Home » Cloud client SW platforms » 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

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

Prerequisites (June 2015⇒):

Welcome to technologies trend tracking for 2015⇒2019 !!! v0.7
5G: 2015⇒2019 5G Technologies for the New Era of Wireless Internet of the 2020’s and 2030’s
Networked Society—WTF ??? v0.5
Microsoft Cloud state-of-the-art v0.7
• Service/telco for Networked Society
• Cloud for Networked Society
• Chrome for Networked Society
• Windows for Networked Society

Opportunity for Microsoft and its Partners in FY17:

As progressed since FY15:

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2010 – the 1st grand year of:

3.5G...3.9G level mobile Internet
• system-on-a-chip (SoC) and
reflective display technologies

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Core information:

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):

imageCompare 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.
image

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
Apple: 80-90 million
Non-Apple brand vendors: ~105+ million
– Samsung: 60-70 million
Whitebox vendors: ~104 million image
Apple, Samsung expected to ship 80-90 million, 60-70 million tablets in 2014, say sources [DIGITIMES, Jan 17, 2014]
Apple and Samsung Electronics will remain as the global top-two tablet vendors in 2014 with expected shipments of 80-90 million and 60-70 million units, respectively, according to Taiwan-based supply chain makers.
Samsung’s recent launch of its 12.2-inch model is expected to propel Apple to accelerate development of large-size iPads. Market sources indicated that Apple is likely to release a 12.9-inch model by the end of the third quarter at the earliest.
The two vendors are also expected to continue rolling out new versions of their existing models.
Samsung is also likely to launch more Galaxy Lite models, with prices going down as low as US$129, the sources indicated, adding that Samsung’s tablet shipments in 2014 are expected to reach 60-70 million units compared to 40 million shipped in 2013.
Meanwhile, Apple reportedly has asked its production partners and component suppliers to develop new models of 7.9- and 9.7-inch tablets, added the sources.
Foxconn expected to ship 55-60 million tablets in 2014, say Taiwan makers [DIGITIMES, Jan 16, 2014]
Foxconn Electronics (Hon Hai Precision Industry) shipped 50 million tablets to become the largest Taiwan-based ODM in 2013 and is expected to ship 55-60 million units to maintain the leading status in 2014, according to supply chain makers.
Foxconn is the main OEM for iPads and has undertaken ODM production of Amazon tablets, the sources noted.
Pegatron, with orders for iPad, Surface and tablets launched by Asustek Computer, shipped 25 million units in 2013 and is expected to remain as the second-largest ODM with shipments of 25-28 million units in 2014, the sources indicated.
With Lenovo and Acer being major clients, Compal Electronics shipped seven million tablets in 2013. With potential OEM orders for iPad mini with Retina display and additional ODM orders from Amazon, Compal is likely to ship 14 million tablets in 2014, the sources estimated.
Quanta Computer shipped 15-16 million tablets in 2013, of which a large portion were Nexus models for Google, the sources noted. Although Quanta may obtain OEM orders for a 12.9-inch iPad, shipments in 2014 will be low volume, the sources indicated. Therefore, Quanta’s 2014 tablet shipments are expected to remain at 15-16 million units.
Digitimes Research: Non-Apple brand vendors to ship 105 million tablets in 2014 [Nov 19, 2013]
Global tablet shipments are expected to reach 289 million units in 2014, up 23.6% on year. The growth, however, will be weaker than that for smartphones due to the fact that the tablet market has already entered the maturity stage, according to Digitimes Research’s latest figures.
In 2014, non-Apple first-tier brand vendors’ products are expected to have more room for price cuts, making their products even more competitive in China than their white-box competitors. The lower pricing means retailers will be more eager to promote their products. The gap in terms of functionality between Google’s official Android operating system and Android Open Source Project (used mostly by China white-box vendors) are also expected to be widen. As a result, the non-Apple first-tier vendors’ combined shipments are expected to grow dramatically to 105 million units in 2014, slightly surpassing China white-box vendors’ combined shipments of 104 million units, according to estimates by Digitimes Research.
Although the fifth-generation iPad (Air) is expected to attract consumers and stimulate replacement demand, the device’s high pricing are expected to limit iPad series products’ shipment growth in 2014 with the volume to reach only 80 million units.
As for brand vendors’ rankings, Apple and Samsung Electronics will remain in the top two in 2014. Since Samsung will adopt more aggressive marketing and pricing strategies in 2014, its shipments will reach 52.5 million units, reducing its gap with the market leader Apple. Lenovo, as the largest PC vendor worldwide and with advantages in its home market of China, is expected to ship 9.5 million units in 2014 to take third place in the tablet market.
Having failed to obtain orders for the next-generation Google Nexus tablets, Asustek Computer is expected to step up promoting its own-brand tablets, and it will ship nine million units in 2014, becoming the fourth largest vendor.
Acer will have a strong presence in entry-level segment, shipping 6.7 million tablets in 2014 to take sixth place, while Google will be the fifth largest vendor. Amazon‘s [5.45 million units in 2013 #5 with that in 2013] and Microsoft‘s shipments [max ~2-3 million of Surface Pro and ??? of Surface] will stay flat or grow only slightly on year.
Digitimes Research expects 7-inch models to remain as the mainstream size for branded tablets in 2014 with shipments set to reach 89.1 million units. But the segment’s share of total tablet shipments will drop below 50%. Brand vendors are expected to place more emphasis on 8-inch models as they look to avoid fierce competition in the 7-inch segment, which is crowded with low-price and white-box products. Shipments to the 8-inch segment are expected to reach 30 million units in 2014, triple the volume in 2013 and surpassing 10-inch models’ 25.4 million units.
As for Taiwan ODMs, their shipments will hit 117 million units in 2014, accounting only for 63% of the global total, down 5.2pp on year. The share will decline because Samsung and Lenovo, the second and the third largest vendors, are making most of their tablets internally.
To seek lower manufacturing quotes and to diversify risks, brand vendors are expected to further divide their tablet orders among ODMs. Foxconn Electronics (Hon Hai Precision Industry) and Pegatron Technology will remain as the top two ODMs for tablets in 2014. With more orders coming from Apple and Asustek, Pegatron will see significant tablet shipment growth in 2014, narrowing its gap with Foxconn. Compal Electronics is expected to surpass Quanta Computer to become the third-largest table ODM, thanks to orders from Apple and its acquisition of Compal Communication.
This article is an excerpt from a Digitimes Research Special Report (2014 global tablet demand forecast). Visit our latest Special reports.

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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