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2014 H1 changes on the Worldwide Tablet market

Versus as it was presented in The lost U.S. grip on the mobile computing market, including not only the device business, but software development and patterns of use in general [this same blog, April 14, 2014]:

imageSource: The Tablet Market Ticks Up In The Second Quarter
With White Box Shipments Leading The Way [Business Insider, July 25, 2014]

      • The global tablet market ticked up in the second quarter of 2014, although growth is still near the market’s historical low.
  • Shipments hit about 44.3 million during the period, yielding year-over-year growth of 11%.

While an improvement from the previous quarter, consider that the tablet market had year-over-year growth of nearly 80% in the same quarter just a year ago.

    • Although it lead all vendors with about 27% market share, Apple’s iPad shipments declined 9% year-over-year during the period. That marks the second consecutive quarter in which iPad shipments have declined.
    • Samsung’s tablet shipments grew a paltry 1% for the period to hit 8.5 million units in the second quarter. That is an enormous slowdown compared to the growth rates it was achieving just a year ago. In the second quarter of 2013, Samsung tablet shipments grew 300% year-over-year.
    • Both Apple and Samsung lost market share during the quarter. Apple’s leading market share fell from 33% to 27% while Samsung’s dipped two percentage points to 17%.
    • “White-box” vendors = 41% of market

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    Worldwide Tablet Market Grows 11% in Second Quarter on Shipments from a Wide Range of Vendors, According to IDC [IDC press release, July 24, 2014]

    The worldwide tablet grew 11.0% year over year in the second quarter of 2014 (2Q14) with shipments reaching 49.3 million units according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. Although shipments declined sequentially from 1Q14 by -1.5%, IDC believes the market will experience positive but slower growth in 2014 compared to the previous year.
    “As we indicated last quarter, the market is still being impacted by the rise of large-screen smartphones and longer than anticipated ownership cycles,” said Jean Philippe Bouchard, IDC Research Director for Tablets. “We can also attribute the market deceleration to slow commercial adoption of tablets. Despite this trend, we believe that stronger commercial demand for tablets in the second half of 2014 will help the market grow and that we will see more enterprise-specific offerings, as illustrated by the Apple and IBM partnership, come to market.”
    Despite declining shipments of its iPad product line, Apple managed to maintain its lead in the worldwide tablet market, shipping 13.3 million units in the second quarter. Following a strong first quarter, Samsung struggled to maintain its momentum and saw its market share slip to 17.2% in the second quarter.  Lenovo continued to climb the rankings ladder, surpassing ASUS and moving into the third spot in the tablet market, shipping 2.4 million units and grabbing 4.9% markets share. The top 5 was rounded out by ASUS and Acer, with 4.6% and 2.0% share, respectively. Share outside the top 5 grew to an all time high as more and more vendors have made inroads in the tablet space. By now most traditional PC and phone vendors have at least one tablet model in the market, and strategies to move bundled devices and promotional offerings have slowly gained momentum.
    “Until recently, Apple, and to a lesser extent Samsung, have been sitting at the top of the market, minimally impacted by the progress from competitors,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Now we are seeing growth amongst the smaller vendors and a levelling of shares across more vendors as the market enters a new phase.”

    Worldwide Tablet Shipments Miss Targets as First Quarter Experiences Single-Digit Growth, According to IDC [IDC press release, May 1, 2014]

    Worldwide tablet plus 2-in-1 shipments slipped to 50.4 million units in the first calendar quarter of 2014 (1Q14) according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The total represents a sequential decline of -35.7% from the high-volume holiday quarter and just 3.9% growth over the same period a year ago. The slowdown was felt across operating systems and screen sizes and likely points to an even more challenging year ahead for the category.
    “The rise of large-screen phones and consumers who are holding on to their existing tablets for ever longer periods of time were both contributing factors to a weaker-than-anticipated quarter for tablets and 2-in-1s,” said Tom Mainelli, IDC Program Vice President, Devices and Displays. “In addition, commercial growth has not been robust enough to offset the slowing of consumer shipments.”
    Apple maintained its lead in the worldwide tablet plus 2-in-1 market, shipping 16.4 million units. That’s down from 26.0 million units in the previous quarter and well below its total of 19.5 million units in the first quarter of 2013. Despite the contraction, the company saw its share of the market slip only modestly to 32.5%, down from the previous quarter’s share of 33.2%. Samsung once again grew its worldwide share, increasing from 17.2% last quarter to 22.3% this quarter. Samsung continues to work aggressively with carriers to drive tablet shipments through attractively priced smartphone bundles. Rounding out the top five were ASUS (5%), Lenovo (4.1%), and Amazon (1.9%).
    With roughly two-thirds share, Android continues to dominate the market,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Although its share of the market remains small, Windows devices continue to gain traction thanks to sleeper hits like the Asus T100, whose low cost and 2-in-1 form factor appeal to those looking for something that’s ‘good enough’.”

    Digitimes Research: Global tablet shipments reach 55.06 million units in 2Q14 [press release, July 23, 2014]

    There were 55.06 million tablets shipped globally in the second quarter of 2014, decreasing 4.5% on quarter but increasing 17.9% on year, according to Digitimes Research.
    The shipments consisted of 14.1 million iPads, down 10% on quarter, and 18.96 million units launched by vendors other than Apple, down 12.7% on quarter. Additionaly, 22.3 million white-box units were shipped in the second quarter.
    Shipments of small-size Wi-Fi-enabled units in particular slowed down in the second quarter and the time period was also a slow season for shipments. Supply chains also faced yield issues and Samsung saw less-than-expected shipments for its 8-inch tablets. Tablets sized 10-inch and above have seen shipment increases since fourth-quarter 2014.
    Taiwan tablet makers meanwhile surpassed 20 million in shipments for brand tablets during the second quarter, which made up 60% of overall brand tablet shipments during the time period, added Digitimes Research.

    Digitimes Research: Global tablet shipments drop 30% sequentially in 1Q14 [press release, April 23, 2014]

    Global tablet shipments reached only 58.56 million units in the first quarter of 2014, down almost 30% sequentially, but up 4.6% on year despite Samsung Electronics trying to boost both its high-end and entry-level tablet shipments and Lenovo pushing shipments to meet its fiscal 2013 targets. Seasonality, Apple seeing weaker sales, and the tablet market growing mature were also factors that affected shipment performance, according to Digitimes Research.
    Shipments of iPads suffered both on-year and sequential drops to reach 15.85 million units in the first quarter. Non-iPad tablet shipments were 22.31 million units, down 20% sequentially, but up over 30% on year thanks to strong demand for Samsung, Lenovo and Asustek’s Windows-based models. White-box tablet shipments reached only 20.4 million units due to seasonality and labor shortages during the Lunar New Year holidays.
    Apple and Samsung remained the top-two vendors in the first quarter, but the two players’ market share gap was less than 6pp. Lenovo was the third-largest vendor, followed closely by Asustek Computer in fourth. Amazon and Google dropped to number seven and ten.
    Taiwan ODMs shipped 22.15 million tablets together in the first quarter, accounting for less than 60% of global shipments. The largest maker, Foxconn Electronics (Hon Hai Precision Industry), and second-largest Pegatron Technology both suffered significant shipment drops due to lower-than-expected demand for iPad. Quanta saw increased shipments in the quarter because of Asustek’s T100 tablet, and returned to being the third-largest maker in Taiwan. Compal Electronics’ shipments suffered a sharp decline because Amazon’s Kindle Fire range is approaching the end of its lifecycle, while Acer is turning to cooperate with China-based makers, Digitimes Research‘s figures showed.

    Digitimes Research: Global white-box tablet shipments down in 1Q14 [press release, May 12, 2014]

    There were 20.4 million white-box tablets shipped globally in the first quarter of 2014, decreasing by 27.4% on quarter and by 2.4% on year, according to Digitimes Research.
    The decrease in shipments was mainly because most white-box vendors are based in China and there were fewer working days in the first quarter due to the Lunar New Year holidays, Digitimes Research pointed out.
    Of the shipments, 7-inch models accounted for 70.5%, 7.85/7.9-inch ones 21.3%, 8- to 9-inch ones 4.2%, above 9- to 10-inch 2.9%, above 10-inch 1.1%.
    Due to strong demand in emerging markets including India, Indonesia, Thailand, Russia and Eastern Europe, global white-box tablet shipments in the second quarter of 2014 will increase 14.2% on quarter and 45.6% on year to 23.3 million units.
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    Wintel rebirth amid the stock market turning negative about the Wintel future

    Despite of the Intel video of a year ago getting totally new meaning this week:

    with:

    the stock market has just turned negative about the future of both companies:

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    source: http://seekingalpha.com/symbol/INTC

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    source: http://seekingalpha.com/symbol/MSFT?s=msft

    An explanation for that:

    Why I Sold All Of My Intel Shares This Week [a “casual investor” by nickname Quoth the Raven on ‘Seeking Alpha’, April 3, 2014]

    Summary

    • Intel was upgraded by a Piper Jaffray analyst, who cited a slowing PC market decline.
    • The PC market, sans Mac, has been on a decline that hasn’t ended, despite people like myself predicting it would have bottomed by now.
    • I sold my Intel shares for the time being and am grazing greener pastures.

    By now, we all know some of the questionable points about Intel’s (INTC) business. In the past, I’ve written about the company being a little slow on the uptake when it came to mobile and tablet sales. Most recently I’ve questioned the company’s vision for jumping into cloud computing with a major investment and abandoning their in-house Hadoop project, ultimately leading to a major waste of money and resources.

    First things first; I sold out of my Intel long position the other day, not necessarily discounting the company to be a long-term hold again at some point in the future. I needed the capital for other purposes, evaluated the many positions in my portfolio, and found the most unease about Intel – so, I sold – for now.

    And, sure enough, right after I sold, Seeking Alpha came out and reported that Piper Jaffray came out and upgraded the stock:

    • As part of a change of coverage for chip stocks, Piper is upgrading Intel to Overweight, and downgrading Broadcom (BRCM) to Neutral.
    • The firm thinks Intel will benefit from stabilizing PC sales, and is worried about Broadcom’s mobile customer concentration (presumably with Apple and Samsung).
    • IDC still expects PC shipments to fall another 6% in 2014. But Y/Y decline rates have been narrowing in recent quarters.
    • OTR Global recently reported Broadcom’s 3G baseband chip sales to Samsung have fallen sharply. Samsung has also taken steps to increase its use of in-house Wi-Fi and Bluetooth chips, though that hasn’t stopped Broadcom from continuing to secure combo chip design wins.
    • Apple bought Bluetooth chipmaker Passif Semi last year (possibly for iWatch R&D), but hasn’t yet done anything to suggest it’s working on Wi-Fi chips.

    When I dug a little deeper into the reasoning behind the upgrade, one thing perked my ears up. Piper is coming out and assuming that the PC market is going to continue to slow and then eventually bottom. I thought this very same thing six months ago. Since then, I’ve continued to watch the PC market decline – albeit slower now – but it has yet to hit a bottom.

    Again, Intel’s biggest friend here has been Mac, which has been able to buck the overall trend of the PC market and continue to sell well. Intel leveraging its relationship with Apple (AAPL) at this point remains a key factor in their success.

    As the main constituency of Intel products travel through the sales of PCs, this continues to remain a point of unease for Intel. Additionally, Piper is seemingly betting on a flawless execution and growth of Intel’s Quark chipset which certainly is possible, but remains to be seen at this point.

    Gartner’s numbers, shown below, continue to show a decrease in PCs for 2015, and an increase in both tablets and mobilewhere Intel still does not have a steady foothold.

    (click to enlarge – source)

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    Further, the headlines surrounding the market that even I predicted would have stabilized by now, continue to look ugly. cnet reported:

    PC sales will continue to nosedive this year as more consumers scoop up mobile devices, says a new report from Gartner.

    Global shipments of personal computers will total 276.7 million in 2014, Gartner forecast on Thursday, a 6.6 percent drop from last year. On the flip side, tablet shipments will jump by 38.6 percent thanks in part to greater demand in regions outside North America.

    But the number of people replacing their aging PCs with tablets is actually expected to decline.

    But what about globally, you ask? I asked the very same thing – same uneasy headlines, different countries. We continue to see reports, like this one out of Taiwan, claiming that PC sales are poised to decline:

    Total PC sales in Taiwan are poised to decline for the fourth consecutive year, as consumers continue to favor mobile devices that are less expensive than, but as productive as, their pricier counterparts, International Data Corp [IDC] forecast yesterday.

    National PC sales are expected to fall by 5.1 percent to 2.55 million units this year, following a 15.6 percent fall last year, the market research firm said in a report.

    Desktop computers are projected to account for 60 percent of total PC sales this year, with notebook computers making up the remaining 40 percent, the report said.

    Last year, desktop and notebook sales in Taiwan reached 1.68 million and 1.01 million units respectively, it added.

    But when are we going to hit the coveted bottom that we continue to talk about? It is coming, possibly, but it sure isn’t here yet. And, as long as these sales continue to decline, Intel remains at a vulnerable point as a company. Especially with the questionable vision they have shown of late.

    Again, this data [dated March 5] from IDC is once again suggesting that PC sales are going to decline more than we expected this year:

    Shipments of new personal computers, most of them equipped with Microsoft Windows (MSFT), will decline more in 2014 than thought a few months ago, researcher IDC said Tuesday.

    IDC said that PC shipments will drop by 6% from the year before to approximately 296 million, a smaller number than it forecast three months ago, when it said global shipments would decline 4% in 2014.

    Last year, shipments contracted by 10% compared to 2012, dropping to about 315 million new PCs.

    IDC revises its numbers quarterly, said Rajani Singh, an analyst with IDC, who pointed out that as the market changes, the company modifies its forecasts, sometimes up, sometimes down.

    Even though I thought their new incentive-based pay program was a good idea, there were many that disagreed with me and thought it was bad for business. You could say the same, again, about the company’s recent foray into cloud computing. People ask, “Is it too little, too late?” Why does it seem like Intel is just throwing everything against the wall to see what sticks?

    (click to enlarge)

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    Do I think Intel is an absolutely horrible stock to be in for the long-term? Of course I don’t. It pays a dividend, has a good balance sheet, and is going to be around for many years to come. Do I think Intel is ripe for a short to mid-term trade? Absolutely not. I think there’s still work that needs to be done at this point before we see Intel push up towards $30/share and, thusly, I made my decision to sell my Intel shares for the time being and enter an Intel holding pattern.

    Best of luck to all investors.

    Mobile Cloud Computing: proven questions and statements about the current and future state-of-the-market

    • Is Android Becoming the New Windows?
    • Tablets to Outsell PCs Worldwide by 2015
    • Android Blows Past iOS in Global Tablet Market
    • Android To Retain Big Lead In Maturing Smartphone Market
    • The Price Gap Between iOS and Android Is Widening
    • In Just 2 Years, Google And Facebook Have Come To Control 75% Of All Mobile Advertising
    Note: In addition keep in mind at least the fact that Bloomberg (Businessweek) legitimizes Allwinner and Rockchip as challengers to Intel and Qualcomm via the tablet space, as well as Spreadtrum in the smartphone space [‘Experiencing the Cloud’, March 18, 2014]. More facts of such kind:
    Alibaba gets Tango for its push into the U.S. and the whole Western world [‘Experiencing the Cloud’, March 20, 2014]
    Chinese smartphone brands to conquer the global market? [‘Experiencing the Cloud’, March 18, 2014]
    MediaTek is repositioning itself with the new MT6732 and MT6752 SoCs for the “super-mid market” just being born, plus new wearable technologies for wPANs and IoT are added for the new premium MT6595 SoC [‘Experiencing the Cloud’, March 4, 2014]
    To watch Alisher Usmanov (Алишер Усманов) [‘Experiencing the Cloud’, March 22, 2014]
    Device businesses should have a China-based independent headquarter at least for Asia/Pacific if they want to succeed [‘Experiencing the Cloud’, Jan 28, 2014]
    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 [‘Experiencing the Cloud’, Jan 17, 2014]
    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]
    Leading PC vendors of the past: Go enterprise or die! [‘Experiencing the Cloud’, Nov 7, 2013]
    The question mark over Wintel’s future will hang in the air for two more years [‘Experiencing the Cloud’, Sept 15, 2013]
    • Is Android Becoming the New Windows?
    • Tablets to Outsell PCs Worldwide by 2015
    • Android Blows Past iOS in Global Tablet Market
    • Android To Retain Big Lead In Maturing Smartphone Market
    • The Price Gap Between iOS and Android Is Widening
    • In Just 2 Years, Google And Facebook Have Come To Control 75% Of All Mobile Advertising

    All supported by facts and well researched forecasts by IDC, Gartner and eMarketer.

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    Source: Is Android Becoming the New Windows? [Statista, Jan 9, 2014]

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    Source: Tablets to Outsell PCs Worldwide by 2015 [Statista, Mach 1, 2014]

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    Source: Android Blows Past iOS in Global Tablet Market [Statista, Mach 3, 2014]

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    Source: Android To Retain Big Lead In Maturing Smartphone Market [Statista, Mach 4, 2014]

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    Source: The Price Gap Between iOS and Android Is Widening [Statista, Feb 14, 2014]

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    Source: In Just 2 Years, Google And Facebook Have Come To Control 75% Of All Mobile Advertising [Business Insider India, March 21, 2014]

    In the last two years, Facebook and Google have gone from a position of merely being two big, fast-growing players in mobile advertising to dominating it completely. Combined, they have cornered 75.2% of the entire mobile market in 2013, according to new data by eMarketer.

    In 2014, Google alone is expected to be roughly as big as all other companies combined, as this chart of mobile ad revenues from Statista shows.

    “new data by eMarketer”:
    Driven by Facebook and Google, Mobile Ad Market Soars 105% in 2013 [eMarketer, March 19, 2014]

    Mobile ad spending on pace to reach $31.45 billion this year

    Last year, global mobile ad spending increased 105.0% to total $17.96 billion, according to new figures from eMarketer. In 2014, mobile is on pace to rise another 75.1% to $31.45 billion, accounting for nearly one-quarter of total digital ad spending worldwide.

    Facebook and Google accounted for a majority of mobile ad market growth worldwide last year. Combined, the two companies saw net mobile ad revenues increase by $6.92 billion, claiming 75.2% of the additional $9.2 billion that went toward mobile in 2013. The two companies are consolidating their places at the top of the market, accounting for more than two-thirds of mobile ad spending last year—a figure that will increase slightly this year, according to eMarketer.

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    Facebook in particular is gaining significant market share. In 2012, the social network accounted for just 5.4% of the global advertising market. In 2013, that share increased to 17.5%, and eMarketer predicts it will rise again this year to 21.7%. Google still owns a plurality of the mobile advertising market worldwide, taking a portion of nearly 50% in 2013, but the rapid growth of Facebook will cause the search giant’s share to drop to 46.8% in 2014, eMarketer estimates.

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    The rapid pace at which mobile has taken over the company’s ad revenue share indicates Facebook’s mobile future. In 2012, only 11% of Facebook’s net ad revenues worldwide came from mobile, and last year, that figure jumped to 45.1%. In 2014, eMarketer estimates that mobile will account for 63.4% of Facebook’s net digital ad revenues. Mobile accounted for 23.1% of Google’s net ad revenues worldwide in 2013, and eMarketer estimates this share will increase to 33.8% this year.

    Chinese smartphone brands to conquer the global market?

    The smartphone market in China became saturated between Q3’12 and Q4’13 as per the below chart from Analysys International (EnfoDesk):

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    Note that this chart corresponds to Chinese writing traditions, i.e. in Q2’11 16.81 million smartphones and 51.01 million feature phones were sold, while in Q4’13 97.63 million smartphones and 9.2 million feature phones. Source: 易观分析:2013年第4季度中国手机销量增速放缓,智能手机市场呈现饱和态势 (Analysys analysis: China mobile phone sales growth slowed in the fourth quarter of 2013, the smart phone market is saturated) [EnfoDesk, March 11, 2014]

    Chinese Handset Vendors Will Account for Over 50% of Mobile Handset Sales in 2015 [ABI Research press release, March 10, 2014]

    ABI Research reports that Chinese handset vendors will account for over 50% of mobile handsets in 2015. Chinese vendors already accounted for 38% of mobile handset shipments in 2013 and the ongoing shift in growth to low cost handsets, especially smartphones, will increase their market share.

    Greater China has long dominated the mobile handset manufacturing supply chain, but now its OEMs are beginning to dominate sales at the expense of the traditional handset OEMs, including even Samsung.

    Many of the Chinese OEMs have focused almost exclusively on the huge Chinese market, with little activity beyond its borders, but this is set to change. Huawei (6th in worldwide market share for 2013) and ZTE (5th) have already made an impact on the world stage, but other Chinese handset OEMs like Lenovo—the Motorola acquisition is a clear statement of intent—and Xiaomi are set to join them.

    Chinese vendors already take up five of the top ten places in terms of worldwide market share, despite three of them only really shipping into China. The Chinese vendors highlight the changing shape of the mobile handset market, as the Chinese manufacturing ecosystem, specifically reference designs, enable the next wave of smartphone growth in low cost emerging markets and amongst price conscious consumers everywhere,” said Nick Spencer, senior practice director, mobile devices.

    “South East Asia has already experienced this trend, but ABI Research expects to see the impact of these Chinese vendors increasing in all emerging markets and even advanced markets, especially on prepay,” added Spencer.

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    The New Phone Giants: Indian And Chinese Manufacturers’ Fast Rise To Threaten Apple And Samsung [Business Insider India, March 15, 2014]

    The top Indian and Chinese smartphone manufacturers are classically disruptive. They produce products that are “good enough,” at a fraction of the cost of comparable models from premium brands. These ultra low-cost devices are the key to nudging consumers in massively untapped markets like India and Indonesia onto smartphones.

    And these companies are starting to aim higher – producing 4G LTE smartphones that have the same processing power as Samsung and Apple premium devices.

    They’re also far more innovative than they’re given credit for in terms of their strategy, supply chain management, and hardware.

    In a new report from BI Intelligence, we explain why global consumer Internet and mobile companies will increasingly need to work with companies like Xiaomi and Micromax – not to mention Lenovo, Huawei, ZTE, Coolpad, Karbonn, and others – if they don’t want to miss out on mobile’s next growth phase in emerging markets

    • Major local manufacturers now account for two-fifths of China’s smartphone market, and one-fourth of India’s. Xiaomi already sells four of the top 10 best-selling Android devices in China, and operates one of the top five app stores.
    • Combined, the top five manufacturers in China and the top two in India – the “Local 7” in the chart above – are now shipping about 65 million smartphones every quarter, more than Apple, and coming close to drawing even with Samsung.
    • These local manufacturers wield influence in various ways. They run their own successful app stores, mobile operating systems, and mobile services. They also hold the keys to which apps are preloaded on their phones. When BlackBerry wanted to take its BBM messaging service for Android into India, it signed a deal with Micromax.
    • The local manufacturers are not provincial outfits producing knock-offs, as some might be inclined to assume. But their main competitive tool, for now, remains price. Local manufacturers in China and India match the features of more expensive devices and manage to produce comparable hardware at a fraction of the price. A Micromax handset comparable to Apple’s iPhone 5C costs less than one-fourth as much.
    • Xiaomi has used a four-point strategy in its three-year rise to produce four of the most popular phone models in China. We discuss all four aspects, including tight inventory management and crowdsourcing product development feedback.
    • These manufacturers will continue to expand overseas, in search of new growth opportunities. Micromax is in Nepal, Bangladesh, and Sri Lanka. Xiaomi has its eyes on Malaysia and Brazil. Huawei is already in the U.S. For example, it sells a 4G LTE handset on MetroPCS.

    Smartphone Prices Race to the Bottom as Emerging Markets Outside of China Come into the Spotlight for Future Growth, According to IDC [press release, Feb 24, 2014]

    Singapore and London, February 24, 2014 – Emerging markets have become the center of attention when talking about present and future smartphone growth. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, in 2013 the worldwide smartphone market surpassed 1 billion units shipped, up from 752 million in 2012. This boom has been mainly powered by the China market, which has tripled in size over the last three years. China accounted for one out of every three smartphones shipped around the world in 2013, equaling 351 million units.

    Recently the surge in growth has started to slow as smartphones already account for over 80% of China’s total phone sales. The next half billion new smartphone customers will increasingly come mainly from poorer emerging markets, notably India and in Africa.

    “The China boom is now slowing,” said Melissa Chau, Senior Research Manager for mobile devices at IDC Asia/Pacific. “China is becoming like more mature markets in North America and Western Europe, where smartphone sales growth is slackening off.”

    Emerging markets in Asia/Pacific outside of China, together with the Middle East and Africa, Central and Eastern Europe, and Latin America, account for four fifths of the global feature phone market, according to IDC data. “This is a very big market opportunity,” said Simon Baker, Program Manager for mobile phones at IDC CEMA. “Some 660 million feature phones were shipped last year, which could add two thirds to the size of the current global smartphone market.”

    India will be key to future smartphone growth as it represents more than a quarter of the global feature phone market. “Growth in the India market doesn’t rely on high-end devices like the iPhone, but in low-cost Android phones. Nearly half of the smartphones shipped in India in 2013 cost less than US$120,” said Kiranjeet Kaur, Senior Market Analyst for mobile phones at IDC Asia/Pacific.

    “Converting feature phone sales to smartphone sales implies a relentless push towards low cost,” added Baker. IDC research shows nearly half the mobile handsets sold across the world have retail prices of less than US$100 without sales tax. Two thirds of those have prices of less than US$50.

    “The opportunity gets larger the lower the price falls,” continued Baker. “If you take retail prices without sales tax, in 2013 nearly three quarters of the US$100-125 price tier was already accounted for by smartphones. Within US$75-100 the proportion was down to just over half, and between $50-75 it was not much more than a third.”

    Many smartphone vendors have begun gearing up for this next wave of cost pressure. Samsung is increasingly switching production to Vietnam, where manufacturing costs currently undercut mainland China. Even Hon Hai, one of the largest contract manufacturers for handsets in China, has announced plans for a plant in Indonesia to furnish a lower production cost base.

    In addition to the table below, an interactive graphic showing worldwide sub-$100 feature phone shipments by region is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

    Worldwide Sub-$100 Feature Phone Shipments by Region, 2013

    Region

    Shipments (M Units)

    India

    212.3

    Middle East & Africa

    150.0

    Asia/Pacific (excluding Japan, China, and India)

    140.7

    Latin America

    76.4

    PRC

    68.1

    Central & Eastern Europe

    43.6

    Western Europe

    39.8

    North America

    13.9

    Total

    744.9

    Source: IDC Worldwide Mobile Phone Tracker, February 24, 2014

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    Analysys International: Xiaomi Ranked Among Top Five in Q4, 2013 [March 11, 2014]

    The statistics from EnfoDesk, the Survey of China Mobile Terminals Market in Q4, 2013, newly released by Analysys International, shows that the market share of Samsung, Lenovo, Huawei, Coolpad and Xiaomi ranked the top five of China smartphone in Q4, 2013. The market share of Samsung shrink slightly over the previous quarter, but it still accounted for 15.07 percent of smartphone market and maintain the leading position.

    The release of Apple‘s new product has brought efficiency in Q4, and its market share slightly rebounded. Owning to the release of MI3 (Xiaomi), the market share of Xiaomi up 3.85 percentage points compared to the previous quarter. MI3 still should be bought from booking and the booking is relatively frequent. Meanwhile, the purchase restriction of MI2(Xiaomi) and Red MI(Xiaomi) has been relaxed, coupled with the strategic cooperation between Xiaomi and mobile operators, making it easier to buy custom models as well as contributing to the  enlargement of Xiaomi’s market share. It can be expected that Xiaomi will put more energy into the complement of its retail capabilities and continue to increase their market share.

    From: UMENG Insight Report – China Mobile Internet 2013 Overview [UMENG, March 12, 2014]

    – The number of active smart devices in China exceeded 700 Million by the end of 2013.
    – The five fastest growing mobile apps categories (excluding games) are : news, health & fitness, social networking, business, and navigation. These areas will bring new opportunities for developers in 2014.
    – Socializing your apps is the key to success for developers. Currently among the top 1,000 apps (apps and games) in the Chinese market, 55% of them provide links to Chinese social networking services (e.g. Sina Weibo, Wechat, QQ, Renren) The amount of app content sharing to social network platforms per mobile Internet user per day has tripled in the last 6 months.
    – Social network sharing in game has become incredibly popular on all social networking platforms, 48% of in app sharing traffic to social networks are from games.
    – High-end devices (pricing above 500US$) have a significant market share in China, contributing 27% of total devices. These users have dynamic needs on mobile apps . The users of below 150US$ phones prefer casual games for their entertainment requirements.
    – The year of 2013 became known as the first year Chinese developers took IP seriously with many developers licensing IP from rights holders. By the end of 2013, among the Top 100 games, 20% license 3rd party IP.
    – Over the course of 2013 the percentage of iOS jailbroken devices in the Chinese Mainland fell by 17% to 13% of all devices. Domestic users are becoming more hesitant to jailbreak their devices.

    700 Million active smart devices in China

    • By the end of 2013, the number of active smart devices in China had exceeded 700,000,000, including smart phones and tablets.       
    • In the 4th quarter 59% of new devices were bought by smartphone users upgrading their existing hardware. The remaining new devices where bought by users buying their first smartphone. As smartphone use becomes more commonplace in China new sales are increasingly driven by existing users upgrading, rather than from users purchasing their first smartphone.               

    image

    The market for budget Android phones is strong in China with 57% of devices under 330 USD price range. However over a quarter of users are using high-end smart phones costing over 500USD, 80% of these are iPhones.

    image

    Fragmented Android device market

    • In the 4th quarter of 2013, Samsung and XiaoMi (a local brand) prove to be the most popular Android brands as between them they manufacture all of the top 10 active Android devices.
    • However the Android market is still highly fragmented with hundreds of different handsets on the market. Samsung who manufacture many devices in all price ranges control 24% of the device market, while the domestic manufactures are battling it out with the international brands to extend their market share.

    image

    • In 2013, changes to device connectivity saw a large growth in WiFi connectivity, from 38% at the beginning of  the year to 52% at year end. Mobile Internet infrastructure has become better in China. However Chinese users are still price sensitive to mobile data tariff.       

    image

    • Glossary:   
      Active Device: active device refers to device which has activated at least one app covered by Umeng platform in the stipulated time frame. All  the “devices” in the report refers to “active devices”, not the actual shipment.

    • Data Source:   
      Analysis data in the report is based on over 210,000 Android and iOS apps from the Umeng platform. All data was collected from January to December 2013.

    From: More than 247 million mobile handsets shipped in India during CY 2013, a Y-o-Y growth of 11.6%; over 70 million mobile handsets shipped in 4Q 2013 alone [CyberMedia Research press release, Feb 26, 2014]

    According to CMR’s India Monthly Mobile Handsets Market Review, CY 2013, February 2014 release, India recorded 247.2 million mobile handset shipments for CY (January-December) 2013. During the same period, 41.1 million smartphones were shipped in the country.

    image

    India Smartphones Market

    The India smartphones market during 2H 2013 saw a rise in shipments by 60.3% over 1H 2013, taking the overall contribution of smartphones to 16.6% for the full year. Further, 65.8% of the total smartphones shipped in the country were 3G smartphones during CY 2013.

    image

    Commenting on these results, Tarun Pathak, Lead Analyst, Devices, CMR Telecoms Practicesaid, “CY 2013 was primarily the year of smartphones for the India market, particularly for local handset vendors. A first for the India market was a marginal decline in featurephone shipments on a year-on-year basis. This trend is likely to continue with more vendors focusing on entry level smartphone offerings aimed at the consumer segment.”

    “Nearly 70 vendors operated in the highly competitive India smartphones market in CY 2013, with ‘Tier One’ brands like Apple, Samsung, Nokia, Sony, HTC, LG and Blackberry capturing close to 53% of the total smartphones market, followed by India brands capturing close to 43% of total smartphone shipments. The remaining market of roughly 4% smartphone shipments was captured by China OEM brands, where we expect a few more players to enter the India market directly, instead of continuing as ODM partners to Indian brands”, Tarun added.

    Rapid Growth In Smartphones Offset The Slump Witnessed In Feature Phone Sales In 4Q13, Says IDC [press release, Feb 26, 2014]

    India was one of the fastest growing countries worldwide in terms of smartphone adoption in 2013. According to the International Data Corporation (IDC) in 2013 the smartphone market surpassed 44 million units shipped, up from 16.2 million in 2012.  This surge has been mainly powered by home grown vendors which have shown a tremendous and consistent growth over the past 4 quarters of 2013.

    The overall phone market stood at close to 257 million units in CY 2013 – an 18% increase from 218 million units in CY2012.

    CY2013 also witnessed a remarkable migration of the user base from feature phones to smartphones primarily due to the narrowing price gaps between these product categories.

    image

    Q413 Perspective:

    The India smartphone market grew by 181% year over year (YoY) in the fourth quarter of 2013 (4Q13).  According to International Data Corporation’s (IDC) APEJ Quarterly Mobile Phone Tracker, vendors shipped a total of 15.06 million smartphones in 4Q13 compared to 5.35 million units in the same period of 2012. 4Q13 grew by almost 18% Quarter-on-Quarter.

    The shipment contribution of 5.0inch-6.99inch screen size smartphones (phablets) in 4Q2013 was noted to be around 20% in the overall market. The category grew by 6% in 4Q13 in terms of sheer volume over 3Q13.

    The overall mobile phone market (Feature Phones and Smartphones) stood at 67.83 million units, a 16% growth YoY and a meager 2% growth quarter over quarter (QoQ).The share of feature phones slid further to make 78% of the total market in 4Q13, with the market showing a decline of 2% in 4Q13 over 3Q13.

    image

    The fourth quarter of 2013 witnessed a spike in the smartphone shipments by smaller homegrown vendors like LAVA, Intex which have shown tremendous growth in the past couple of quarters.

    “The growth in the smartphone market is being propelled by the launch of low-end, cost competitive devices by international and local vendors which are further narrowing the price gaps that exist between feature phones and smartphones”, said Manasi Yadav, Senior Market Analyst with IDC India.

    “The international vendors have understood the importance of creating a diverse portfolio of devices at varied price points and are striving to launch cost competitive devices that cater to every segment in the target audience ” comments Kiran Kumar, Research Manager with IDC India.

    Top Five Smartphone Vendor Highlights

    Samsung: Samsung maintained its leadership spot with about 38% in terms of market share. Its smartphone shipments grew by close to 37% from 3Q 2013 to 4Q2013. The fourth quarter saw quite a few new launches across price points by Samsung – however the low-end Galaxy portfolio in smartphones contribute to 50% in terms of shipment volumes

    Micromax: Micromax held on to its second spot with about 16% in terms of market share in 4Q2013. Some of the top selling models were the entry level smartphones like A35 Bolt and A67. The Canvas range of devices has also done well in terms of volume contribution owing to the marketing campaigns launched around them.

    Karbonn: The market share for Karbonn in 4Q2013 was close to 10%, some of the top selling models for this brand were A1+ and A51.

    Sony: Sony managed to make a comeback in the top-5 smartphone vendor list in 4Q13 and garnered a market share of 5%. The top selling models included Xperia M Dual and Xperia C handsets, which are targeted at mid-tier price range.

    Lava : Lava managed to hold onto the number 5 spot in the top-5 smartphone vendor list. The continued traction around the XOLO and IRIS range of devices helped the vendor garner a market share of 4.7% in 4Q13. Some of the top selling models include the newly launched XOLO A500 S and the existing models like IRIS 402 and IRIS 349.

    image

    IDC India Forecast:

    IDC anticipates the growth in Smartphone segment to outpace the overall handset market growth for the foreseeable future. The end-user shift towards mid-to-high screen size products will be amplified by the declining prices and availability of feature-rich localized product offerings. Vendors who are able to differentiate their offerings at affordable prices will maintain a competitive edge and secure a strong position in the mobile phone market in CY 2014.

    From: Gartner Says Annual Smartphone Sales Surpassed Sales of Feature Phones for the First Time in 2013 [press release, Feb 13, 2014]

    Worldwide Smartphone Sales to End Users by Vendor in 2013 (Thousands of Units)

    Company
    2013
    Units
    2013 Market Share (%)
    2012
    Units
    2012 Market Share (%)
    Samsung
    299,794.9
    31.0
    205,767.1
    30.3
    Apple
    150,785.9
    15.6
    130,133.2
    19.1
    Huawei
    46,609.4
    4.8
    27,168.7
    4.0
    LG Electronics
    46,431.8
    4.8
    25,814.1
    3.8
    Lenovo
    43,904.5
    4.5
    21,698.5
    3.2
    Others
    380,249.3
    39.3
    269,526.6
    39.6
    Total
    967,775.8
    100.0
    680,108.2
    100.0
    Source: Gartner (February 2014)
    Worldwide Smartphone Sales to End Users by Vendor in 4Q13 (Thousands of Units)

    Company
    4Q13
    Units
    4Q13 Market Share (%)
    4Q12
    Units
    4Q12 Market Share (%)
    Samsung
    83,317.2
    29.5
    64,496.3
    31.1
    Apple
    50,224.4
    17.8
    43,457.4
    20.9
    Huawei
    16,057.1
    5.7
    8,666.4
    4.2
    Lenovo
    12,892.2
    4.6
    7,904.2
    3.8
    LG Electronics
    12,822.9
    4.5
    8,038.8
    3.9
    Others
    106,937.9
    37.9
    75,099.3
    36.2
    Total
    282,251.7
    100.0
    207,662.4
    100.0
    Source: Gartner (February 2014)
    Top Smartphone Vendor Analysis
    Samsung: While Samsung’s smartphone share was up in 2013 it slightly fell by 1.6 percentage points in the fourth quarter of 2013. This was mainly due to a saturated high-end smartphone market in developed regions. It remains critical for Samsung to continue to build on its technology leadership at the high end. Samsung will also need to build a clearer value proposition around its midrange smartphones, defining simpler user interfaces, pushing the right features as well as seizing the opportunity of bringing innovations to stand out beyond price in this growing segment.
    Apple: Strong sales of the iPhone 5s and continued strong demand for the 4s in emerging markets helped Apple see record sales of 50.2 million smartphones in the fourth quarter of 2013.
    “However, Apple’s share in smartphone declined both in the fourth quarter of 2013 and in 2013, but growth in sales helped to raise share in the overall mobile phone market,” said Mr. Gupta. “With Apple adding NTT DOCOMO in Japan for the first time in September 2013 and signing a deal with China Mobile during the quarter, we are already seeing an increased growth in the Japanese market and we should see the impact of the last deal in the first quarter of 2014.”
    Huawei: Huawei smartphone sales grew 85.3 percent in the fourth quarter of 2013 to maintain the No. 3 spot year over year. Huawei has moved quickly to align its organization to focus on the global market. Huawei’s overseas expansion delivered strong results in the fourth quarter of 2013, with growth in the Middle East and Africa, Asia/Pacific, Latin America and Europe.
    Lenovo: Lenovo saw smartphone sales in 2013 increase by 102.3 percent and by 63.1 percent in the fourth quarter of 2013. Lenovo’s Motorola acquisition from Google will give Lenovo an opportunity to expand within the Americas.
    “The acquisition will also provide Lenovo with patent protection and allow it to expand rapidly across the global market,” said Mr. Gupta. “We believe this deal is not just about entering into the U.S., but more about stepping out of China.” 
    Gartner expects smartphones to continue to drive overall sales in 2014 and an increasing number of manufacturers will realign their portfolios to focus on the low-cost smartphone sector. Sales of high-end smartphones will slow as increasing sales of low- and mid-price smartphones in high-growth emerging markets will shift the product mix to lower-end devices. This will lead to a decline in average selling price and a slowdown in revenue growth.
    In the smartphone OS market, Android’s share grew 12 percentage points to reach 78.4 percent in 2013 (see below). The Android platform will continue to benefit from this, with sales of Android phones in 2014 approaching the billion mark.
    Worldwide Smartphone Sales to End Users by Operating System in 2013 (Thousands of Units)

    Operating System
    2013 Units
    2013 Market Share (%)
    2012 Units
    2012 Market Share (%)
    Android
    758,719.9
    78.4
    451,621.0
    66.4
    iOS
    150,785.9
    15.6
    130,133.2
    19.1
    Microsoft
    30,842.9
    3.2
    16,940.7
    2.5
    BlackBerry
    18,605.9
    1.9
    34,210.3
    5.0
    Other OS
    8,821.2
    0.9
    47,203.0
    6.9
    Total
    967,775.8
    100.0
    680,108.2
    100.0
    Source: Gartner (February 2014)

    Nokia X family of smartphones, leading local brand partners for Windows Phone and the potential of all that on the Indian market

    For some observers in the Western media the Nokia X family is a kind of challenge to Microsoft unlike my earlier post describing it as Nokia’s “best of everything” X range smartphones to conquer the smartphone market between the Asha and Lumia devices [‘Experiencing the Cloud’, Feb 24, 2014]. In Will Satya Nadella and Microsoft Pick Up The Challenge Laid Down By The Android-Powered Nokia X? Forbes contributor, Ewan Spence simply concludes that:

    If Nadella is looking to move Microsoft towards a future with more focus on easily accessible services rather than hardware lock-in, then the Nokia X should continue to receive some love and affection, along with continued support in the media and from the press teams in Redmond. It may even be made available for other manufacturers looking for an Android base to build on with some preferential patent licensing bundled along with the deal.

    Other journalists accustomed to the U.S. market, where you don’t buy your smartphone but getting it as part of your paid subscription “for free”, even critisizing the Nokia X performance (see two critics on the right) unlike the head of UX Design, an American (see his view on the left) in charge of the team in Beijing, China “with global scope and BRIICA (Brazil, India, Indonesia, China, Africa) focus”:

    Doug Walston, Head of MP [Mobile Phones] UX Design, Nokia – Beijing*:

    “With the X family,” says Doug, “we were really focused on the needs of new people using smartphones, especially those in emerging markets. We wanted to create a beautifully simple device that gives access to a wealth of apps.”

    “Apps don’t need to be rewritten to tap into Fastlane. We’ve used some special sauce (and native platform hooks) so it all just works.”

    “If there’s an element of the interface of which I’m particularly proud, it’s the home screen. It’s so distinctive, bold and direct. It’s a break from the confusion that you see elsewhere in phones at this price.”

    “The simplicity of the interface also means that it has a very low overhead on performance. Typically for a phone with all these features, you would expect a horrid battery life and a laggy interface in this segment, but that isn’t true of the X family at all. The performance is surprisingly good.”

    From Not just a pretty face – the UI of the X family [Nokia Conversations blog, Feb 26, 2014]
    *” The entire MP UX Design team is in Beijing now with global scope and BRIICA (Brazil, India, Indonesia, China, Africa) focus and encompasses accountability for the UX Design of the entire MP devices portfolio (15 + devices annually, with an expected volume of around 300 million devices sold annually).” This is a rephrased text corresponding to the job announcement of the Head of Mobile Phones Industrial Design [ID] on LinkedIn. Walston took this role on May 9, 2013 when he came from Motorola Mobility to take over the MP UX Design part of Peter Skillman’s job leaving him with the role of heading the HERE Design group based in Berlin and Cambridge. Before that Skillman was heading the UI and services design for the successful Asha range for two years.

    Jane McEntegart, Writer/Editor at Tom’s Hardware:

    Nokia X 1.0 is not slow or sluggish, but in the brief time we played with it, it wasn’t blazing fast either. The tile-interface also didn’t feel quite as sleek as it does in Windows Phone 8.

    From Hands On with Nokia’s Windows Phone-flavored Android OS [Tom’s Hardware, Feb 24, 2014]

    Tom Warren, Senior Reporter for The Verge, the resident Microsoft expert:

    If you put the Nokia X side-by-side with the company’s Lumia 520 handset it might be hard to tell them apart.

    Using the X software can be quite frustrating, however, as the entire interface is prone to slow response and a lot of lag. Closing or switching between apps on the X takes far longer than other, even entry-level, smartphones, and browsing the web will quickly test your patience. The third-party apps we saw on the X, such as Facebook, looked as they do on other Android smartphones, but they too suffered from poor performance. Nokia’s choice to combine the functions of home and back into the single back button is confusing, and it’s difficult to predict exactly where in the interface the button will take you when you press it. Part of the reason for the laggy interface and apps … is more likely related to the Android version in use on these devices.

    Nokia appears to be positioning the X as a method to draw people to Microsoft’s cloud services.

    From This is Nokia X: Android and Windows Phone collide [The Verge, Feb 24, 2014]

    Is the head of MP UX design is right or such a harsh critic as Tom Warren? You could decide it for yourself by watching the video below. Draw special attention to the Fastlane performance difference between the Nokia X with 512MB of RAM and Nokia X+/XL with 768MB ([3:46-4:30] vs. [5:53-6:26]). It is also not an accident that “Resizeable tiles” are demonstrated on the 768MB version. My impression is, that if you are buying the 768MB versions (Nokia X+ or Nokia XL) you won’t feel the problems Tom Warren outlined above, won’t feel at all:

    Nokia Launches Nokia X At Mobile World Congress In Barcelona [Red Robot – Intelligent Distribution YouTube channel, Feb 24, 2014]

    Today at the Mobile World Congress, Nokia introduced the Nokia X family, affordable smartphones that offer access to a world of Android apps. The new devices feature the best of Nokia design and quality, signature Nokia experiences such as HERE Maps and Mix Radio, and popular Microsoft services such as Skype, OneDrive and Outlook.com.
    [0:06] Press conference
    >> [0:50] Elop’s 1st introduction: the new Nokia 220
    >> [1:20] 2nd introduction: the new Nokia Asha 230
    >> [1:32] 3d introduction: the new Nokia X and Nokia X+
    >> [2:07] Preloaded great applications on the Nokia X family, hundreds of thousands of Android apps, Nokia signature experiences (HERE Maps, Nokia Mix Radio)
    >> [2:42] Fastlane as a fantastic element of Nokia X experience
    >> [2:57] 4th introduction: the Nokia XL
    [3:40] B-roll (i.e. alternative) footages (with no sound):
    > [3:42] Nokia X: Runs Android Apps, 4″ display, Fastlane, 3MP camera, 1GHz Dual Core Processor, Dual SIM
    >> [3:46] Nokia X: Fastlane
    >> [4:30] Nokia X: Skype
    >> [5:08] Nokia X: Nokia Store
    >> [5:33] Nokia X: Third Party App Stores
    > [5:49] Nokia X+: Runs Android Apps, 4″ display, Fastlane, 3MP camera, 1GHz Dual Core Processor, 768MB RAM, Dual SIM
    >> [5:53] Nokia X+: Swipe
    >> [6:26] Nokia X+: Resizeable tiles
    >> [7:15] Nokia X+: Nokia Mix Radio
    >> [8:02] Nokia X+: Demo App: Plants VS Zombies 2
    > [8:40] Nokia XL: Runs Android Apps, 5″ display, Fastlane, 5MP camera with flash, 2MP fron-facing camera, 1GHz Dual Core Processor, 768MB RAM, Dual SIM
    >> [8:45] Nokia XL: Swipe
    >> [9:26] Nokia XL: Camera: 5MP with autofocus and flash

    Even more, as the rest of my post goes through the below details (i.e. sections 1. to 4.), you will find (along with with me) that from the point of view of focusing on the BRIICA (Brazil, India, Indonesia, China, Africa) markets (which was the task of the development team in Beijing China) this is an excellent product with no problems mentioned by some media people in the West. There is even no conflict with Microsoft at all (another critical speculation typical to the Western Media) as the Nokia X family is also preparing the ground for the upcoming super low-cost (higher levels as well) Windows Phone devices from local and regional brands like the #3 Karbonn and the #4 Lava (Xolo) in India, as well as Gionee which is a large local brand in China with strong recognition in India as well, not to speak of those who will supplied from Foxconn, the biggest white-label phone manufacturer in China.

    1. Why does this post concentrate on the Indian market?
    2. Nokia X family has been well positioned for the highest growth Indian market
    3. The feature phone and smartphone markets in India according to CyberMedia Research India and IDC
    4. New low-cost Windows Phone partnering strategy by Microsoft especially aimed at the Indian market


    1. Why does this post concentrate on the Indian market?

    Answer #1: The Indian smartphone market is expected to double and touch 80 million by the end of current fiscal, a top Samsung India official said today.

    “We are expecting smartphone sales in the country to touch 80 million mark by the end of current fiscal [Samsung’s fiscal years are the same as the calendar years], while total sales were around 40 million in 2012-13,” Samsung Mobile and IT India Head Vineet Taneja said.

    From Indian smartphone market to double to 80 million by fiscal end: Samsung [The Economic Times (of India), Feb 18, 2014]

    Answer #2:Now is the right time because there is a rapidly growing low-price affordable smartphone segment that’s really taking off in a number of growth economies. We’re seeing that in countries like Indonesia, Russia, Vietnam and a number of others,” [Stephen] Elop [former Nokia CEO and soon-to-be Microsoft executive vice president] says in the interview, shot at Mobile World Congress in Barcelona.

    While Nokia X is based on Android, the user interface “is remarkably similar to the Windows Phone interface,” he says.

    That means these customers, many of whom have never owned a smartphone before, will learn to navigate in Microsoft’s world first, with the potential over time to buy higher end Nokia Lumia phones that run Windows Phone as Lumia prices drop.

    “And so we’ve gone for that and we’ll take advantage of that to keep people in the Lumia family but using Nokia X as a feeder system into our Windows Phone strategy,” Elop says.

    The strategy isn’t meant for the U.S. where cellular carriers widely and generously subsidize the price of high-end phones in order to lock customers in to long-term contracts, he says.

    The above excerpts are from the Nokia’s Stephen Elop Talks Android video interview:

    Nokia’s Stephen Elop talks about the move by the company to embrace Android at this time.

    From Nokia chief: Nokia X Android smartphone is a gateway drug to Windows Phone [Network World, Feb 25, 2014]

    Answer #3: is in another post of mine: Nokia’s “best of everything” X range smartphones to conquer the smartphone market between the Asha and Lumia devices [‘Experiencing the Cloud’ Feb 24, 2014] but before reading that here is Nokia X/ Nokia X Plus Hands On (Dual SIM) [WPXBOX YouTube channel, Feb 24, 2014] video from which you can easily understand why is it “best of everything” instead of a stock Android smartphone:

    Detailed Hands on of Nokia X and Nokia X+ which only differ by memory of 256 MB Ram. They both come with 4GB memory card which can be expanded to 32GB.

    Answer #4: in section 2 of this post I will show you that these smartphones will quite probably have a competitive on line pricing starting at most from:
    Rs 7400 ($119) for Nokia X vs. the list price of EUR 89 [$122]* (Rs 7582)
    Rs 8000 ($129) for Nokia X+ vs. the list price of EUR 99 [$136]* (Rs 8434)
    Rs 8600 ($139) for Nokia XL vs. the list price of EUR 109 [$150]* (Rs 9284)
    * Although these prices are before local taxes.

    Answer #5: India will be key to future smartphone growth as it represents more than a quarter of the global feature phone market. “Growth in the India market doesn’t rely on high-end devices like the iPhone, but in low-cost Android phones. Nearly half of the smartphones shipped in India in 2013 cost less than US$120,” said Kiranjeet Kaur, Senior Market Analyst for mobile phones at IDC Asia/Pacific.
    From Smartphone Prices Race to the Bottom as Emerging Markets Outside of China Come into the Spotlight for Future Growth, According to IDC [press release, Feb 24, 2014]

    Answer #6: In addition to existing partnersNokia, Samsung, HTC and Huawei — Microsoft has announced it is now working with Foxconn, Gionee, Lava (Xolo), Lenovo, LG, Longcheer, JSR, Karbonn and ZTE to develop on the Windows Phone platform. … Customers can expect to see an even broader array of devices, from iconic to lower-cost options, coming to market. … The expanded Windows Phone ecosystem will also provide mobile operators and retail partners with additional opportunities to offer white-label Windows Phone devices under their own brands.
    From Microsoft adds nine new Windows Phone hardware partners [press release, Feb 23, 2014] where Karbonn is the #3 and Lava (Xolo) the #4 brands (after #1 Samsung and #2 Micromax), while Gionee is a local brand in China with strong recognition in India as well, and Longcheer as a local Chinese brand that has long been in India as well (albeit with top recognition already lost). Finally Foxconn is the biggest white-label phone manufacturer in China whose production has already influenced the Indian market very much.

    We are adding support for Qualcomm Snapdragon 200 and 400 series chipsets, with options that support all major cellular technologies, including LTE (TDD/FDD), HSPA+, EVDO and TD-SCMA. We will also support soft keys and dual SIM where our partners want it for their devices. One nice benefit of these additions is that many hardware vendors will be able to use the same hardware for both Android and Windows Phone devices [obviously if they are using the Qualcomm SoCs]. From Joe Belfiore, corporate vice president of Microsoft Windows Phone in Scaling Windows Phone, evolving Windows 8 [Windows Phone Blog, Feb 23, 2014]

    Q. Many of your recent partnerships and announcements have focused on emerging markets. Is that a major priority?
    A. It’s not our only focus, but it’s a very big one. The purpose of low-cost phones in emerging markets is to drive volume. From Joe Belfiore, corporate vice president of Microsoft Windows Phone in Q.&A. With Joe Belfiore on the Future of Windows Phone [Bits blog of The New York Times, Feb 23, 2014] That is the Nokia X family will not only prepare the ground for its own Lumias but for these upcoming low-cost Windows Phone devices as well (also why IMHO Microsoft will not kill the Nokia X family after Nokia devices and services becomes part of it)


    2. Nokia X family has been well positioned for the highest growth Indian market

    X marks the sweet spot [Nokia Conversations, Feb 25, 2014]

    We asked Jussi Nevanlinna, VP for Mobile Phone marketing, some of your questions about the new Nokia X family, why it’s important for Nokia and why customers will be delighted with the phones.

    First of all, why now? Why is the timing now right for an Android-based smartphone from Nokia?

    There are a couple of answers to that question.

    To launch the Nokia X family, we needed to be able to create a product that was true to Nokia’s heritage in design and build quality. But we also needed to make it very affordable. Lots of different components had to come into place for us to create something that’s clear and easy to use, but also high quality and within people’s financial reach.

    The other answer is that the market itself is moving. We’re the number one manufacturer in growth markets in the ‘entry-level’ and ‘feature phone’ categories. But a lot of those people are now aspiring to smartphone products. There are a significant number of users worldwide who are about to experience the Internet through a mobile device. As you can imagine, we want to be ready for them.

    image

    The Nokia X family is based on the Android Open Source Platform (AOSP). Does that put the future of the family at the mercy of Google?

    To fully explain, this is a Nokia smartphone that runs Android apps. At its heart, we have AOSP on top of which we have added Nokia design and usability expertise to create the user interface that people see. Then we have added Nokia experiences like HERE Maps and Nokia MixRadio, and Microsoft services like Skype, Outlook.com and OneDrive. What we don’t have is Google services: this was deliberate. Instead, we have implemented Nokia and Microsoft services to create something truly differentiated.

    So who is the target audience for the Nokia X family?

    These are global products, which will be available pretty much everywhere except North America, Korea and Japan. We have a particular focus on growth markets – for example, India and China, Thailand and Indonesia then over to Egypt, Kenya and Nigeria, and South America, especially countries like Brazil, and Mexico. They are all places where we’re seeing this big shift from feature phones to affordable smartphones.

    Our Nokia X family customers are young, social, very aspirational and are fans of Nokia. They love our brand and our product design. And they also love Android apps: the quantity and choice is very appealing to them.

    So we’re offering them the best of three worlds:

    • Nokia design and build quality;
    • Microsoft cloud services; and
    • Android apps.

    image

    Does the X family compete with the Lumia family and maybe mean lost sales for Lumia?

    Our approach to compete in the affordable smartphone market is twofold. While Lumia remains our primary smartphone platform and we continue to push the prices down, Nokia X addresses price points that are generally lower than those reached by Lumia, and we’ll keep pushing the Nokia X prices down even further.

    In fact we see Nokia X as a stepping-stone to Lumia. With Nokia X we are bringing people the best of Nokia and Microsoft services and experiences, making a future switch to Lumia natural.

    Some might see creating an Android-based device as strange considering that the plan is for Nokia’s devices and services business to join Microsoft soon?

    I can’t speak on Microsoft’s behalf; what I can say is our strategy with Mobile Phones has been, and remains, connecting the next billion. Microsoft is equally focussed on ‘mobile first; cloud first. As I have explained, getting people exposed to and loving Microsoft and Nokia services in the affordable segment creates a natural pathway to Lumia, which is designed to be the pinnacle smartphone experience.

    image

    Technology becomes cheaper all the time. When it becomes possible to create a Lumia for $100, will the X family be retired?

    I think the key word is ‘family’. We will be announcing more products in the family over the course of the next year, and the price range it covers will change to suit the markets. We will be taking Nokia X into even more affordable price points.

    What do app developers need to do to make their Android apps available for the Nokia X family?

    The short answer is: nothing. In the vast majority of cases, Android apps will run very well on the Nokia X family, out of the box.

    Furthermore, we’re working with developers to make it very easy to submit apps into the Nokia Store. In most cases, they simply republish their apps to Nokia Store .

    Where apps depend on functionality that isn’t on the Nokia X family devices, like Google Maps, we’ve created API plugins for the Android SDK to allow developers to simply tick the box to use HERE Maps instead.

    image

    And what advantages can developers and customers gain by using Nokia Store?

    Android developers stand to make big gains by supporting the Nokia X family. We have heard many times that they find it hard to monetise their apps. One reason for that is, in emerging markets, people are a lot less likely to have credit cards. The Nokia Store offers in-app payments through operator billing, and we have the largest network of operators signed up for that. It’s been shown through experience that when operator billing is available, then revenues increase by up to five times.

    That’s one reason the Nokia Store offers a better alternative. The other is from the user’s side. The Nokia Store is curated. The apps are screened and scanned so you won’t bump up against malware or inappropriate content. So they can shop in our store with confidence and security.

    And worldwide, people are very comfortable with using third-party app stores that aren’t owned by Google. In Russia, the Yandex Store dominates the Android marketplace. In China, Google Play isn’t available, so all app purchases are through third parties. So you see, non-Google stores are already the norm for most Android owners.

    Nokia X is a phone made for India [India Today, Feb 24, 2014]

    The Finnish handset maker has finally unveiled its much talked of Android phone, the Nokia X, at the ongoing Mobile World Congress 2014.

    Nokia has launched a family Android phones with three variants–Nokia X, X+ and XL–at affordable prices. All three Nokia X variants are going to be low-cost phones with the Nokia XL expected to be priced around Rs.9,000 [$145]. For now, the prices that have been revealed are: Nokia X for 89 euros, the X+ 99 euros and the larger LX carries a price tag of 109 euros.

    Specs-wise, these are basic level phones. All three devices are powered by a Qualcomm Snapdragon Dual Core processor and are dual SIM. The Nokia X comes with 4-inch display, the X+ has a bit of more storage options and the XL variant comes with 5-inch LCD screen and and 5-megapixel rear and 2-megapixel front cameras.

    The Nokia X phones do not come with pre-installed Google Play Services. As a result the Play Store isn’t available on the Nokia X or Nokia X+. Though, Android apps can be downloaded through Yandex Store.

    Once, Nokia was the leader of Indian mobile industry. Nokia feature phones used to be first choice of the Indian consumers. But it could not keep pace with the emergence of smartphones. Its competitors like Samsung, Sony and Micromax took away the markets from the Finnish handsets maker with innovative smartphones at affordable prices.

    With affordable Android phones, the world’s largest smartphone maker, Samsung, is dominating the Indian market. Even, the home grown tech company Micromax made a market for itself with range of affordable Android phones having great features.

    With its budget prices and widely used Android OS, the Nokia X series of smartphones will target the consumers looking to upgrade themselves from feature to smartphones. As the smartphone market is growing in India, given its brand reputation in the country, Nokia phones are going to give its competitors a run for their money in the sub Rs.10,000 [$161]segment. An Android phone from the Nokia at affordable price will be a good deal.

    Well aware of its advantageous positing in the price-sensitive Indian market, Nokia has listed the X series devices on its India website as coming soon just after unveiling the devices at the ongoing Mobile World Congress 2014 in Barcelona.

    Nokia Lumia 525 – First Impressions [Digit YouTube channel, Jan 7, 2014]

    After the major success tasted by the entry level Lumia 520, Nokia has introduced the updated Lumia 525 for those wanting just a little more, at the same price

    The current (Feb 25, 2014) lowest online price for Lumia 525 (in India) is on Snapdeal.com:

    image
    Rs 11499 [$186]
    (list price) –> Rs 9519 [$154] Black/White –> Rs 9712 [$158 ] Yellow

    Competing with the following models of the marketing leading brands (Samsung, Micromax, Karbonn):

    image
    Rs 11230 [$181] Rs 9244 [$149] … Rs 12100 [$195] Rs 9379 [$151] … Rs 12990 [$207] Rs 9997 [$161]
    image

    For comparison the preceding the Lumia 520 on the same site:

    image
    Rs 10499 [$169] (list price) –> Rs 7976 [$128] Black –> Rs 7995 [$129] White
    –> Rs 8169 [$132 ] Yellow

    Then some leading competitors for the Nokia X range (also from Snapdeal.com):

    image
    All list prices: Rs 9999 [$161] Rs 8949 [$144] … Rs 7225 [$117] … Rs 7895 [$127]

    image

    13767
    6878
    10957
    7440
    7623
    Broadcom BCM23550
    Broadcom BCM21654G
    MediaTek MT6572
    Qualcomm MSM8225
    Qualcomm MSM8225

    Which means a competitive on line pricing starting at most from:
    Rs 7400 ($119) for Nokia X vs. the list price of EUR 89 [$122]* (Rs 7582)
    Rs 8000 ($129) for Nokia X+ vs. the list price of EUR 99 [$136]* (Rs 8434)
    Rs 8600 ($139) for Nokia XL vs. the list price of EUR 109 [$150]* (Rs 9284)
    * Although these prices are before local taxes.

    For  comparison the top of the Asha Touch range, the Asha 503 on the same site (currently):

    image
    Rs 7399 [$119] (list price) –> Rs 6549 [$106] Black/White –> Rs 6894 [$111] Yellow
    –> Rs 6939 [$112] Red

    Which means that the price of Asha devices could be lowered after the Nokia X devices appear on the market. This is especially true with the introduction of Asha 230 using the same SoC:

    image

    As the Asha 230 was announced for EUR 45 [$62]* (Rs 3823) you got an immediate price indication for such a decrease. In fact this new model is an effective replacement for the current Asha 500 as the entry level Nokia Asha Software Platform 1.1 device which has:

    • 2 MP rear camera instead of a 1.3 MP one on Asha 230
    • standby time up to 840 h (2G), talk time up to 14 h (2G) because of an 1200 mAh battery instead of the 1020 mAh one on Asha 230

    but has the best online price of Rs 3999 ($66), actually from Nokia India against the list price of USD69 before taxes or subsidies.


    3. The feature phone and smartphone markets in India according to CyberMedia Research India and IDC

    From CMR announces top Telecom trends for 2014 in India [CyberMedia Research India press release, Dec 31, 2013]

    CMR today released its MarketVision 2014 for Telecommunications in India.  Below are the key trends identified for 2014 for some priority segments.

    Mobile Handsets

    2013 witnessed the first time decline in growth of feature phones in India and this trend is going to further sharpen in 2014 as the primary focus of the industry as well as consumers would remain around the smartphones.

    CMR identifies the following trends for 2014 in Smartphones

    • LTE enabled smartphone releases to be among priority areas of the vendors.
    • Chinese ODM’s have started taken a direct OEM route towards India Smartphone market.  CMR expect around 10 Chinese ODMs entering into India Mobile market in 2014.
    • ‘Made in India’ smartphones amount to 47% of the total sales.  With such tremendous growth and success witnessed by these brands in the local market, 2014 will be the time to look at newer geographies including MENA, Latin America and the SAARC [South Asian Association for Regional Cooperation] region for the home grown vendors.  CMR expects 3-4 such brands looking for new geographic markets.
    • With the increasing confidence and reliance of Indian consumers on the online retailing, particularly after the emergence of successful platforms like flipkart, CMR expects the role of ‘etailing’ becoming important for emerging brands who for various reasons cannot establish their physical distribution network across the country, particularly the non-metro cities and towns.
    • While the ecosystem partners like ODMs and app developers will be exploring Windows as a platform for mobility, CMR identifies Tizen, Firefox, Ubuntu and Sailfish among the new open source OSs emerging in 2014 in the India market.
    • CMR expects vernacular apps to start getting focus in 2014 from the developer community in the country.  Since national elections are going to be among the predominant themes for 2014, we expect a lot of apps being developed around this space which could be owned by a political party or being promoted by a neutral app developer.

    62.9 million mobile handsets shipped in India during July-Sept 2013, a Y-o-Y growth of 10.9%; September registers, 19.5 million handset shipments; Nokia retains overall leadership [CyberMedia Research India press release, Nov 19, 2013]

    • Smartphone shipments cross 11.1 million units; Samsung still the market leader in smartphones category with Micromax and Karbonn at #2 and #3, respectively. Top 3 vendors make up nearly 63.1% of the total smartphone shipments.
    • Featurephone segment witnesses the first ever negative growth in shipments in the India Mobile handsets market.

    According to CMR’s India Mobile Handsets Market Review, 3Q 2013, November 2013 release,India registered 62.9 million mobile handset shipments for the period July-September (3Q) 2013. During the same period, 11.1 million smartphones were shipped in the country.

    image

    Commenting on the results, Faisal Kawoosa, Lead Analyst, CMR Telecoms Practice said, “We have been saying that the way forward is smartphones. JAS 2013 is the first quarter to actually report this trend in numbers. This means vendors can expect to see large opportunities in the upgrades market where many featurephone users will upgrade to a smartphone. It may also so happen that new smartphone purchases register lower volumes vis-à-vis upgrades. But this phenomenon may be a few quarters away.”

    “So there is going to be a huge opportunity as well as competition in the entry- to mid-level smartphone segments, which is where the volumes would remain for a while,” Faisal further added.

    image

    India Smartphones Market

    The India smartphones market during July-September 2013 saw a rise in shipments by 152.3% over and above the July-September 2012 number, taking the contribution of smartphones to 17.6% of total mobile handset shipments during the period July-September 2013.

    image

    Commenting on these results, Tarun Pathak, Analyst, CMR Telecoms Practice said, “The India smartphones market continues to be a competitive space with close to brands vying with each other. Going forward, we expect this segment to be even more competitive as we expect some of the China-based ODM partners entering directly into the India market during 1H 2014. It will be interesting to see what impact this will have on the market share of existing smartphone players.”

    “Another interesting observation is that local handset brands have now close to 47% market share in the India smartphones market and this momentum has been a source of confidence to a couple of players to enter new geographies outside India where the smartphone market is on the rise. Going forward 3G smartphone shipments will continue to rise and we can expect to see a few smartphone vendors introduce 4G-enabled devices by the end of 2013,” Tarun concluded.

    Notes for Editors
      1. This release is a part of the CyberMedia Research (CMR) Smart Mobility Market Programme.
      2. CyberMedia Research (CMR) uses the term “shipments” to describe the number of handsets leaving the factory premises for OEM sales or stocking by distributors and retailers. For the convenience of media, the term shipments has been replaced by ‘sales’ in the press release, but this reflects the market size in terms of units of mobile handsets and not their absolute value. In the case of handsets imported into the country it represents the number leaving the first warehouse to OEMs, distributors and retailers. CyberMedia Research does not track the number of handsets brought on their person by individual passengers landing on Indian soil from overseas destinations or ‘grey market’ handsets. These are, therefore, not part of the CyberMedia Research numbers reported here.
      3. CyberMedia Research (CMR) tracks shipments of mobile handsets on a monthly basis. However, as per convention, the market size is reported on a calendar quarter basis where appropriate to the context; in all such cases this refers to an aggregated number for the three calendar months in the quarter to which the press release refers.
      About CyberMedia Research
      A part of CyberMedia, South Asia’s largest specialty publisher, CyberMedia Research (CMR) has been a front runner in market research, consulting and advisory services since 1986. CMR offers research and consulting services – insights, market intelligence, market sizing, ecosystem mapping and go-to-market services – covering the Information Technology, ITeS, Semiconductor & Electronics, Telecommunications, Government, SMB & Entrepreneurship, Smart Infrastructure, Energy & Utilities and Healthcare & Life Sciences verticals.
      Cyber Media Research Ltd., an ISO 9001: 2008 company, is a member of the Market Research Society of India (www.mrsi.in) and enrolled with ESOMAR (www.esomar.org) CMR’s forthcoming studies include stakeholder satisfaction surveys, mega spender assessments and market mapping studies for these domains.
      For more details, please visit http://www.cybermediaresearch.co.in or http://www.cmrindia.com/

      Explosive Smartphone Growth Driven by Lower-Priced Models, Cannibalises Feature Phone Sales in Indian Mobile Market, Says IDC [press release, Dec 2, 2013]

      The India smartphone market grew by 229% year over year (YoY) in the third quarter of 2013 (3Q13).  According to International Data Corporation’s (IDC) APEJ Quarterly Mobile Phone Tracker, vendors shipped a total of 12.8 million smartphones in 3Q13 compared to 3.8 million units in the same period of 2012. 3Q13 grew by close to 28% over the units shipped in the second quarter of 2013 (2Q13).

      The 5.0 inch-6.99 inch screen size smartphones (phablets) continued to show sustained growth in 3Q2013 as well – the phablet category contributed to 23% in the overall market in terms of volume.

      The overall mobile phone market (Feature Phones and Smartphones) had a 12% growth YoY and a 7% growth quarter over quarter (QoQ) with the share of feature phones sliding further to make 81% of the total market in 3Q13 despite the feature phone market growing at 3% in 3Q2013 over 2Q2013.

      imageimage

      Source: IDC Asia Pacific Quarterly Mobile Phone Tracker, 3Q 2013

      The third quarter of 2013 witnessed a slowdown in the numbers for top local vendors such as Micromax and Karbonn – while international vendors like Samsung and Nokia powered by their new product launches made up for close to 30% of the overall market in 3Q2013.

      “The growth in the smartphone market continues to drive the overall growth numbers for the phone market – given that there’s still a huge potential for smartphone penetration in India, this trend is expected to continue in the coming quarters”, said Manasi Yadav, Senior Market Analyst with IDC India.

      “The change agents for this rapid shift of consumer preference towards Smartphones have been the narrowing price gap between Feature phones and Smartphones. The Smartphone market is expected to maintain these elevated levels of growth in the near future” comments Kiran Kumar, Research Manager with IDC India.

      Top Five Smartphone Vendor Highlights

      Samsung: Samsung maintained its leadership spot with about 33% in terms of market share. Its smartphone shipments grew by close to 36% from 2Q 2013 to 3Q2013. The third quarter saw quite a few new launches across price points by Samsung – however the low-mid tier phones such as Galaxy S

      Duos and Galaxy Star continued to drive their volumes.

      Micromax: Micromax held on to its second spot with about 17% in terms of market share in 3Q2013. Some of the top selling models were A27 and A26 in terms of volumes – we have seen a dedicated marketing and advertising push from the brand with continued investments to up the brand recall.

      These efforts are expected to bear fruit in the coming quarters in time for their upcoming launches.

      image

      Karbonn: The market share for Karbonn in 3Q2013 was close to 11%, some of the top selling models for this brand were A6 and A50. There has been a significant pick-up for the Titanium range of phones especially S5 and S2 specifically.

      Nokia: The Lumia range of devices continued to show a growth trajectory in 3Q2013 and garnered close to 5% market share – the trend is expected to continue with greater support from Microsoft in the coming quarters. The third quarter of 2013 saw a few notable launches like the Lumia 625 and Lumia 925 which have been able to generate positive interest from consumers and developers alike.

      Lava : Lava made it to the top 5 for the first time in 3Q2013 owing to huge shipments coming in from its XOLO and IRIS range of competitively priced devices. Some of the top selling models for the brand are IRIS 349 and IRIS 402. Keeping in mind the shifting consumer preferences, there has been a conscious shift from feature phones to smartphones, which is expected to continue in the upcoming quarters too.

      Smartphone Prices Race to the Bottom as Emerging Markets Outside of China Come into the Spotlight for Future Growth, According to IDC [press release, Feb 24, 2014]

      Singapore and London, February 24, 2014 – Emerging markets have become the center of attention when talking about present and future smartphone growth. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, in 2013 the worldwide smartphone market surpassed 1 billion units shipped, up from 752 million in 2012.  This boom has been mainly powered by the China market, which has tripled in size over the last three yearsChina accounted for one out of every three smartphones shipped around the world in 2013, equaling 351 million units.

      Recently the surge in growth has started to slow as smartphones already account for over 80% of China’s total phone sales.  The next half billion new smartphone customers will increasingly come mainly from poorer emerging markets, notably India and in Africa

      “The China boom is now slowing,” said Melissa Chau, Senior Research Manager for mobile devices at IDC Asia/Pacific.  “China is becoming like more mature markets in North America and Western Europe, where smartphone sales growth is slackening off.”

      Emerging markets in Asia/Pacific outside of China, together with the Middle East and Africa, Central and Eastern Europe, and Latin America, account for four fifths of the global feature phone market, according to IDC data. “This is a very big market opportunity,” said Simon Baker, Program Manager for mobile phones at IDC CEMA.  “Some 660 million feature phones were shipped last year, which could add two thirds to the size of the current global smartphone market.”

      India will be key to future smartphone growth as it represents more than a quarter of the global feature phone market. “Growth in the India market doesn’t rely on high-end devices like the iPhone, but in low-cost Android phones. Nearly half of the smartphones shipped in India in 2013 cost less than US$120,” said Kiranjeet Kaur, Senior Market Analyst for mobile phones at IDC Asia/Pacific.

      Converting feature phone sales to smartphone sales implies a relentless push towards low cost,” added Baker. IDC research shows nearly half the mobile handsets sold across the world have retail prices of less than US$100 without sales tax. Two thirds of those have prices of less than US$50.

      “The opportunity gets larger the lower the price falls,” continued Baker. “If you take retail prices without sales tax, in 2013 nearly three quarters of the US$100-125 price tier was already accounted for by smartphones. Within US$75-100 the proportion was down to just over half, and between $50-75 it was not much more than a third.”

      Many smartphone vendors have begun gearing up for this next wave of cost pressure. Samsung is increasingly switching production to Vietnam, where manufacturing costs currently undercut mainland China. Even Hon Hai [better known outside as Foxconn], one of the largest contract manufacturers for handsets in China, has announced plans for a plant in Indonesia to furnish a lower production cost base.

      In addition to the table below, an interactive graphic showing worldwide sub-$100 feature phone shipments by region is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

      image

      image

      The China Smartphone Market Hiccups as Growth Streak Ends with First Sequential Decline in 2013 Q4, Says IDC [press release, Fev 13, 2014]

      Singapore and Hong Kong, February 13, 2014 – After 9 consecutive quarters of explosive growth, which propelled China into the top smartphone market in the world, the China smartphone market experience its first slowdown in 2013 Q4.

      According to the International Data Corporation (IDC) Asia/Pacific Quarterly Mobile Phone Tracker, shipped 90.8 million units compared to 94.8 million in 2013 Q3, declining by 4.3% quarter on quarter (see Figure 1). Several factors drove this stumble – for one, China Mobile’s 4G TD-LTE network went live on December 18, translating into supplies of 4G handsets not able to reach the market fully until 2014 Q1. The increasing popularity of phablets and channel inventory also played a role, whereby operators cut phone subsidies on phones with smaller screens, triggering distribution channels looking to clear out those stocks.

      “The world has increasingly looked to China as the powerhouse to propel the world’s smartphone growth and this is the first hiccup we’ve seen in an otherwise stellar growth path,” says Melissa Chau, Senior Research Manager with IDC Asia/Pacific’s Client Devices team.

      “There will certainly be future drivers to unlock further smartphone growth in China, as Apple demonstrated with its China Mobile tie-up in January, and the massive device migration to come of phones only supporting 2G and 3G networks to devices supporting 4G networks. However, we are now starting to see a market that is becoming less about capturing the low-hanging fruit of first time smartphone users and moving into the more laborious process of convincing existing users why they should upgrade to this year’s model”

      Looking ahead at the prospects for the Asia/Pacific (excluding Japan) region, with mature Asia/Pacific markets like already having hit market saturation and China growth facing more moderate increases, two trends will become more prominent.

      First, growth will increasingly shift to ever-more emerging markets. While India volumes significantly lag China, India has taken the number three ranking of largest smartphone markets in the world in 2013, surpassing Japan, the United Kingdom, South Korea, Germany and France, which were all ranked higher in 2012.

      Second, Chinese phone players which have previously been content to make their mark on the China market itself, are looking to expand their ambitions overseas. While this trend has started already through 2013, IDC expects it to become more common in 2014.

      Chinese players are getting hungrier to turn themselves into international rather than China-only brands. Nowhere is this more clear than Lenovo’s acquisition of Motorola’s handset business, and even smaller players, some unknown to much of the world, like Oppo, BBK, Gionee and of course Xiaomi are ramping up on international expansion.”

      Figure 1.
      Asia/Pacific (Excluding Japan) Smartphone Shipments by Sub-Region, 2011Q1-2013Q4

      image

      Notes:

      • Mature markets include Australia, Hong Kong, New Zealand, Singapore and Taiwan
      • SEA markets include Indonesia, Malaysia, Philippines, Thailand and Vietnam

      Source: Asia/Pacific Quarterly Mobile Phone Tracker, February 2014


      4. New low-cost Windows Phone partnering strategy by Microsoft especially aimed at the Indian market

      Mobile World Congress, Microsoft and Nokia [The Official Microsoft Blog, Feb 24, 2014]

      The following post is from Frank X. Shaw, Corporate Vice President of Communications at Microsoft.


      Mobile World Congress is in full swing in Barcelona this week, one of the biggest events of the year for the mobile industry. I love Barcelona, and am sad to miss MWC this year. There is something about the combination of the history and tradition of Barcelona past and the energy and innovation of Barcelona present, with all the attendees of MWC a punctuation mark. And there is always something new, companies with something to say.

      Microsoft is no exception. On Sunday afternoon, we hosted a press conference where we reinforced the momentum we’re seeing for Windows Phone – the fastest growing mobile OS with 91 percent year-over-year growth. We announced we’re working with nine new Windows Phone hardware partners , including Foxconn, Gionee, Lava (Xolo), Lenovo, LG, Longcheer, JSR, Karbonn and ZTE as well as a collaboration with Qualcomm to help more manufacturers build Windows Phones faster. You can read Joe Belfiore’s blog post [see also below] from yesterday for more details.

      Nokia held its press conference earlier Monday. They announced a number of new devices from their Mobile Phone division including Nokia X, which will compete with Android devices in the affordable smartphone category and introduce the Microsoft cloud to a new set of customers in growth markets.

      There’s been lots of speculation about what this announcement means for Microsoft and about our pending acquisition of Nokia’s Devices and Services business. Here are a couple of points to put things into context.

      First, our transaction with Nokia has not yet closed. Today, we operate as two independent companies as required by antitrust law, and we will until the acquisition is complete. The anticipated close timeframe for the acquisition remains end of the first quarter of 2014.

      Second, we’re pleased to see Microsoft services like Skype, OneDrive and Outlook.com being introduced on these devices. This provides the opportunity to bring millions of people, particularly in growth markets, into the Microsoft family. The Skype team on Monday announced an offer in select markets for the first customers who purchase a Nokia X, one month of Skype’s Unlimited World Subscription. Read the Skype blog for more details.

      Finally, our primary smartphone strategy remains Windows Phone, and our core device platform for developers is the Windows platform.

      It is a fascinating time in the industry today. The rate of improvements in devices, the breadth of services offered, the way consumers and businesses are using devices of all shapes and sizes to do more – it is a reminder to all of us that what is considered status quo in Barcelona this year has the potential to look very different in the rear view mirror a year from now.

      We’d have it no other way. 🙂

      Microsoft adds nine new Windows Phone hardware partners [press release, Feb 23, 2014]

      New hardware partners and tools will accelerate global scale.

      Microsoft Corp. on Sunday announced nine new hardware partners for Windows Phone and direct access to tools that will broaden the portfolio of devices for consumers and introduce new price points to accelerate growth in key markets. In addition to existing partnersNokia, Samsung, HTC and Huawei — Microsoft has announced it is now working with Foxconn, Gionee, Lava (Xolo), Lenovo, LG, Longcheer, JSR, Karbonn and ZTE to develop on the Windows Phone platform.

      With this latest news, Microsoft is now working with seven of the top 10 smartphone manufacturers in the world in addition to leading brands in China, India and Taiwan, representing more than 56 percent of the addressable market globally (IDC Worldwide Mobile Phone Tracker, 2013). Customers can expect to see an even broader array of devices, from iconic to lower-cost options, coming to market.

      “We are pleased to add these new partners to our expanding Windows Phone ecosystem. They will be key contributors to continued growth across price points and geographies for Windows Phone,” said Nick Parker, corporate vice president of the OEM Division at Microsoft.

      Windows Phone is the fastest-growing smartphone operating system, according to IDC, and posted the largest increase for 2013 (90.9 percent), more than doubling the growth of the overall market during the year.

      Microsoft also unveiled expanded hardware support that provides more flexibility so Windows Phone partners can build devices to meet the unique needs of their region or customer segments. Microsoft is adding support for Qualcomm Snapdragon™ 200 and 400 processors by Qualcomm Technologies Inc. with options that support various major cellular technologies, including LTE (TDD/FDD), HSPA+, EVDO and TD-SCMA. Windows Phone will also support soft keys and dual SIM, critical requirements particularly in Asian markets. These changes allow for manufacturing partners to easily leverage existing design investments to diversify their portfolio to include Windows Phone devices, including larger screen phablets.

      On Sunday, Microsoft launched the Windows Hardware Partner Portal, which is designed to speed up device commercialization while minimizing development costs. Speed and economies are especially important for manufacturers needing to compete and win in the dynamic high-volume smartphone segment. The Windows Hardware Partner Portal is now open to all smartphone device manufacturers to learn about and begin the process to develop on the Windows Phone platform. Windows Phone device manufacturers will also be able to leverage the great services Microsoft has to offer in that market, which could include Office Mobile, Skype, Xbox and Bing; a growing app catalog; and features like Live Tiles and People Hub, which make Windows Phone so uniquely personal.

      To further help enable smartphone device manufacturers to quickly and easily broaden their portfolio to include Windows Phone devices, Microsoft and Qualcomm Technologies are collaborating to give OEMs and ODMs that are working with the various Qualcomm Reference Designs for Snapdragon 200 and 400 processors direct access to Microsoft tools, content and adaptation kits to build devices on the Windows Phone platform. With Microsoft and Qualcomm Technologies, through its Qualcomm Reference Design program, delivering the building blocks to help design and build Windows Phones, Microsoft hardware partners will be able to focus on differentiating their offering based on apps and services. Device manufacturers will now be able to choose from hundreds of ways to customize their Windows Phone devices while keeping the consistently high-quality experience that the Windows Phone platform provides.

      “We are making it easier, faster and more affordable for partners to develop a Windows Phone,” Parker said.

      The well-established Qualcomm Reference Design program offers Qualcomm Technologies’ leading technical innovation, differentiated hardware and software, easy customization options that save engineering costs, access to an ecosystem of hardware providers, and testing and acceptance readiness for regional and leading operator requirements.

      The expanded Windows Phone ecosystem will also provide mobile operators and retail partners with additional opportunities to offer white-label Windows Phone devices under their own brands. Mobile operators will also have more options to build custom apps and services for their Windows Phone devices that increase customer satisfaction, retention rates and revenue streams.

      Scaling Windows Phone, evolving Windows 8 [Windows Phone Blog, Feb 23, 2014]

      The following post is from Joe Belfiore, Corporate Vice President of corporate vice president of Windows Phone and Windows Program Management & Design at Microsoft.


      A lot of you folks know me as “the Windows Phone guy.” Over the past five years I’ve been co-managing the Windows Phone product team on a mission to make Windows Phone a delightful and successful platform. Recently my job changed to focus not just on Windows Phone but also on the user experience of Windows 8 and future versions of Windows. Today Nick Parker and I had a chance to talk to media and analysts from around the world attending Mobile World Congress in Barcelona—we shared some updates about Windows and Windows Phone, and we announced a new phase in our plan to continue growing and scaling Windows Phone globally.

      Let’s start with Windows Phone.

      We’ve experienced steady growth in recent years due to our “highly personal” approach to the smartphone experience and the amazing devices we’ve seen from our hardware partners HTC, Huawei, Nokia and Samsung. Together we’ve solidified our spot among the top three operating systems and celebrated some impressive milestones:

      • Recognized as the fastest growing OS with 91% year-over-year growth in 2013 (IDC, February 2014)
      • More than 10% share across Europe—which is more than double compared with last year. (Kantar Worldpanel ComTech, January 2014)
      • Most important to me, we’ve seen high customer satisfaction data—a fact that even our competitors have acknowledged!
      • Reached critical mass in the Windows Phone Store (now over 240,000 apps) and are still growing – fast – with an average of 500 apps added each day. We’ve had key additions such as Instagram, Vine, Waze and Mint—and today, we announced Facebook Messenger will be available in the coming weeks.

      This past year was especially busy as we delivered three updates to the Windows Phone platform—we continued building the platform out for scale (via new chipsets, new carrier/country support, and more screen sizes) and we enabled some great scenarios for customers (e.g. the Nokia Lumia 41 MP camera and advanced camera features).

      New Windows Phone Hardware Partners

      Broadly speaking, our partners overall are the engine of growth for Windows. In addition to our great partners HTC, Huawei, Nokia and Samsung, today in Barcelona we announced we’re now working with nine new Windows Phone partners, including: Foxconn, Gionee, JSR, Karbonn, Lava (Xolo), Lenovo, LG, Longcheer and ZTE. Collectively, Windows Phone partners make up an impressive 56 percent of the global smartphone market, according to IDC.

      This is exciting news for phone buyers around the world. With seven of the top 10 global OEMs—in addition to some of the leading brands in China, India and Taiwan— now collaborating with Windows Phone, you can expect to see an incredible new range of devices across screen sizes and price points. And of course we’re committed to delivering this device diversity without compromising the consistent, designed-around-you Windows Phone experience our users have grown to love.

      Some of these partners are names that might not be familiar to you, but they’re leading the global expansion in the smartphone category. They bring competitive products to market because of their knowledge of the local markets, channels and consumers. They are important partners that will help broaden availability of Windows Phones to new and emerging markets.

      New Windows Phone Hardware Support

      Getting a wider range of device builders to create Windows Phones required us to enable even more hardware flexibility and to make the engineering process of building a Windows Phone even easier. Thus we also announced:

      • We are adding support for Qualcomm Snapdragon 200 and 400 series chipsets, with options that support all major cellular technologies, including LTE (TDD/FDD), HSPA+, EVDO and TD-SCMA. We will also support soft keys and dual SIM where our partners want it for their devices. One nice benefit of these additions is that many hardware vendors will be able to use the same hardware for both Android and Windows Phone devices.
      • To streamline the process of building a Windows Phone device, today we launched the Windows Hardware Partner Portal so that all our hardware partners will have direct access to the tools and content needed to build and market their Windows Phone devices efficiently and cost-effectively.

      We also are working closely with Qualcomm Technologies, Inc. to help manufacturers anywhere in the world quickly and easily broaden their portfolio by building Windows Phone devices through the well-established Qualcomm Reference Design (QRD) program. Making it easier for manufacturers to take advantage of reference design options is an important step for Windows Phone. ABI Research notes a major smartphone industry shift towards reference designs since they speed time to market, and estimates that more than 400 million reference design smartphones will be shipped in 2014.

      Evolving Windows 8

      As part of my “new job,” I talked as well about Windows on tablets and PCs, and what to expect from us in the near future.

      We are committed to making Windows the best place for our partners to build great devices. Today that means different screen sizes, input methods, connectivity needs, and usage scenarios. Above all, we want that experience to feel natural for our customers. We want it to be familiar and tailored to the device. We want your stuff to be there no matter where you are, ready for whatever you need, and we want it to run beautifully on hardware made by partners around the world.

      With Windows 8, there’s no doubt that we made a big bet and took a first step toward that future. We bet on touch and on mobility in a big way, and included a fresh take on what a touch-based interface could be for customers. We believe deeply in this direction and the future will continue to build on Windows 8.

      We shipped Windows 8.1 in under a year in response to customer and partner feedback, and we’ll continue to refine and improve Windows to deliver a productive and delightful experience for all users on all devices. And, you’ll see us continue on a more rapid release cadence where we deliver ongoing value to all your Windows devices.

      Over the next few months, we’ll continue to deliver innovation and progression with an update to Windows 8.1, coming this spring. We’re especially excited about several things I want to preview with you here.

      • We’ll enable our partners to build lower cost hardware for a great Windows experience at highly competitive price points.
      • We are making improvements to the user interface that will naturally bridge touch and desktop, especially for our mouse and keyboard users. We have a number of targeted UI improvements that keep our highly satisfying touch experience intact, but that make the UI more familiar and more convenient for users with mouse/keyboard. Don’t worry, we still LOVE and BELIEVE IN touch… but you’ll like how much more smooth and convenient these changes make mouse and keyboard use!
      • We are enhancing support for enterprise customers via a few tweaks, particularly including features that greatly improve IE8 compatibility in Internet Explorer 11, which is especially critical for web-based line of business applications. Additionally, we’re extending mobile device management capabilities and making deployment easier.

      More news still to come

      Speaking of our enterprise customers, we are also hard at work on delivering a compelling new update for Windows Phone that will add key features for consumers, as well as a big investment in enterprise customer capabilities, including VPN, S/MIME support, enterprise Wi-Fi, extended mobile device management and certificate management. Along with a host of great developer and consumer value, we expect to deliver this to customers this spring with new phones following as we move into summer.

      2013 was an exciting and busy year chock full of big changes in our industry and at Microsoft. I’m really excited about seeing what the new and hot technologies are as Mobile World Congress opens tomorrow, and even more excited about the work we’ll be able to deliver for customers, partners and developers over the next several months. Stay tuned!

      Q.&A. With Joe Belfiore on the Future of Windows Phone [Bits blog of The New York Times, Feb 23, 2014]

      Joe Belfiore is the corporate vice president of Microsoft Windows Phone, and he oversees the software that powers handsets using the company’s operating system. Microsoft is expected to close its $7.2 billion deal to buy the handset and services division of Nokia by the end of March. The acquisition will give Microsoft control of both mobile software and hardware, as it looks to expand its 4 percent market share in global smartphone sales. Mr. Belfiore will play a crucial role in Microsoft’s efforts to take on Apple and the cellphone makers that use Google’s Android operating system.

      On Sunday, Mr. Belfiore declined to comment on rumors that Nokia would unveil an Android-based phone on Monday at the Mobile World Congress conference in Barcelona. But during a news conference earlier in the day, he said, “What they do as an independent company is up to them. There are some things they do that we are excited about. There are other things that we are not so excited about.”

      The following is an edited interview with Mr. Belfiore on other questions facing Microsoft and Windows Mobile.

      Q. You have talked about 2013 being a year that Windows Phone had to eat its vegetables. What do you mean by that?

      A. We faced a massive problem. It would have been very difficult to create a range of devices for every operator at every price that included every app in the world. We decided to focus on building something at a limited set of price points in a small, limited number of countries. That’s what we did this year. We had to get that right. Now that we’ve done that, we want to get Windows Phone at more price levels and in more countries.

      Q. It’s difficult to attract users if you can’t offer them the apps that they want. But to get the apps, you need users. How do you solve that problem?

      A. There’s no magic solution. We have to grow phone volume where we can. To increase our market share, we have to be available where customers are at low-cost and high-end price points. The stage is now set. Given our hardware partners, and Microsoft and Nokia coming together, we are in a good position to kick-start our market share.

      Q. The Microsoft-Nokia acquisition is expected to close this quarter. What excites you about the deal?

      A. There are some straightforward benefits. We can build on our existing healthy engineering relationship between software and hardware. And when one company takes products to market, it can tell the story with one voice. That will be a benefit. The biggest problem we face is how to get the word out about what we do. Those marketing activities, the storytelling around our products, are underestimated.

      Q. When Microsoft closes the deal with Nokia, it will compete directly with other handset makers that also use the Windows Phone operating system. What is your response to that?

      A. We can help build the market for Windows Phones. When there’s a healthy ecosystem, there’s a sales opportunity for all our partners. There are some markets and some countries where Nokia already competes with other manufacturers. But there’s a large opportunity out there. There are niches that are partners will be able to fill.

      Q. Many of your recent partnerships and announcements have focused on emerging markets. Is that a major priority?

      A. It’s not our only focus, but it’s a very big one. The purpose of low-cost phones in emerging markets is to drive volume. But doing high-end products like the Lumia 1520 and Lumia 1020 also gives an aspirational view of the way the product line will go.

      Q. In a year’s time, where would you like the Windows Phone experience to be?

      A. A year from now, I would like to have widespread consumer knowledge of the type of value proposition that is available with Windows Phone. People who use the phones have a favorable experience with them. But we need to get the word out there.

      Q. Smartphones that use either Android or Apple’s iOS have almost 95 of the global market share. What is your response to analysts who say that Microsoft should give up on Windows Phone?

      A. We benefit from investing in mobile innovation. And we think we have a lot to offer our partners and customers. The mobile market will continue to grow, the opportunities will continue to grow. We are not going anywhere.

      Q. Microsoft has just appointed a new chief executive. How does Windows Phone fit into his vision?

      A. The way we’ve built our team and how we have approached innovation is massively focused on mobile first, cloud first. That’s very much aligned with the vision that he has outlined.

      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:
      image

      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!

      image

      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:
       imageDeveloped 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.

      image

      ¥ 1000 – ¥ 2000: US$ 165 – US$ 331
      ¥ 2000 – ¥ 3000: US$ 331 – US$ 496
      ¥ 3000- ¥ 4000: US$ 496 – US$ 661

      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.
      image
      China smartphone sales hit 93.08 million in Q3,2013, rose as high as 89.3 percent with the sequential growth rate being 20.7 percent. Smartphone continued to rise 90.7 percent of the total market share. Compared to 2013Q2, Apple’s share was in the largest decline, down by 1.1 percentage points.
      EnfoDesk Analysys International holds that Apple’s declining of mobile phone sales is mainly due to the small influence of iPhone 5S/5C although it was released in mid-September. The sales of iPhone new products are expected to boost Apple’s overall share in Q4. However, this momentum will not last long, and Apple’s share will ultimately continue to decline.
      image
      Research definition:
      Mobile phone sales refers to the number of mobile phone that sell to the users through various channels. Part of the mobile phone sales data in this report does not include smuggled and parallel goods, see specific data in the report.

      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

      image

      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.

      image

      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.”

      image

      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.

      image

      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):
      image

      * 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.

      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

      Details about Samsung’s strengths you can find inside the Samsung has unbeatable supply chain management, it is incredibly good in everything which is consumer hardware, but vulnerability remains in software and M&A [‘Experiencing the Cloud’, Nov 11, 2013] post of mine.

      Note what was communicated in the 2013 global tablet forecast [Dec 11, 2012]:

      • imageDIGITIMES Research forecasts that global tablet shipments (including both branded and white box models) will overtake notebook shipments in 2013, growing by 38.3% on 2012 levels to hit 210 million units.
      • Shipments of branded tablets alone are forecast to reach 140 million units. That is the shipment of white box tablets is forecast to grow to more than 70 million units in 2013. [NS: Q1-Q3’: 62.6 million]
      • DIGITIMES Research also projects that global shipments of branded and white box tablets will top 300 million by 2015, with branded devices accounting for more than 200 million units and white box tablets for around 100 million.

      My findings behind the title statement:

      • White-box vendors from Mainland China delivered 62.6 million tablets in Q1-Q3’13 vs. 35.4 million a year ago (76.8% growth) per DIGITIMES Research
        (the two latest sources used for that are included in the end)
      • Apple delivered 48.2 million tablets in Q1-Q3’13 vs. 42.8 million a year ago (12.6% growth) per IDC
        (the IDC sources used are the corresponding quarterly press releases)
      • Samsung delivered 27.3 million tablets in Q1-Q3’13 vs. 8.7 million a year ago (214% growth) per IDC (with a H1’13 correction from Samsung itself)
      • IDC’s latest forecast couldn’t take properly into the account the group of white-box vendors (44.6 million in “Others” category vs. 62.6 million), even more than a year ago (25.8 million in “Others” category vs. 35.4 million)
      • With such error for Q1-Q3’13 there was a 142.6 million strong worldwide market by IDC vs. 76.4 million a year ago (86.7% growth)
      • Together the white-box vendors, Apple and Samsung, as the market changing vendors/vendor group delivered 132.7 million tablets in Q1-Q3’13 vs. 86.9 million a year ago (52.7% growth)
      • Meanwhile the “Others” group (with improper inclusion of white-box vendors) by IDC delivered 49.8 million tablets in Q1-Q3’13 vs. 25.8 million a year ago (93% growth)

      image

      • Mainland China had a 4.4 million strong tablet market in Q3’13 vs. the 44.6 million worldwide market as per IDC. Since white-box vendors sold 25 million tablets worldwide (according to DIGITIMES Reasearch) in Q3’13 vs. only 16.8 million sales in the ‘Others’ category by IDC we can safely raise the 49.8 million number by upto 10 million to upto 60 million. This means that in the current quarter Mainland China constituted at least 8.8% of the worldwide tablet market.
      • The sequential (Q/Q) growth rate on the Mainland China market per Analysis Int. is:
        image
      • Meanwhile the sequential (Q/Q) growth rate on the worldwide market per IDC is:
        image
      • This means that Mainland China has much less seasonality than the worldwide market, which is a sign of greater untapped tablet demand than in other markets of the world. Considering the fact that an unusually large group of local tablet vendors are playing the local brand game in China, while the white-box vendor game outside, any global brand tablet vendor should already participate in the Mainland China market in order to succeed worldwide. Lenovo, Samsung and Microsoft have clearly recognised this:


      image
      (the two latest Analysis International sources used for that are indicated later)

      image

      • Samsung has dramatically increased its market penetration efforts in Q3’13 and succeeded quite well. In fact it was able to push back somewhat the growth rate of the group of local brand vendors (from 170% Q/Q growth rate in Q2’13 to 150% in Q3’13) while significantly increased its own growth rate (from 170% to a whopping 220%).

      image

      • Therefore, if things stay as it is (see the above chart) Samsung will outgrow local brand vendors on the Mainland China market within a year.
      • Otherwise, if the group of local brand vendors will be able to withstand Samsung’s local efforts and significantly improve the value of their own brands, then the outlook may return to a view which could have been forecasted after Q2’13 (see the below chart):

      image

      • Meanwhile two local brands, Teclast (台电) and Onda (昂达) each were able to beat two other global brands, Asus and Acer, on the Mainland China market in the last two quarters.
      • The group of ‘Others’, i.e. other local brands taken together were able to grow by similar rate in the last two quarters which shows that with an ongoing consolidation of the local brands (details ommitted here) a few local brands may join Teclast and Onda as the strongest local vendors which will have an opportunity to change their white-box vendor status abroad (and grow globally under their own brand as well).

      image

      image

      The Q3’13 and Q2’13 Analysys International sources:
      Nov 8, 2013: http://www.enfodesk.com/SMinisite/maininfo/articledetail-id-389539.html
      Aug 28, 2013: http://www.enfodesk.com/SMinisite/maininfo/articledetail-id-376953.html

      The Q3’13 and Q2’13 DIGITIMES Research sources:

      China white-box tablet shipments reached about 25 million units in the third quarter of 2013, up 56.3% sequentially and 40.4% on year thanks to strong overseas shipments, which accounted for 80% of the total volume. Among white-box tablet shipments, 7-inch models accounted for the largest share, while 8-inch models, which were originally expected to become new star products, were unable to do so because of high costs from the bezel design and limited supply of 8-inch panels.
      Although white-box tablets are expected to see extraordinary growth in 2013, they are also expected to face more obstacles and challenges in the future. First, they will see strong price competition from large brand vendors, which will offer Android-based products at price levels similar to those of white-box models. Second, the tablet market will gradually reach saturation and should no longer see demand as strong as before.
      Third, white-box tablet costs have already hit the bottom margin, causing related assembly service providers and component suppliers to see limited profits. Several unhealthy players were already been eliminated from the market at the end of the second quarter, while the remaining players will need to rely on pumping up their shipments to support their profitability. However, such a strategy is unlikely to sustain for long, Digitimes Research noted.
      Digitimes Research also found that white-box tablets in Europe or North America are mostly used as gifts in product promotions or bundling deals and therefore specifications are not as high as those of regular tablets. As for emerging markets such as Eastern Europe, Southeast Asia and Latin America, most consumers are buying white-box tablets with a single-core processor, because of limited purchasing power.
      As for application processors (APs), 70% of white-box tablets with phone functions adopted solutions from MediaTek in the third quarter, replacing the solutions from China-based Allwinner, the original favorite. Digitimes Research estimates that the proportion of white-box Wi-Fi-only tablets using MediaTek’s solution will also increase dramatically starting the fourth quarter, further impacting China-based Allwinner and Rockchip’s AP shipments. In addition to low prices, China-based AP suppliers will also need to consider how to create additional value for their APs to survive the competition.
      White-box tablet shipments reached only 15.9 million units in the second quarter of 2013, down 26.3% sequentially due to weakening tablet demand in May and June. Many smaller white-box players were also forced to quit the market, according to Digitimes Research’s latest figures.
      Although white-box tablet shipments peaked in April 2013, increasing component costs and the fact that consumers are becoming more sensitive over tablet pricing, are impacting white-box players’ profitability.
      For component supply, China-based chipmakers’ competition is gradually becoming fierce for both single-core and dual-core processors. In August 2013, some single-core processor prices were as low as US$5. By the end of 2013, dual-core processor will become the basic specification for entry-level white-box tablets, while mid-range models will turn to quad-core processor completely, Digitimes Research noted.
      DRAM and NAND Flash remained at high price points in the second quarter of 2013, but as related players are increasing their supplies in the third quarter, prices are dropping.
      As for panels, an entry-level 7-inch TN panel was priced at about US$10-11 at the beginning of the third quarter, and the price has been rising. Although the industry is seeing tight panel supply, the issue is expected to be eased as more panel players will open up new production lines to manufacture small-to-medium size panels in the first half of 2014.
      White-box vendors’ over-optimism about demand in the first half created high tablet inventories for the vendors. Weak demand in Europe and North America has affected sales of both first-tier brand vendors and white-box players.
      As for China, local first-tier brand vendors’ increasing sales have impacted white-box models’ demand in the country. Emerging markets such as India, Russia, countries in Eastern Europe, Latin America and Southeast Asia, are only providing limited contributions to white-box tablet players because shipments to these countries have just recently started.
      Currently, strengthening their inventory management and expanding into overseas emerging markets will be important tasks for white-box tablet players to survive in the tablet market.