kantar Worldpanel, a global leader in consumer panel insights, released the 2012 China FMCG Shopper report in Beijing. In most of 26 of the top consumer goods categories sold in China across packaged foods, beverages, personal care and homecare, covering more than 80 percent of the country’s fast-moving consumer goods (FMCG) market, shoppers who purchase more frequently in a category tend to buy more brands rather than more of the same brands.
Kantar Worldpanel equips shoppers from 40,000 households throughout urban China with barcode scanners to record their purchases from all channels. The findings dispel several misunderstood notions about how Chinese consumers respond to product brands. Although over 60 percent of Chinese shoppers have said that brands were their top consideration when purchasing (in previous Bain research), in reality, they rarely act on that consideration at the moment of purchase. Instead, they are in a near-constant state of trial, without leading to eventual preference and loyalty.
End of the Nokia “magic” hurting European and Asian consumers while mobile carriers are uncertain about the future under the Microsoft brand
… Microsoft should act significantly faster to clarify the situtation, especially in the critical feature phone replacement market where the only real growth opportunities remain. Otherwise it could loose the mobile market even before starting the battle. Such conclusions are also strengthening my recent Nokia should introduce an Android forked smartphone for the $75-120 range in order to enhance its Asha Software Platform strategy and 2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to succeed with its devices and services strategy conclusions posted here on January 17.
In addition, there are extremely worrying signs on the horizon as per Jan 27, 2014:
– MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2
Just How Much Brand Damage Is Microsoft Doing To Nokia? [by Tero Kuittinen* on Forbes, Jan 23, 2014]
Analysts were widely expecting Nokia to sell 10 M smartphones in 4Q 2013. The company ended selling 8.2 M units, down from 8.8 M in the previous quarter. It’s a massive miss considering the strong sequential volume growth Nokia had delivered during the spring and autumn periods.
…
Nokia had real smartphone volume traction in the autumn and it was expected to continue – yet after the September announcement of Microsoft acquisition, device sales actually started to decline. For Europeans, the explanation is obvious: consumer backlash as Microsoft association started tarnishing the Nokia brand. Yet for Microsoft executives, this may come as a complete shock.From the West Coast perspective, Nokia has been a fading phone brand for twelve years. The deep emotional connection many European and Asian consumers have with the Nokia brand is not obvious for American tech executives. And this is why many transcontinental mergers fail: executives have real trouble gauging brand essence across continents. Nokia used to inspire Apple-like loyalty in consumers as recently as around 2005-2007. A residue of that affection buoyed its Lumia sales drive in first three quarters of 2013.
…
The scale of that backlash is hard to gauge – but 4Q 2013 seems like a genuinely ominous sign for the future. Nokia was expected to deliver 11-13% sequential smartphone volume growth. It delivered -7% decline – an abrupt reversal that blindsided both Wall Street and industry analysts. Something in the European and Asian attitudes towards the Microsoft purchase of Nokia has eluded American tech experts.
* His description of himself:
I have followed the mobile handset market since late Nineties. I spent eight years doing sell-side equity research on Wall Street, starting out at Alliance Capital. I have expanded from handset industry to mobile app market over the past three years. Now back to mobile telecom industry – mobile diagnostics, mobile trend research, mobile expense management. I regularly talk to handset distribution, OS development and app industry pros in Europe, Asia, Latin America and USA. I pay particular attention to tracking phone and app sales trends in Brazil, India, China, South Africa, Nigeria, Spain, Italy, Germany and the UK.
Lumia sales slump sabotages Microsoft’s strategy before it starts [Computerworld, Jan 23, 2014] in a rearranged way
But analysts aren’t buying the idea that Microsoft’s Nokia acquisition poisoned consumers’ minds …
… Instead, the experts pinned the blame on Nokia first and foremost, and secondly on the all-too-natural distraction caused by the Microsoft acquisition. …
Carolina Milanesi of Kantar Worldwide Panel:
There may have been some backlash in buying Lumia, but for the most part consumers don’t care about these things.
It’s like Nokia said, ‘It’s not our problem anymore.’ The numbers are the evidence that with the acquisition looming, Nokia essentially washed its hands of the business, and probably reduced its promotional efforts and lowered carrier incentives.
There’s still an opportunity for Microsoft, but it needs to work with the carriers and look for those users who have low-end Android phones, who have not invested in the ecosystem.
Those are the people Microsoft-Nokia should be going after. But they need to get devices on the market.
Tuong Nguyen, principal analyst at Gartner:
The wariness would come more from the vendor [i.e. mobile carriers]partnership side rather than consumers.
The challenge is two parts for Microsoft now.
First, the feature phone business is scaling down as they ramp up the Lumia line, but that’s not ramping up as fast as the feature phone is ramping down. And as the industry as a whole has seen less true innovation, the fourth quarter isn’t a blow-out quarter like it once was. The market’s hitting the point, in developed countries anyway, where it’s a replacement market now.
It is critical that when [Microsoft] lands the deal, they go out and show something and say something. Microsoft cannot take six months to do that. It would kill them.
Patrick Moorhead, principal analyst at Moor Insights & Strategy:
Microsoft does have a distribution problem. When only two out of 100 phones are Windows Phone, it’s very hard to drive meaningful share, it’s hard to get developers excited, and creates a vicious circle.
The top of everyone’s mind in the channel and among developers is, ‘What’s next, Microsoft? How are you going to drive volume?’ It needs a very early disclosure of what it wants to be in mobile, and must move as quickly as possible to do that.
I don’t think Build is early enough, but I do think that’s where they’ll give some disclosure.
Microsoft will want to take advantage of the friendly environment at Build, where developers who are arguably pro-Microsoft may be able to influence those who are on the fence.
The extraordinary attempt by Nokia/Microsoft to crack the U.S. market in terms of volumes with Nokia Lumia 521 (with 4G/LTE) and Nokia Lumia 520
Update: there was no effective result of the price elasticity trial on the U.S. market as per the below chart composed by myself from news releases from Kantar Worldpanel Comtech over the period in question:
(Credit: Kantar Worldpanel ComTech)
While we have Lumia 520 for Rs. 8850, i.e.US$ 144 in India, and US$121.5 in China as the minimum price, current prices in U.S. are much below of that (although in China there is also the improved and upgraded to 1GB RAM version, Lumia 525 is available from $103 up since December, but in all of the other places the price is up from $115, like here):
* Meanwhile the Nokia/Microsoft effort was instrumental for a new trend of ending smartphone subsidies on the U.S. market (see towards the end of the post related to T-Mobile’s so called Un-carrier strategy)
Nokia Lumia 521
|
Nokia Lumia 520
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Everything started to work that way in Q3 2013:
Note that:
(Credit: Kantar Worldpanel ComTech)
Android leads OS U.S. sales, as LG and Nokia see resurgence [Kantar Worldpanel press release, Jan 7, 2014]
In the 3 months ending November 2013, Android maintained its lead of smartphone sales on the U.S., capturing 50.3% of the smartphone market. iOS follows with 43.1% of smartphone sales, an increase month on month, however, down 9.9% versus the same period a year ago, according to data on the U.S. market released today by Kantar Worldpanel ComTech.
Windows Phone, the third largest OS in the U.S, sold nearly 5% of smartphones in the 3 months ending November 2013, up 2.1% points from the previous year.
As with the previous period, Verizon maintained its lead as the top smartphone carrier, with just under a third of sales (31.7%). AT&T, in second, had 28.3% of smartphone sales in the 3 months ending November 2013. T-Mobile, overtaking Sprint as the third largest carrier had 13.3% of sales, and was the only major carrier to see growth year on year (up 6.3%).
The data is derived from Kantar Worldpanel ComTech USA’s consumer panel, which is the largest continuous consumer research mobile phone panel of its kind in the world, conducting more than 240,000 interviews per year in the U.S. alone. ComTech tracks mobile phone behavior and the customer journey, including purchasing of phones, mobile phone bills/airtime, and source of purchase and phone usage. This data is exclusively focused on the sales within this 3 month period rather than market share figures. Sales shares exemplify more forward focused trends and should represent the market share for these brands in future.
Kantar Worldpanel ComTech Global Strategic Insight Director, Dominic Sunnebo states, “The iPhone 5S and 5C were the two bestselling smartphones in the U.S for the 3 months ending November 2013. However, increased rivalry from Android brands and a resurgence of LG and Nokia, has made year-on-year share gains for Apple difficult. This is especially true on T-Mobile.”
On T-Mobile, the ‘UNcarrier’ strategy, launched earlier in 2013, has been successful because it has attracted first-time smartphone buyers, looking to upgrade to their first smartphone. Among T-Mobile smartphone buyers in November 2013, 55% of those that purchased an LG and Nokia smartphone were first-time smartphone buyers, compared to just 39% of Apple customers.
Sunnebo continues, “First-time smartphone buyers remain a key demographic for carriers and brand alike. The lower end iPhone 5C represents an opportunity for Apple to attract these customers. Thus far the majority of 5C customers have come from other smartphone platforms, though if historical trends hold, the lower end model (historically the older iPhone model following the release of a new iPhone), should be able to attract this demographic with its lower price and comparable specs.”
(data from Kantar Worldpanel ComTech, chart compiled by theguardian.com)
Regarding the US installed base see also Apple and Samsung Grow to Represent 68 Percent of Smartphones Owned in the US, According to The NPD Group [press release, Jan 16, 2014]
From Nokia Lumia 521 Price Deal: Lumia 521 Windows Phone 8 Smartphone Price Cut by MetroPCS to $29 [Video] [Tech: Latinos Post, Jan 15, 2014]
The price of the Nokia Lumia 521 received a significant reduction but only for MetroPCS customers.
The Lumia 521 Windows Phone 8 smartphone received a $29 price tag, although tax was not included.
The original price for the Lumia 521 was $99, but MetroPCS issued a couple discounts including a rebate offer for the $29 cost to come into fruition. To be precise, MetroPCS added an “Instant Discount” worth $50 followed by a $20 mail-in rebate.
The Lumia 521, also available with T-Mobile, can be purchased at full price $102. A $0 up-front offer is also available with T-Mobile as long as the consumer pays $4.25 for the next 2
04 months.Meanwhile, the online Microsoft Store has the Lumia 521 for $69, which is a discount from the original $99 price tag. The online Microsoft Store is offering free shipping and returns.
Amazon.com also has the Lumia 521 in stock. For $79.99, the Lumia 521 can be purchased following a 47 percent discount from its original $149.99 price tag.
From Nokia Lumia 520 vs. Nokia Lumia 521 Specs: Price Cuts for Windows Phone 8 Smartphones on Online Microsoft Store End Jan. 12 [Video] [Tech: Latinos Post, Jan 9, 2014]
The Nokia Lumia 520 and Lumia 521 have received price discounts but the opportunity to purchase either Windows Phone 8 smartphones is about to end this weekend.
The Lumia 520 is available with no contract courtesy of mobile carrier AT&T for $99. The online Microsoft Store, however, is offering the Lumia 520 for $40 less than AT&T. Until Jan. 12, potential customers can purchase the Lumia 520 for $59 from the online Microsoft Store, which includes free shipping and free returns.
…
The Lumia 521 is also on sale on the online Microsoft Store. The Lumia 521 also had an original price tag of $99 but can be bought for $69. The online Microsoft Store will also ship the Lumia 521 for free.
From AdDuplex Windows Phone Statistics Report for December 2013 [AdDuplex blog, Dec 30, 2013]
… The raw data analyzed was collected over the day of December 27th, 2013 (UTC time) unless otherwise stated. …
United States
We have a new number 2 in the US and that’s the global leader – Lumia 520. Therefore, the share of Lumia 52x devices in US is now pretty much aligned with global situation. It’s notable that L520 has jumped 3 places in just one month and that is, most likely, the result of the aggressive pricing we’ve seen recently.
Another notable fact about US is that T-Mobile is the new number 2 Windows Phone 8 operator in the country with 23.3% of the market. We will see if Verizon is able to come back next month when, hopefully, their new Windows Phone flagship is out. But, if history is any indication, it is the low end that drives the market share. So it is more likely that we won’t see any major changes in the lineup next month.
Note that according to MetroPCS Aggressively Expands, Adding 15 New Markets; Triples Reach to 45 Markets across the United States just Six Months after T-Mobile-MetroPCS Combination [press release Nov 5, 2013]
About MetroPCS
MetroPCS provides the freedom and convenience of unlimited, no-annual-contract wireless services on an advanced nationwide 4G LTE network for a flat rate. With MetroPCS, customers get great value and a wide variety of device choices from leading brands. A flagship brand operated by T-Mobile US, Inc. (NYSE: “TMUS”), MetroPCS products and services are available online and across the United States through a network of company-owned stores, authorized dealer locations, and leading national retailers.
In addition to that MetroPCS Broadens 4G Smartphone Lineup with Addition of New Nokia, LG Phones and Access to Nationwide 4G Network [press release July 25, 2013]
Nokia Lumia 521 is MetroPCS’ First Windows Phone 8 Smartphone; LG Optimus F3™ Adds LTE to Popular Optimus Line
In conjunction with the expansion of its MetroPCS brand into 15 new markets, T-Mobile US, Inc. (NYSE: TMUS) is tomorrow introducing two new smartphones to the brand’s 4G portfolio: the LG Optimus F3™ and the Nokia Lumia 521. These devices can be paired with MetroPCS’ affordable 4G service plans, featuring unlimited data, talk and text – taxes and regulatory fees included – starting at just ‘$40, period’ and all on a nationwide 4G network.
The Nokia Lumia 521 and LG Optimus F3 join MetroPCS’ lineup of recently launched HSPA+ and LTE smartphones — delivering all the speed wireless consumers need for a great mobile experience.
As the first Windows Phone 8 product in the MetroPCS lineup, the Lumia 521 is another way the company is delivering what consumers demand – more choice – and at a great price for just $99 (plus taxes and fees).
From Nokia Lumia 521 Specs, Price Deal Offer: Microsoft Store Cuts Lumia 521 Windows Phone 8 Smartphone Cost to $69 [Video] [Tech: Latinos Post, Dec 26, 2013]
The online Microsoft Store has reduced the price of the Nokia Lumia 521 Windows Phone 8 smartphone just as the holiday shopping season ends.
Previously priced at $99, the Lumia 521 can be purchased on the online Microsoft Store for $69. Back on Dec. 1, the online Microsoft Store had priced the Lumia 521 at $79.
The online Microsoft Store will also ship the Lumia 521 for free.
…
On Amazon, as of Christmas Eve, the Lumia 521 could be purchased for $97.93, which is a savings of $52.06 or 35 percent from the original price. The Lumia 521 was previously listed at $149.99 for its original price.
From Nokia Lumia 521 Specs and Price in USA: Amazon, T-Mobile New Price Offers for Lumia 521 Windows Phone 8 Smartphone [Video] [Tech: Latinos Post, Dec 7, 2013]
As Latinos Post reported on Dec. 4, Amazon had priced the Lumia 521 Windows Phone 8 smartphone for T-Mobile at $135.99. The price change comes two days after it was priced at $79.95 instead, which was a 47 percent discount from the original listed price of $149.99.
As of Dec. 7, the Lumia 521’s price changed and slightly better than the previous $135.99 cost. The Lumia 521’s new price tag is $94.97, which is a savings of $55.02 from the original $149.99 list price.
From Nokia Lumia 521 Specs and Price in USA: Amazon, T-Mobile New Price Offers for Lumia 521 Windows Phone 8 Smartphone [Video] [Tech: Latinos Post, Dec 7, 2013]
The Lumia 521 can also be purchased from the official T-Mobile website with $0 up front. On T-Mobile’s website, the full retail price of the Lumia 521 is $102, which is down from $126 previously listed. With the $0 up front offer, the T-Mobile customer will have to pay $4.25 for the next 24 months. If the consumer cancels the wireless service, the remaining balance on the Windows Phone 8 device will be due. With the purchase of the Lumia 521 from T-Mobile’s official website, the consumer will receive a $20 app credit.
From Nokia Lumia 520 Specs and Price in Amazon at $30 Off From Original $99.99 Price Tag for AT&T GoPhone Prepaid Plan [Video] [Tech: Latinos Post, Nov 26, 2013]
As seen on Amazon, the Lumia 520 Windows Phone 8 was originally offered for $99.99 as part of AT&T’s GoPhone prepaid plans. Amazon, however, reduced the price by $30, or the equivalent of 30 percent.
The new price for the Lumia 520 is $69.99 and with free shipping due to the item costing more than $35.
According to Amazon, the Lumia 520 is ranked as No. 35 in the Cell Phones and Accessories Best Sellers Rank. The Windows Phone 8 device is No. 2 among the No-Contract Cell Phones rank.
Meanwhile, AT&T’s official website is offering the Lumia 520 at the original cost with the GoPhone plan. AT&T has the Lumia 520 for $99.99, but the item comes with free shipping.
From AdDuplex Windows Phone Statistics Report for October 2013 [AdDuplex blog, Oct 14, 2013]
… The raw data analyzed was collected over the day of October 11th, 2013 (UTC time) unless otherwise stated. …
United States
US now has a new leader and if you combine it with its 520 sibling you can see that almost quarter of the Windows Phones in US is now represented by the lower end 52x line. There’s also a new leading operator for Windows Phone 8.
AT&T has reclaimed the crown from Verizon, and MetroPCS and T-Mobile continue to steal the market share from the 2 leaders.
Windows Phone 8 is now on almost 83% of devices in the US, so if you are targeting US market, I guess, you can start developing for WP8-only.
Canada
I don’t think we’ve covered Canada ever before, so it’s time to fix that. Lumia 520 and 920 almost share the top spot and it’s pretty clear that the smaller sibling will claim the crown next month. What is interesting to see is that Samsung ATIV S is at number 3 with a solid 14%. Not a picture we are used to seeing.
T-Mobile US Inc TMUS, Q3 2013 Earnings Call Transcript [Morningstar, Nov 5, 2013]
Our Un-carrier strategy continues to separate us from the competition, so let me give you a quick refresher of what we’ve done at a torrid pace so far this year. Un-carrier 1.0, Simple Choice, announced in March, got rid of the annual service contracts and introduced a radically simplified consumer rate plan. Un-carrier 2.0, JUMP!, launched in July, gave consumers the freedom to affordably upgrade their device when they want, not when they are told.
We already have more than 2.2 million net enrollments. It’s really working. Simple Choice for family launched at the same time as JUMP! Less families get rid of annual service contracts and offers affordable service plan with no credit check.
Simple Choice for business launched in August extended the benefits that consumers had been enjoying, no annual service contracts and simple rate plan. Businesses of all size can decouple services from the cost of devices to get rid of unpredictability.
Un-carrier 3.0 Simple Choice Global launched in October made the world our customer’s network as we now offer unlimited data in texting worldwide at no extra charge in over 100 countries.
Most recently, Un-carrier 3.0 part 2 where we unleashed tablets without up to 200 megabytes of three 4G LTE data every month. We think it’s insane that most tablet owners don’t even signup for mobile Internet data services, because they are worried about high fees and overages.
…
Smartphone sales showed continued growth coming in at 5.6 million devices or 88% of total phone units. This is a great trend that will continue as we now have all the leading devices in our lineup.
…
So, the strategy is managing to peel people away from AT&T, Sprint, Verizon, and the other carriers and you’ve seen churns start to elevate at some of the other carriers as the Un-carrier strategy at T-Mobile has taken hold.
…
In Bonn, we talked about the Un-carrier pain point strategy and how it would be successful, and we pointed out that the most vulnerable was AT&T, but not that we would solely take share from AT&T. But any customer that was feeling these pain points and that’s really been the process, but in the beginning obviously a lot of the ease of switching technology-wise were AT&T customers. We’re actually in a new phase now where there has been a lot of discussion recently in the industry about potential network speeds in 2015 or trials of speed in 25% of five Metro markets. What Neville and his team have announced now, are smoking fast industry-leading speeds everywhere now. That clearly along with our full device portfolio and our Un-carrier strategy does make us a threat across the entire market. So we will continue to attack the same foes. …
… We’re taking share from the low end and the high end. At the high end, it’s particularly AT&T and Sprint, and at the low end from a variety of prepaid players. I think we’ve described before that the Un-carrier strategy is about establishing a really effective midmarket space that’s in no trade-offs positioning. Meaning, traditionally people have had to down at the low end trade off what’s great about wireless to get great value or at the high ends go after one of the top two or three networks, but suffer restrictions and lack of value and lack of transparency and pricing, et cetera. What we do, as John just said, is provide a no-apologies, fantastic, market-leading network position booked back by the Un-carrier value proposition that’s simple and transparent, fair and flexible. So it’s a midmarket position, and therefore it’s taking share from above and from below, but more from above. So more of the share coming from AT&T and Sprint so far.
T-Mobile drops upfront price of Nokia Lumia 925 and 521 to zero [Neowin, July 26, 2013]
T-Mobile just started selling the Nokia 925 in the US less than 10 days ago for $49.99 upfront, but starting tomorrow that new Windows Phone 8 device, and indeed nearly all of the smartphones that T-Mobile sells, will have the low, low upfront price of zero.
T-Mobile Promotes Unprecedented Deal This Summer – Zero Dollars Down for All Devices [press release, July 26, 2013]
T-Mobile Promotes Unprecedented Deal This Summer – Zero Dollars Down for All Devices
America’s Un-carrier offers the ultimate promotion with the lowest upfront price on devices
BELLEVUE, Wash. – July 26, 2013 – In time for back-to-school, T-Mobile US, Inc. (NYSE: TMUS) will drive an unparalleled promotion this summer, dropping the upfront price on its entire lineup of devices in stores nationwide to zero dollars down. With this promotion, new and existing well-qualified consumers and small business customers will get affordable and hassle-free access to the latest 4G LTE smartphones, tablets, mobile hotspots and feature phones at the upfront price of $0 down with monthly device payments[1].
This limited-time promotion is available starting tomorrow, July 27, 2013. In addition to the promotion, customers also can take advantage of T-Mobile’s groundbreaking upgrade program, JUMP!(TM), which enables them to sign up to upgrade their phones when they want, up to twice a year as soon as six months from enrollment.
“The number of reasons not to switch to T-Mobile this summer is ZERO,” said John Legere, president and chief executive officer, T-Mobile US. “This is a fantastic offer and we’re making it easier than ever for customers to get the latest amazing devices. Adding Zero Down in addition to JUMP!, and Simple Choice with no contract is all about making wireless work for consumers and shaking up this industry.”
The hottest devices of the summer at the lowest upfront cost combined with T-Mobile’s Simple Choice Plan, unlimited data on a nationwide 4G network and no annual service contracts gives customers an opportunity that’s tough to beat. The promotion will be available nationwide at participating T-Mobile retail stores, via customer care, and online athttp://www.T-Mobile.com. A selection of the devices included in the promotion is as follows:
Device
Down Payment
Monthly Payments
24 equal monthly payments for 0% APR on approved credit1Samsung Galaxy S® 4
$0
$25
Samsung Galaxy Note® II
$0
$26
Samsung Galaxy S® III
$0
$22
Xperia® Z from Sony
$0
$25
iPhone 5[2]
$0
$27
Nokia Lumia 925
$0
$22
Nokia Lumia 521
$0
$6
BlackBerry® Q10
$0
$25
HTC One®
$0
$25
Samsung Galaxy Tab(TM) 2 10.1
$0
$20
JUMP!
JUMP!, only from T-Mobile, offers customers the freedom to upgrade to a new device more frequently and affordably, and it includes handset protection that helps to protect against malfunction, damage, loss or theft – all for just $10 per month, per phone (plus taxes and fees). Customers can upgrade to a new phone, financed through T-Mobile’s Equipment Installment Program (EIP), twice every 12 months after they’ve been in the JUMP! program for six months.[3] Simply trade in an eligible T-Mobile phone in good working condition at a participating store location. Any remaining EIP payments will be eliminated, and current customers can purchase new phones for the same upfront pricing as new customers, with device financing3 and a no-annual-service contract Simple Choice Plan.
Simple Choice Plan
T-Mobile’s Simple Choice and Simple Choice for Business Plan start with a base rate of $50 per month for unlimited talk, text and Web with 500MB of high-speed data. Customers can get 2.5GB of high-speed data for $10 more per month per line or unlimited data for an additional $20 per month per line. Customers can add a second phone line for $30 per month, and each additional line is just $10 per month. There are no caps and no overages on T-Mobile’s network, and no restrictive annual service contracts.
When small business customers activate a new line or renew an existing line of service with a Simple Choice for Business plan (min. 500 MB data required), they can access T-Mobile’s Business Extras bundle for added value. Business Extras customers with capable devices may opt into a free year of 24/7 remote IT support from a well-recognized, third-party service provider and a year of T-Mobile North American Flat-rate Data feature, allowing free monthly access to up to 150MB of overage-free, high-speed data across North America, including Canada and Mexico on our partner networks.[4] Other benefits include two free paper-to-mobile form conversions, waived activation fees, Business Care support, Wi-Fi Calling on enabled devices, and free Smartphone Mobile Hotspot on select rate plans.
T-Mobile’s 4G LTE Network
T-Mobile’s 4G LTE network now reaches more than 157 million people across the United States and is live in 116 metropolitan areas. T-Mobile remains on target to deliver nationwide 4G LTE coverage by the end of the year, reaching 200 million people in more than 200 metropolitan areas. In addition, T-Mobile’s 4G HSPA+ service is available to 228 million people nationwide. By combining 4G HSPA+ and LTE network technologies, T-Mobile can provide customers with a strong, seamless nationwide 4G network experience[5].
About T-Mobile US, Inc.:
As America’s Un-carrier, T-Mobile US, Inc. (NYSE: “TMUS”) is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The company’s advanced nationwide 4G and 4G LTE network delivers outstanding wireless experiences for customers who are unwilling to compromise on quality and value. Based in Bellevue, Wash., T-Mobile US operates its flagship brands, T-Mobile and MetroPCS. It currently serves approximately 43 million wireless subscribers and provides products and services through 70,000 points of distribution. For more information, please visit http://www.t-mobile.com.
Statement: Nokia Lumia 521 [T-Mobile, May 22, 2013]
Beginning May 22, the Nokia Lumia 521 – an exclusive to T-Mobile – will be available online at www.T-Mobile.com, at T-Mobile retail stores, select dealers and national retailers for $29.99 down with 24 equal monthly payments1 of $5 0% APR O.A.C. for well-qualified customers with the new Simple Choice Plan.
Powered by Windows Phone 8, the Lumia 521, which will run on T-Mobile’s fast nationwide 4G network, is a perfect, everyday smartphone that will embody a range of high-end features at an affordable price. The smartphone features a super sensitive 4″ touch screen, HD Voice, 5MP camera with auto focus and 720p HD video recording. It will also include exclusive Nokia applications such as Nokia Music, Cinemagraph, Creative Studio, Panorama, Smart Shoot and HERE Drive, Maps and Transit.
Lumia 521 smartphones sold through T-Mobile will also feature Wi-Fi Calling. Customers who have already purchased or ordered a Lumia 521 through HSN, Microsoft Retail Stores or Walmart will receive an over-the-air maintenance release beginning May 20, which will enable the Wi-Fi Calling feature.
The Nokia Lumia 521 will go on sale at Microsoft Retail Stores for $149 and at Walmart for $129.88 on May 11, as previously announced. For more information on T-Mobile’s Nokia Lumia 521, please visit the media kit.
1 If you cancel wireless service, remaining balance on phone becomes due.
T-Mobile’s Growth Is Bad News for Apple [The Motley Fool, Jan 8, 2014]
No wonder rival AT&T (NYSE: T ) has gotten so aggressive — T-Mobile‘s (NYSE: TMUS ) “un-carrier” initiatives have proven to be wildly successful. According to new data from Kantar Worldpanel, T-Mobile almost doubled its share of U.S. smartphone sales in the third quarter of 2013, while market-leaders AT&T and Verizon lost ground.
T-Mobile’s growth flies in the face of industry observers, who have long argued that consumers favor smartphone subsidies. If current trends persist, subsidies could soon become a thing of the past — and that’s not good for Apple(NASDAQ: AAPL ) shareholders.
T-Mobile ends contracts
T-Mobile spent 2013 rolling out a number of initiatives that cumulatively comprise its un-carrier strategy, the most significant of which has been the end of two-year contracts. Starting in 2013, T-Mobile did away with them — new subscribers pay for their service strictly on a month-to-month basis. Because T-Mobile’s subscribers now have the freedom to easily ditch their service, T-Mobile no longer pays for its subscribers’ handsets. T-Mobile customers can buy their phones in full, or pay them off in monthly installments, but either way, they’re paying the full retail price.
This stands in stark contrast to the business model long championed by T-Mobile’s rivals, including AT&T. Under the standard, two-year contract model, carriers foot the bill for much of their subscribers’ handsets, but lock them up with a contract.
AT&T warns smartphone subsidies are coming to an end
AT&T, however, could soon join T-Mobile in ditching subsidies. Last month, AT&T’s CEO warned that the current smartphone subsidy model cannot continue to persist.AT&T still offers subsidies and contracts for now, but in December the carrier rolled out a new initiative structured much like T-Mobile’s. AT&T’s new “Mobile Share Value” plan lets subscribers pay for their service on a month-to-month basis but doesn’t cover the cost of their phone. Last week AT&T went further, offering to give T-Mobile subscribers up to $450 in credit if they switched to one of AT&T’s new plans.
Based on Kantar’s recent numbers, AT&T has reason to shake up its business: last quarter, AT&T sold just 28.3% of new US smartphones, down from nearly 35% in the same quarter last year.
Apple’s iPhone business remains subsidy-dependent
A war between the two companies is good for consumers, but potentially bad for Apple. The King of Cupertino still derives the vast majority of its profit from the iPhone, and sales could take a hit if smartphone subsidies go away.Although Apple has just slightly more than 13% of the global smartphone market, it sells more than 43% of the smartphones in the U.S. The reason for the discrepancy comes down to subsidies — U.S. carriers’ willingness to heavily subsidize Apple’s iPhones has made them affordable to U.S. consumers. In most other countries around the world, smartphone subsidies are uncommon.
The pricing pressures that drive global consumers to pick alternative handsets could apply in the U.S. if smartphone subsidies go away. Without subsidies, the $350 Nexus 5 looks much more attractive when compared to Apple’s $649 iPhone 5s. And even if consumers continue to buy Apple-made handsets, they could choose to hold on to their old models for longer, resulting in much longer upgrade cycles.
Watch for other carriers to copy T-Mobile
T-Mobile’s incredible success has shown rival carriers that it’s possible to attract customers even without offering smartphone subsidies. With AT&T’s sales on the decline (according to Kantar), the carrier seems to be following T-Mobile’s lead in abandoning subsidies.If this trend spreads to other major U.S. carriers, Apple shareholders should be concerned.
2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to succeed with its devices and services strategy
For the company’s most recent “ONE Microsoft” strategy see:
– Microsoft reorg for delivering/supporting high-value experiences/activities [‘Experiencing the Cloud’, July 11, 2013]
– How the device play will unfold in the new Microsoft organization? [‘Experiencing the Cloud’, July 14, 2013]
Update: There are extremely worrying signs on the horizon as per Jan 27, 2014:
– MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2
– End of the Nokia “magic” hurting European and Asian consumers while mobile carriers are uncertain about the future under the Microsoft brand
End of Update
As 2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again [‘Experiencing the Cloud’, Jan 17, 2014] it is time to summarize the ARM-based opportunities for 2014 (note that Intel’s goal in the tablet space is only 40 million units, both Android and Windows):
Compare everything to 2014 global notebook demand forecast [DIGITIMES Research, Dec 5, 2013] which estimates that global notebook shipments in 2014 will reach around 160 million units, down from a peak of over 200 million in 2011, but the drop in 2014 will be lower than the on-year drop in 2013, with new market developments, new product opportunities, and changes in the major players’ strategies all playing critical roles in the IT industry’s future trends.
Digitimes Research: Global smartphone shipments to top 1.24 billion units in 2014 [Jan 14, 2014]Global smartphone shipments are expected to top 1.24 billion units in 2014, with Samsung Electronics, Apple, LG Electronics, Sony Mobile Communications, Lenovo, Huawei [according to the company: 52 million units in 2013 vs 60 million target] , Microsoft, ZTE, Coolpad and TCL serving as top-10 vendors, according to Digitimes Research.Apple may see its shipments double in 2014 largely due to increased shipments to China and Japan as it will benefit from its cooperation with the largest telecom operators in the two countries, said Digitimes Research.The growth rate for Samsung will be limited in 2014 as its sales in the US, China and Japan will be depressed by growing popularity of iPhones.China-based Lenovo, Huawei and Coolpad are expected to step up their efforts to boost sales in overseas markets after being enlisted among the top-10 vendors due to higher shipment volumes in the home market in China.However, TCL and ZTE will continue to ship smartphones to overseas markets mainly, but will also strengthen sales in China, with domestic sales to account for less than 50% of their total shipments in 2014, commented Digitimes Research.This article is an excerpt from a Digitimes Research Special Report (2014 global smartphone market forecast).Digitimes Research: China smartphone-use application processor shipments edge up 2.4% in 4Q13 [Jan 15, 2014]Shipments of application processors for smartphone applications to China grew 2.4% sequentially and 20.8% on year in the fourth quarter of 2013, according to data compiled by Digitimes Research.MediaTek saw its AP shipments decline 3.9% sequentially in the fourth quarter due to inventory checks at clients and a high growth recorded in the previous quarter.However, it was a 20% sequential shipment decline suffered by Qualcomm the fourth quarter that weakened the growth momentum of the application processor sector, said Digitimes Research.Meanwhile, MediaTek has been shifting its focus to the high-margin segment, instead of seeking high shipment growth. China-based Spreadtrum Communications was hit with high inventory of TD-SCDMA chips and slow sales of its dual- and quad-core solutions, Digitimes Research indicated.Qualcomm also saw its performance weaken in the fourth quarter as its QRD (Qualcomm reference design) chips were less competitive than those offered by rivals in terms of product features.This article is an excerpt from a Chinese-language Digitimes Research report. Click here if you are interested in receiving more information about the content and price of a translated version of the full report. |
Digitimes Research estimates that in 2014 global tablet shipments will reach 289 million units [Dec 31, 2013]China white-box makers add extra value to tablets as cost reduction is no longer possible [DIGITIMES Research, Jan 16, 2014]China white-box players have not been able to lower their Wi-Fi-based tablets’ prices since the third quarter of 2013 because there is no room for further reductions in their BOM costs.The average BOM cost for a white-box tablet – most of which adopted a dual-core processors – stood at about US$25 as of the fourth quarter of 2013. Dual-core processor pricing could not drop any further, as their average prices came to about US$4, only less than US$1 higher than that of a single-core one.Memory and 7-inch TN LCD panels are the two key components that account for major shares of white-box tablet BOM costs. However, most panel suppliers have been only willing to upgrade specifications instead of dropping their quotes, and therefore, white-box players have been left with upgrading their devices with better panels without an option of reducing the panel cost.While cost reduction is no longer a feasible way to attract consumers, many white-box players have turned to push tablets with phone functions to increase their devices’ functionalities and value. The devices also provide higher gross margins for vendors.Digitimes Research estimates that currently, 80% of white-box tablets are available in countries other than China, because white-box tablets with phone functions have seen rising demand in Russia and other markets in Eastern Europe and Southeast Asia since the second half of 2013.China white-box players’ partnerships with regional brand vendors in emerging markets have also helped raise local consumers’ demand for tablets with phone functions.In the first half of 2013, most white-box tablets with phone functions adopted China-based Allwinner Technology’s solution which combined an entry-level single-core processor with a discrete baseband module. However, many white-box device makers have turned to MediaTek solutions for their tablets since the second half of 2013 after the Taiwan-based chipmaker also integrated a baseband chip into its tablet processor solution.MediaTek’s solution is more expensive, but its support for product development and hardware design has given it an upper hand over competitions. Meanwhile, independent design houses (IDHs), which provide white-box players with product design services, also started to design tablets using MediaTek’s smartphone processors in the second half of 2013, which prompted white-box players to adopt MediaTek’s solutions.Digitimes Research estimates that tablets with phone functions will account for 40% of 7-inch white-box tablet shipments in 2014, up from 20% in 2013. |
In 2014, smartphones are expected to continue penetrating rapidly into emerging markets such as Russia, India, Indonesia and Latin America, while China’s smartphone shipments will see weakened on-year growth in the year, but still enormous volume. Within the top-10 smartphone vendors in 2013, four of them are from China and in 2014 more China-based vendors are expected to enter the top 10.Three China-based handset vendors increase component deliveries [DIGITIMES, Dec 11, 2014]China-based handset vendors Xiaomi Technology, Gionee and Hisense have been taking increasing deliveries of panels and touch panels from suppliers in preparation for launching new models during the peak period before the 2014 Lunar New Year at the end of January, according to Taiwan-based supply chain makers.Other China-based vendors including Lenovo, Huawei Device and Oppo have begun to follow suit, the sources indicated.Xiaomi has seen success in marketing its high-end Xiaomi 3, mid-range Xiaomi 2S and entry-level Hong-mi (Red Rice), the sources noted.Gionee focuses on marketing high-end smartphones priced above CNY2,000 (US$328) through general retail chains without cooperation with China’s three mobile telecom carriers, the sources indicated. Gionee has shipped more than two million smartphones a quarter so far in 2013.Hisense is among several licensed vendors of 4G smartphones and has launched the 5-inch X6T, its first 4G smartphone featuring TD-LTE, LTE-FDD, TD-SCDMA, WCDMA and GSM, on 12 frequency bands, the sources noted. Hisense has taken delivery of components for use in more than one million handsets to be launched before the 2014 Lunar New Year, the sources noted.China market: Xiaomi lowers price for Hongmi smartphone [DIGITIMES, Jan 7, 2014]China-based vendor Xiaomi Technology has reduced the retail price for its budget TD-SCDMA smartphone, the Hongmi, launched in August 2013, from CNY799 (US$132) to CNY699, heralding upcoming competition in the Android smartphone segment in China, according to industry watchers.Rival vendor Huawei is likely to counteract by slashing the prices of its Honor-branded budget smartphones, while other local brands in China are also expected to follow suit soon, said the observers.Optimizing its policy of offering smartphones with high hardware specifications and yet at low prices, Xiaomi has managed to ramp up its shipments to over three million units a month and is expected to ship over 40 million smartphones in 2014, the sources estimated. [According to Xiaomi: “7.2 million devices … in 2012 and 18.7 million …bought in 2013. … for 2014 – the CEO expects forty million Xiamoi smartphones to be bought”]Asustek expected to ship 2014 target of 5 million smartphones [DIGITIMES, Jan 7, 2014]Asustek Computer unveiled three ZenFone-series smartphones for the opening of CES 2013. Viewing that ZenFone models have comparatively high price-performance ratios, Asustek will be able to hit its target shipments of five million smartphones for 2014, and is likely to ship 8-10 million units, according to market analysts.The three ZenFone models will initially launch in the Taiwan, China and Southeast Asia markets in March at contract-free retail prices of US$99 for the 4-inch model, US$149 for the 5-inch, and US$199 for the 6-inch.All three models are equipped with Intel Atom processors and Asustek will launch 3-4 models also with Atom processors in the second half of 2014, the sources indicated.Since Intel has offered incentives to attract PC vendors to adopt its platforms for smartphones, Asustek is expected to procure Atom processors at discount prices and receive subsidies from Intel for marketing the devices, the sources said.Asustek likely to release smartphone orders to China ODMs in 2H14, says paper [DIGITIMES, Jan 15, 2014]Asustek Computer does not rule out the possibility of tying up with handset ODMs in China for the production of smartphones in the second half of 2014, the Chinese-language Economic Daily News (EDN) has quoted company CEO Jerry Shen as saying.After unveiling five new models at the recently concluded CES 2014, Asustek plans to launch another five smartphones in the second half of the year, and therefore it needs more ODMs to support production, Shen was quoted as indicating.The three ZenFone-series smartphones out of the five models unveiled by Asustek at CES 2014, with displays sized in 4-, 5-, and 6-inch, will be available for US$99, US$149 and US$199 unlocked, respectively, and are designed to take on China-based rivals in the entry-level smartphone segment.The possible switch of orders to China-based ODMs may affect its current production partners in Taiwan, including Wistron and Pegatron, said the paper.Digitimes Research: Asustek ZenFone smartphones have lower price-performance ratios than comparable models from China [Jan 17, 2014]Asustek Computer unveiled three ZenFone-series smartphones at CES 2014 and will initially launch the models in the Taiwan, China and Southeast Asia markets in March with prices comparable to low-cost models offered by China-based Xiaomi Technology and Huawei. But the price-performance ratios of the ZenFones will be still lower than rival models from China-based vendors due to the use of different marketing channels, according to Digitimes Research.China-based vendors such as Huawei and Coolpad have been duplicating the business model initiated by Xiaomi by introducing entry-level models with higher hardware specifications and marketing the gadgets mainly through the Internet.Leveraging subsidies offered by telecom operators, Asustek has been able to lower prices for its ZenFone models to levels comparable to those offered by Xiaomi, Huawei and Coolpad, but the price-performance ratios are lower than of the Hongmi smartphone from Xiaomi, the Honor 3C from Huawei and the Great God F1 from Coolpad, due to markup costs added by channel operators in China selling the ZenFones.Due to the lower price-performance ratios, Asustek’s goal of shipping over five million smartphones in 2014 through a low-pricing model remains hard to achieve, commented Digitimes Research.This article is an excerpt from a Chinese-language Digitimes Research report. Click here if you are interested in receiving more information about the content and price of a translated version of the full report. |
Total: ~289+ million
|
More information (going back to end of July 2013) which is directly related to the possible changes on the 2014 markets in terms of 2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again [‘Experiencing the Cloud’, Jan 17, 2014]:
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Nokia should introduce an Android forked smartphone for the $75-120 range in order to enhance its Asha Software Platform strategy [‘Experiencing the Cloud’, Jan 17, 2014]
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China market: Acer launches CNY599 7-inch tablet [DIGITIMES, Jan 17, 2014]
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Microsoft to open Allwinner entry into Windows RT, for the production of 900 yuan (US$149) level Windows RT tablet [‘USD 99 Allwinner’, Jan 16, 2014]
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The first wave of computational photography capabilities from Qualcomm for its new Snapdragon 805 SoCs [‘USD 99 Allwinner’, Jan 4, 2014]
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The Cortex-A53 as the Cortex-A7 replacement core is succeeding as a sweet-spot IP for various 64-bit high-volume market SoCs to be delivered from H2 CY14 on [‘Experiencing the Cloud’, Dec 23, 2013]
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MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones [‘Experiencing the Cloud’, Dec 22, 2013]
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The future is here: Yes, it is Microsoft Surface 2 with modern apps only! (And ARM, not x86/x64!) [‘Experiencing the Cloud’, Nov 17, 2013]
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Q3’13 smartphone and overall mobile phone markets: Android smartphones surpassed 80% of the market, with Samsung increasing its share to 32.1% against Apple’s 12.1% only; while Nokia achieved a strong niche market position both in “proper” (Lumia) and “de facto” (Asha Touch) smartphones [‘Experiencing the Cloud’, Nov 14, 2013]
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The tablet market in Q1-Q3’13: It was mainly shaped by white-box vendors while Samsung was quite successfully attacking both Apple and the white-box vendors with triple digit growth both worldwide and in Mainland China [‘Experiencing the Cloud’, Nov 14, 2013]
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The first multimode Android tablets and laptops from Lenovo [‘Experiencing the Cloud’, Nov 14, 2013]
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Leading PC vendors of the past: Go enterprise or die! [‘Experiencing the Cloud’, Nov 7, 2013]
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Intel is ready to push big in smartphones next year with its winning multimode voice and data, multiband LTE modem technology capable of global LTE roaming via a single SKU [‘Experiencing the Cloud’, Nov 5, 2013]
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Leading edge Nokia phablets for both entertainment and productivity: Lumia 1320 targeting the masses at $339, and Lumia 1520 the imaging conscious business users and individuals at $749 [‘Experiencing the Cloud’, Oct 26, 2013]
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Why Intel is pressed to go as far down as to $99 with its Android tablet prices (but not with Windows 8.1)? [‘Experiencing the Cloud’, Oct 16, 2013]
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Dell’s all Intel tablets and laptops targeting the evolving mobile workforce even with their most consumer specific Android tablets [‘Experiencing the Cloud’, Oct 3, 2013]
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Amazon’s move into overall leadership: Kindle Fire HDX with Snapdragon 800, “revolutionary on-device tech support” (Mayday), enterprise and productivity capable Fire OS 3.0 forked from Android 4.2.2 etc. PLUS a significantly enhanced, new Kindle Fire HD for a much lower, $139 price [‘Experiencing the Cloud’, Sept 27, 2013]
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Multi-tasking and multi-window view used together for high performance productivity scenarios in the state-of-the-art UX environment of Microsoft Windows 8.1 – the ultimate solution not available with Apple and Android devices [‘Experiencing the Cloud’, Sept 26, 2013]
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2nd generation Microsoft Surface family of productivity tablets priced upto $2420 (when for an All-in-One configuration) [‘Experiencing the Cloud’, Sept 24, 2013]
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The long awaited Windows 8.1 breakthrough opportunity with the new Intel “Bay Trail-T”, “Bay Trail-M” and “Bay Trail-D” SoCs? [‘Experiencing the Cloud’, Sept 14, 2013]
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The new Air Command S Pen User Experience making the Samsung Galaxy Note 3 phablet, and Galaxy Note 10.1, 2014 Edition tablet next-generation devices [‘Experiencing the Cloud’, Sept 12, 2013]
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Companion Device Computing as envisaged and implemented by Pranav Mistry and his TTT team from Samsung: the case of Galaxy Gear + Galaxy Note 3 [‘Experiencing the Cloud’, Sept 12, 2013]
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Samsung Exynos 5 Octa with Heterogeneous Multi-Processing and GPU Compute is the hidden gem in the Galaxy Note 3 and GALAXY Note 10.1, 2014 Edition, launched at ‘Samsung UNPACKED 2013 Episode 2’ event [‘Experiencing the Cloud’, Sept 12, 2013]
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Xiaomi announcements: from Mi3 to Xiaomi TV [‘Experiencing the Cloud’, Sept 3, 2013]
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Assesment of the Xiaomi phenomenon before the global storm is starting on Sept 5 [‘Experiencing the Cloud’, Aug 30, 2013]
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Windows [inc. Phone] 8.x chances of becoming the alternative platform to iOS and Android: VERY SLIM as it is even more difficult for Microsoft now than any time before [‘Experiencing the Cloud’, Aug 20, 2013]
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Android to overtake the overall PC market? [‘Experiencing the Cloud’, Aug 20, 2013]
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With Android and forked Android smartphones as the industry standard Nokia relegated to a niche market status while Apple should radically alter its previous premium strategy for long term [‘Experiencing the Cloud’, Aug 17, 2013]
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Google Play catchup with iOS App Store and its way of assuring compatibility across Android 1.6 to 4.3 [‘Experiencing the Cloud’, Aug 15, 2013]
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Superphones turning point: segment satured with Tier 1 globals while the Chinese locals are at less than 40% of the Samsung price [‘Experiencing the Cloud’, Aug 3, 2013]
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Xiaomi, OPPO and Meizu–top Chinese brands of smartphone innovation [‘Experiencing the Cloud’, Aug 1, 2013]
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GiONEE (金立), the emerging global competitor on the smartphone market [‘Experiencing the Cloud’, July 22, 2013, Jan 17, 2014]
MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2
[‘Experiencing the Cloud’, July 22-29, 2013; Jan 27, 2014]
Nokia should introduce an Android forked smartphone for the $75-120 range in order to enhance its Asha Software Platform strategy
In order to increase its presence in the sub $120 market (see Lumia 520 for Rs. 8850, i.e. US$ 144 in India, and US$121.5 in China) it is obvious that Nokia should take the next step in its Asha Software Platform Strategy with its recent stance being the following one:
More information: Q3’13 smartphone and overall mobile phone markets: Android smartphones surpassed 80% of the market, with Samsung increasing its share to 32.1% against Apple’s 12.1% only; while Nokia achieved a strong niche market position both in “proper” (Lumia) and “de facto” (Asha Touch) smartphones [‘Experiencing the Cloud’, Nov 14, 2013]
That is a definite gap exists in Nokia offerings between US$75 and US$120. Also this gap could only be filled with an Android forked offering only. Therefore we should (first time during the whole existence of this trend-tracking blog) take seriously the ongoing rumors about such an offering, the so called Nokia Normandy project., despite all uncertainties of not only the Microsoft takeover of the Nokia device business, but also the uncertainties about the next CEO of Microsoft and the company strategy in smartphones which will come as the result of that selection.
I should include here the latest summary about that from Wikipedia as it “is being considered for deletion in accordance with Wikipedia’s deletion policy”:
Nokia Normandy [Wikipedia excerpt, Jan 17, 2014]
The Normandy, previously known as ‘Project N’, the ‘Asha on Linux project’ and “MView”, is a low-end Android device under development by Nokia.
Described as a potential “game changer”,[1] the project has garnered substantial interest from the media, including coverage from New York Times,[2] Engadget,[3]Stuff,[4] Forbes,[5] Gizmodo,[6] The Verge,[7] CNET[8] and The Times of India.[9]
Manufacturer: Nokia
- Series: unknown; possibly Asha
- Type: Smartphone
- Form factor: Slate
- Operating system: Modified Android KitKat 4.4.1
- System on chip: Believed to be a Qualcomm Snapdragon 200 8225Q
- CPU: Either 1.0 GHz dual-core or unspecified quad-core Qualcomm
- Display: 4″, 854 x 480
- Rear camera: 5MP
Background
Despite choosing the Windows Phone operating system for its smartphones (The Lumia series), Nokia had experimented with the Android platform in the past. Images of a Nokia N9 running Android 2.3 were leaked in 2011. They were believed to be likely genuine, as Steven Elop had mentioned Nokia had considered Android in the past.[10]
On 13 September 2013, the New York Times writer Nick Wingfield revealed that Nokia had been testing the Android operating system on its Lumia hardware, and a second project, known as ‘Asha on Linux’ used a forked version of Android without Google services.[2]
The Chinese technology site CTechnology revealed that, despite the announced merger of Nokia’s handset division with Microsoft, development of the project was continuing until November and 10,000 prototype units had been manufactured by Foxconn containing a Qualcomm Snapdragon 200 8225Q chip.[11]
However, a new report by Tom Warren from The Verge on 11 December 2013 showed the Asha-like device, codenamed ‘Normandy’ for the first time, stating that despite the finalisation of the acquisition, development of the device is continuing.[7] AllThingsD suggested that Microsoft may not actually axe development on the device.[12]
A further report by CTechnology on the 14th December claims that the device development had been halted, along with an Android-based 7-inch Snapdragon 400 tablet. The two projects were, it was claimed, to have been created by Nokia’s CTO division which is not being acquired by Microsoft, with Peter Skillman, the head of UX Design, at the helm of the UI design. The report claims wearable devices are the new focus of the CTO division.[13][14][15]
A further leak by @evleaks showed a press image with several colour options for the phone.[16]
According to NokiaPowerUser, the device is dual-sim with a 4-inch display, stating that the model number is RM-980, and has a 640×360 resolution.[17] In a second report, they suggest the device may be a member of the Asha range as team was headed by Egil Kvaleberg (from Smarterphone) and UI lead by Peter Skillman (who worked on the Asha Platform‘s Swipe UI).[18]
A tweet by @evleaks on 31 December 2013 stated that “The reports of Normandy’s death have been greatly exaggerated“.[19]
A leak on the ITHome technology website showed a blurred image of the phone, and the app drawer of its’ UI in operation, confirming it is a dual sim device. However, no Nokia logos were found on the device.[20]
@evleaks later posted screenshots of the UI, showing the lock screen and Skype in action.[21]
The device later showed up on the AnTuTu benchmark software as Nokia A110, with KitKat 4.4.1, a 5MP camera and an 854 x 480 display.[22]
Two new photos of the Engineering prototype were once again leaked, and the device is widely expected to be released at MWC 2014.[23] One shows a different app launcher to one in a previous leak, suggesting it is a placeholder.[24]
On 13 January 2014, a press photo showing the tile-like UI of the home screen was leaked,[25] and was accompanied by a screenshot of the Asha platform‘s Fastlane-style notification centre the next day.[26]
According to Eldar Murtazin, Microsoft is not keen on the idea, mentioning there are “too many politics” around the project. He claims, if it is released at all, it will have to be in February, before Nokia’s devices acquisition is finalised.[27]
Another source, speaking to TechnoBuffalo, in contrast, suggested Microsoft may use the device as a trojan horse to increase Windows Phone adoption.[27]
References
- Nokia Normandy surfaces online: A game changer in Android domain?
- http://bits.blogs.nytimes.com/2013/09/13/behind-microsoft-deal-the-specter-of-a-nokia-android-phone/?_r=0
- Rumored Nokia Normandy prototype surfaces on Twitter, reveals little
- Nokia Normandy – an Android phone with Lumia DNA | Stuff
- Microsoft Should Embrace Nokia’s Android Project – Forbes
- Nokia’s Alleged Normandy Android Phone Leaks | Gizmodo UK
- Staff, Verge (2013-12-10). “This is Nokia’s Android phone”. The Verge. Retrieved 2014-01-08.
- Nokia’s version of Android looks sleek in leaked pics | CNET UK
- Nokia Android phone Normandy’s photo leaked – The Times of India
- Savov, Vlad. (24 June 2011) Nokia’s Android flirtations revealed. Engadget.com. Retrieved on 2013-07-14.
- Nokia still working on Android phone, won’t cancel until November. Foxconn already made 10K prototypes. Unwired View (2013-09-19). Retrieved on 2013-11-27.
- “Why Microsoft Might Not Kill Nokia’s Android Phone – Ina Fried – Mobile”. AllThingsD. 2013-12-11. Retrieved 2014-01-08.
- “Nokia abandons Peter Skillman led Android adaptation plans, refocuses on wearables, smart glasses for 2015”. Unwired View. 2013-12-16. Retrieved 2014-01-08.
- Swanner, Nate (2013-12-16). “Nokia Android phone, along with other projects, might be shelved”. Android Community. Retrieved 2014-01-08.
- ^ CTECH (2013-12-14). “诺基亚已放弃 Android 手机/平板计划，未来将力推穿戴式设备 | C科技”. Ctechcn.com. Retrieved 2014-01-08.
- “New Nokia Normandy leak shows the Android device in several colors”. PhoneDog. 2013-12-23. Retrieved 2014-01-08.
- “Dual-Sim RM-980 may be Nokia Normandy with 4-inch display | NPU”. Nokiapoweruser.com. 2013-12-11. Retrieved 2014-01-08.
- “More details about Nokia’s “Project N”. Why Android, the Team & missed oppurtunity. | NPU”. Nokiapoweruser.com. 2013-12-24. Retrieved 2014-01-08.
- “Twitter / evleaks: The reports of Normandy’s death”. Twitter.com. Retrieved 2014-01-08.
- “Nokia Normandy Android smartphone reportedly shown in new leak”. BGR. 2014-01-02. Retrieved 2014-01-08.
- “Latest Nokia Normandy leak includes screenshots of custom Android software”. PhoneDog. Retrieved 2014-01-08.
- “Nokia Normandy shows up on AnTuTu. 5 MP Cam, 854 x 480 display, running Android KitKat 4.4.1. | NPU”. Nokiapoweruser.com. Retrieved 2014-01-08.
- “Engineering prototype of Nokia Normandy leaks in a live photo – GSMArena.com news”. Gsmarena.com. Retrieved 2014-01-12.
- Image of Nokia’s Android phone prototype Normandy leaked [Update with Android skin UI] – Neowin
- Nokia ‘Normandy’ budget Android phone purportedly leaked in multiple images – NDTV Gadgets
- Richard Goodwin (2014-01-13). “What is Nokia’s Normandy Project? It’s Android, Jim. But not as we know it…”. Know Your Mobile. Retrieved 2014-01-17.
- “Nokia Normandy Android Phone Ready, If Politics Don’t Get in the Way, Sources Say”. TechnoBuffalo. Retrieved 2014-01-17.
2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again
With 2013 performance of only 10 million tablet chip sets (for Windows mostly) Intel is still confident in its ability to deliver 40 million of those (with increased Android portion) in 2014. To achieve this they will be doing a lot of enabling across the industry to take the Bay Trail-based tablet BOM cost down to an equivalent level. They expect that the company’s overall margin will be hit just by 1.5% because of this required in 2014 effort. They are saying that Intel will be safe from 2015 on as moving to 14nm process technology with next-generation (even in terms of micro-architecture) Broxton and SOFIA SoCs for tablet and smartphone devices. They are basing this statement on their inherent “transistor density” advantage against TSMC from that point in time on, despite some analysts’ opinion of the economy of scale advantage of TSMC in terms of the number of wafers produced.
Meanwhile the possible direction of leading OEMs got a hint with New Acer CEO introduced to the media [Formosa EnglishNews, Jan 14, 2014]
With media generally reporting that Acer’s biggest mistake was its too early and too heavy bet on ultrabooks it is clear that OEMs will take a very cautious approach with Intel’s efforts to decrease the Bay-Trail based tablet costs down on the BOM level, as it is exactly what happened with ultrabooks. Instead the will try to solidify their tablet market position with ARM-based tablets in all segments of the tablet market, from the lowest cost upto the premium. Moreover, Jason Chen’s appointment to the CEO position of Acer is also showing that even for ongoing efforts OEMs need a very detailed and deep understanding of the SoC manufacturing and even the process technologies. Take note of Jason Chen’s history of employment in order to understand that:
- TSMC: 2005-2013
- Intel: 1991-2005
- IBM: 1991-1998
In other regards we only know that Acer to start new operation strategy in April to focus on BYOC (Build Your Own Cloud) [DIGITIMES, Jan 13, 2014] and that “In the future, all of Acer’s businesses including desktop, notebook and tablet will involve the BYOC platform and it is hoping to strengthen its product lines through the services.” It will be interesting to watch what that means as my previous conclusion was Leading PC vendors of the past: Go enterprise or die! [‘Experiencing the Cloud’, Nov 7, 2013].
Now back to the Intel related information in terms of details in their earnings call. Note before that the correlation of Intel and Microsoft stock prices (as well that the stock market was absolutely not happy with Intel results and especially with the “flat 2014” outlook):
The company’s stance for 2014 is indeed not rosy as Intel to reduce global workforce by five percent in 2014 [Reuters, Jan 17, 2014].
From: Intel’s CEO Discusses Q4 2013 Results – Earnings Call Transcript [Seeking Alpha, Jan 16, 2014]
Inserted slides are from Investor Meeting – Stacy Smith (CFO) [Nov 21, 2013] while the acompanying text is from Intel Shares Mobile Progress, Priorities and Product Pipeline at Annual Investor Day [Technology@Intel, Nov 25, 2013] if reference is not put underneath
[On transistor density and wafer cost]
Mark Lipacis – Jefferies
Thanks for taking my question. At the Analyst Day, you addressed your view on transistor density and your expectation for leadership on that vector, but I have to say this discussing that idea with investors is a consensus view that seems to be that Intel has an inherent wafer cost disadvantage that relative to TSMC that neutralizes or more than neutralizes your transistor density advantage and the argument is that TSMC ships more wafers and therefore has more better purchasing power than you and its lower labor cost, so net-net, they have just a big huge advantage of wafer cost that you should have a hard to, too hard of a time to overcome. So my question is do you think that’s a fair view. Can you help us talk to the relative elements of the wafer cost and how you think you can compare? Any kind of help that you give us on the cost dimension would be extremely helpful. Thank you.
From: CES: Process Will Still Win in Mobile, Says Intel’s Eul [Barrons.com, Jan 9, 2014]
Eul points out that Qualcomm, and other competitors such as Nvidia (NVDA) and Broadcom (BRCM), all of whom are dependent on Taiwan Semiconductor Manufacturing Company to actually make the chips they design, will run into a problem as Taiwan Semi’s technology stops scaling.
Intel had made the point at the analyst day presentation, and Eul repeated it: As TSMC moves from 28 nanometer to 20 nanometer, it will run into a problem at the subsequent step, 16 nanometer, where TSMC will not add any real reduction in transistor size. That, says Eul, means that 16-nanometer parts a few years from now will be stuck at a 20-nanometer feature size while intel presumably zooms ahead to 10 nanometer by that time.
And what that means is that, unable to scale the density of a chip as Intel can, Qualcomm and Nvidia and Broadcom and the others will not be able to integrate as many parts as Intel on a single semiconductor die.
And so to those who point out that Intel hasn’t yet released its integrated baseband chip, Sofia, mentioned above, Eul contends the company will have the last laugh in a few years’ time as Qualcomm and the rest hitting a scaling wall.
Brian Krzanich – Chief Executive Officer
You know I think the first thing to remember is that what really counts in all of this is transistor cost and what we really talk about in our Moore’s Law of Curves and when we talk about transistor density is driving a consistent cost reduction of the transistors and so wafer cost is one segment of that. I’m not going to comment on you know TSMC’s wafer cost versus our wafer cost but we feel confident that our relative level of scaling and our internal wafer cost are such that we believe we have a leadership position in transistor cost.
When you’re talking about any product whatever it is, a logic product that’s a low-end microprocessor for wearable or internet of things or high-end Xeon server. You’re talking about the number of case and hence the number of transistors required to put that logic device together, it doesn’t matter whose technology it’s on to some extent. It doesn’t matter what node and so the more cost effective those transistors are whether it’s 500 million or 3 billion the lower the product cost there is and that’s really what we focus on and why we focus on transistor cost. So I think we stand by our what we said at the investor meeting.
[On tablets]
Brian Krzanich: Our disclosure in November of a new smartphone and tablet road map that will include SoFIA our first IA SSD with integrated comps later this year is further evident that we’re innovating and bringing products to market at faster pace. Looking ahead 2014 will be an exciting year as we build further on this new foundation. We have established a goal to grow our tablet volumes to more than 40 million units. Within an emphasis on the value segment. As we’re finishing 2013 with more than 10 million units and a strong book of design wins we’re off to a good start.
Stacy Smith: In the tablet market, we launched the Bay Trail SoC and have started to expand our footprint and market signature in this growing market.
The 4X Tablet Campaign: This year, Intel increased its focus on tablets with key design wins and the introduction of Bay Trail. Next year, Intel plans to increase tablet volumes by 4X! Eul signaled a rich pipeline of tablet and phablet design wins for Bay Trail including Android and Windows devices spanning price points from premium to sub $99 products from leading OEMs and the China tech ecosystem. He also said industry leading performance, competitive battery life, cost-reduced SOCs and unique features like 64 bit will help drive growth. Intel gave a first-time demo of the performance gains achieved with a 64 bit Bay Trail system running Windows and showed a 64 bit kernel running on an Android tablet.
Note the details about the 2014 tablet market of ~289+ million units in the 2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to suceed with its devices and services strategy [‘Experiencing the Cloud’, Jan 17, 2014] post of mine. The 40 million target of Intel is therefore less than 14% of that.
[regarding: So on the tablet strategy to get the 40 million you’re saying it’s going to be a 1.5 percentage hit.
CFO Commentary on Fourth-Quarter and Full Year 2013 Results
2014 Outlook
Gross Margin Reconciliation: 2013 to 2014 Outlook (59.8% to 60% +/- a few points)
– 1.5 points: Tablet impact
Let’s say you guys get into the second half of the year and you’re not quite to the 40 million if it’s a pretty significant short fall. Would you consider canning that strategy I guess I’m just wondering what the commitment is if the volumes aren’t there but the cost is there by the end of the year?]
Brian Krzanich: This isn’t a price reduction as normal price reduction would be; it’s not where you are just simply reducing. It’s truly a BOM cost equalizer and remember a lot of our 40 million tablets in ’14 will be based on Bay Trail. Bay Trail was originally designed for Avoton-based PC segments and the upper end tablet [and all Windows]. And so it’s what we are doing here is doing a BOM cast delta relative to the, what the mid and lower end tablets require. And so those are things like Bay Trail may require more layers of a printed circuit board for the board itself, more components on the board and tighter power management controls and things like that. We have a whole program to reduce those throughout the year. So that gives us confidence that as we go through the year, the BOM cast delta will shrink, but if the volume didn’t show up for some reason and I am not going to say that, that’s what’s going to happen, but I am confident it will, but if it didn’t it’s on a per unit basis. And so the spending on that contra would be reduced equivalently.
Stacy Smith: And I would just add as Brian said we are doing a lot of enabling across the industry to take the BOM cast out in equivalent. These are costs at the system level not at our chip level and it will vary a lot by SKU, but to give you a sense for a Bay Trail platform from the beginning of the year to the end of the year we think that, that BOM penalty drops by more than half. And so it kind of gets better out in time. And then when we get to the Broxton generation we think it’s de minimis.
Brian Krzanich: Both Broxton and SoFIA are just specifically designed to eliminate that delta.
Say “hello” to SoFIA: By the end of 2014, Intel will deliver a new integrated Atom processor + communications solution for entry and value smartphones and tablets, code-named SoFIA. In his presentation, Eul highlighted that Intel’s Infineon wireless assets make the company an “incumbent” in the mobile phone market, shipping more than 360M mobile platforms a year spanning 2G and 3G solutions. He said SoFIA builds on the proven 3G communications platform to deliver a competitive and highly integrated, IA-based mobile solution aimed at the fast-growing market for entry smartphones and tablets. The 3G version of SoFIA is expected by the end of 2014, and Eul said an LTE version would follow in the first half of 2015.
Accelerated Mobile Roadmap: While specific product details will be saved for a later date, Eul signaled a robust pipeline of new Atom processors and multi-comms solutions for 2014 and beyond to address devices spanning market segments from entry to performance smartphones and tablets, an approach he called “market-oriented pragmatism.” In addition to SoFIA, Eul noted:
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Broxton – in 2015 Intel plans to deliver a 14nm, 64 bit SOC based on a new, next generation Atom architecture (Goldmont) targeted for hero devices. Broxton is being designed for pairing with Intel’s next generation LTE solutions.
[regarding: If we look at tablets and smartphone, what type of units do you need to reach for that business to stop having a material impact in gross margin from is 10 points higher utilization rates and excluding the contra revenue impact and that’s it? So just looking at the 40 million units target for this year, what type of volume do you need to get in order for gross margin to start appreciating from the west of the business if you exclude the contra revenue impact?]
Brian Krzanich: Yes, it’s hard to say. I mean, I will bridge back to our strategy here. Our strategy is that we are going to use our process technology leads. We will have leadership products that also are competitive or maybe even leadership in terms of cost and I showed some data at the investor meeting that just kind of showed the die size as we progress from Bay Trail to Broxton to SoFIA and so you can get a sense of the kinds of cost structure that we are going to have on a per unit basis. I don’t think it causes on a percentage basis. Yes, I can’t – I am not envisioning if this causes the gross margin percentage to go up, but you can definitely get to a space once we get through these contra enabling dollars where every unit we sell is accretive on a gross margin dollars per unit. It’s utilizing factories that we have in place for PCs. And so it’s a nice adder of that gross margin dollar per unit standpoint.
[regarding: Bay Trail Android tablets]
Brian Krzanich: Most of the Bay Trail Android tablets really start showing up more in Q2 than in Q1 and that’s again purely you know remember we made a shift, an original program for Bay Trail was all Windows. As we came into the midpoint of the year we sandbox [ph] shift and make it Windows and Android and so you know our OEM partners as well are targeting more towards Q2 and it’s just when you do you go and start putting back in that back to school event which is a next seasonal place where upside usually occur.
[regarding: On the smartphone or on tablet space, I think it is true that Intel has a manufacturing lead, but do you think your cost reduction efforts and then the Moore’s Law advantages ever progressed faster than the ASP declines in the space. In other words, do you think Intel can be sustainably profitable in the mobile space which is maturing?]
Brian Krzanich: Yes, we absolutely do. You saw at the investor meeting products like SoFIA, which really are going to be put on to 14-nanometer are fully integrated all the way through with the 3G option or an LTE option and that LTE is with carrier aggregation. Those kinds of products we believe are very, very cost competitive in fact leading from a cost position. In addition, we don’t talk a lot about, but we are already in that low cost Asia market. We are inch and then we are working with ODMs there. That’s actually where a lot of the innovations coming out of for some of these cost reductions on tablets and where we are getting the cost reduction ideas. So we are in that market now. We sold out of that Shenzhen low cost market in Q4. We will continue through it – through 2014 and with products like SoFIA on leading edge technology, we are very comfortable that we can get into those very low price points.
Experiencing the Cloud 