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Smartphone market outlook and the MediaTek Helio X10 based Xiaomi Redmi Note 2/Prime launched for $125, $140 and $156

Let’s start with an extremely good presentation video by Mrwhosetheboss:

And an actual experience video from Chinese sources (finished by comparing to iPhone 6):

Aug 16, 2015, Xiaomi Today: Xiaomi sold 800,000 Redmi Note 2 phones in 12 hours

Note that Xiaomi has already been the top Chinese company tracked here:
Dec 12, 2012UPDATE Aug’13: Xiaomi $130 Hongmi superphone END MediaTek MT6589 quad-core Cortex-A7 SoC with HSPA+ and TD-SCDMA is available for Android smartphones and tablets of Q1 delivery
Aug 1, 2013Xiaomi, OPPO and Meizu–top Chinese brands of smartphone innovation
Aug 30, 2013Assesment of the Xiaomi phenomenon before the global storm is starting on Sept 5
Sept 5, 2013Xiaomi announcements: from Mi3 to Xiaomi TV
June 12, 2014Xiaomi’s global offensive with Hugo Barra in charge is threatening Apple—with 10.4 million smartphones sold in China it had already outsold Apple in Q1’14, having “just” 9 million iPhones sold there from which we must at least understand the market situation in China upto  Q1 2014 as the reference for the Xiaomi’s progress presented here:

With the Q3 2015 Redmi Note 2/Prime advancement Xiaomi will kill the much hoped (by some stock market analysts) incremental opportunities for the $199 Apple iPhone 6 and $299 iPhone 6 Plus in China and throughout the world. And recall that those were announced 11 months ago as “The Biggest Advancements in iPhone History

China smartphone market Q2 2015 by IHS Technology -- 23-July-2015

This report is similar to later Canalys findings: Xiaomi 15.9%, Huawei 15.7%, and Apple #3. But for the rest: #4 Samsung, #5 vivo. Globally Xiaomi became the #2 Chinese smartphone brand in Q2 2015 according to TrendForce with 5.9% market share, the #1 Huawei having 7.6%, but first time surpassing Lenovo, as well as continuing to distance itself from TCL (Alcatel) and OPPO. Similar to data from Counterpoint Research. See Chinese OEMs Rule. Considering Huawei’s aggressive push since 2011, when Xiaomi devices started in China, Xiaomi’s global achievement is a very remarkable feat.  

Why? Because being in the smartphone device business for just 4 years Xiaomi has already been on or around the top in China for the last 12 months, as well as has launched an impressive global march.

That global sales campaign has been going on in Asia, Russia and Turkey so far, but it is now expanding to Latin America with new model launching in Brazil [CCTV America YouTube channel, July 14, 2015]: “The world’s third largest smartphone maker is taking a different approach in its plans for global domination. Instead of looking to expand in the obvious markets like the U.S. and Europe, Xiaomi is looking to South America. CCTV’s Paulo Cabral filed this report from Sao Paulo.”

And it is not difficult to foresee a huge global success for the company as in India Xiaomi became “the 5th biggest seller of phones in the country, a feat accomplished in only 8 months“: Smartphone company Xiaomi expanding to India and beyond [CCTV America YouTube channel, March 20, 2015]
And now 
China’s Xiaomi Begins Making Smartphones in India [Voice of America, Aug 14, 2015]: “Xiaomi’s Redmi2 Prime smartphone [NOT the Note 2 one], priced at about $110, began rolling out from a factory in Sri City in southern Andhra Pradesh state this week. … entered the Indian market just a year ago, but since then price conscious consumers have snapped up 3 million phones.

Also this all happened after “The Chinese smartphone maker, Xiaomi, held a second flash sale of its new 4.7″ Redmi 1S [at $110/699 RMB almost of the same price level as this year’s $125/799 RMB Redmi Note 2on Tuesday [Sept 9, 2014], after selling out in just four seconds a week ago.“: Chinese smartphone Xiaomi competes with Apple [CCTV America YouTube channel, Sept 9, 2014]

from which I will include the following Q2 CY2014 market share slide for China here:
Xiaomi - Q2 CY2014 smartphone market share for China by Canalys -- 9-Sept-2014
as this position of being “on the top or around it” has been kept by Xiaomi ever since. 

Then we should not forget what only 8 months ago was introduced as Xiaomi launches MiNote, a new iPhone competitor [CCTV America YouTube channel, Jan 15, 2015]: “The tech world is abuzz about Chinese tech company Xiaomi’s bid to compete with Apple and Samsung. Xiaomi CEO Lei Jun unveiled the MiNote and MiNote Pro [at $313/1999 RMB and $391/2499 RMB a kind of twice as expensive predecessors to the new Redmi Note 2/Prime] on Thursday, both are cheaper than similar iPhone models. CCTV’s Xia Cheng reported this story from Beijing.

Finally we should look at the new specification comparisons by GSMinsider: Xiaomi - Redmi Note 2 vs iPhone 6 vs iPhone 6 Plus – Specs Comparison -- 14-Aug-2015

With that Xiaomi will kill Samsung high-end opportunities as well.

Let’s look first at the quite drastic decline of the Samsung smartphone business for the last year and a half (data from Strategy Analytics as it’s been represented in the Apple and Huawei move on Samsung article of July 30, 2015 from Telecom.com, with the vendor rankings in the table according to the latest quarter, i.e. Q2 2015): Strategy Analytics - Global Smartphone Share -- Q1 2014 - Q2 2015
Note that Coolpad (Yulong) and ZTE are also globally represented Chinese brands, not mentioned so far in this article.

Which unit-wise looks like as follows (in millions):Strategy Analytics - Global Smartphone Shipments -- Q1 2014 - Q2 2015

Then I can again refer to Samsung-related high-end specification comparisons produced by GSMinsider: Xiaomi - Redmi Note 2 vs Samsung Galaxy Note 4 vs Samsung Galaxy S5 – Specs Comparison -- 14-Aug-2015
And don’t be fooled with the Qualcomm Snadragon 805 and 801 SoCs used by Samsung in these 2014 vintage devices as Samsung itself abandoned Qualcomm as an SoC supplier for its 2015 devices:Xiaomi - Redmi Note 2 vs Samsung Galaxy S6 vs Samsung Galaxy S6 Edge – Specs Comparison -- 14-Aug-2015

CINNO Research - Q1 2015 China Smartphone Rear Camera Pixel Share -- 12-April-2015Note: Such Samsung move of abandoning the Qualcomm Snadragon 805 and 801 SoCs in its latest high-end products is not an accident but a hard-pressed necessity. The octa-core Qualcomm Snadragon 810 replacing the 805/801 had serious thermal throttling problems, and the Chinese brands were starting to use other octa-cores, among them the quite competitive MediaTek Helio X10. See the following Q1 2015 technology landscape presentation composed of the graphical views from the April 12 and April 24 reports by CINNO Research (in addition to the camera related view on the right):CINNO Research - Q1 2015 China Smartphone Display and CPU Technologies -- 12-24-April-2015

And software-wise Xaomi is already 5 years in the smartphone business with a lot of quite enthusiastic supporters for its Android based Mi User Interface throughout the world. The MIUI 5th Anniversary: Greetings From MIUI Fans From All Over The World testimonial video from the MIUI ROM YouTube channel dated August 12, 2015 is stating that: “MIUI is one of the most popular Android ROMs in the world. It is based on Android, featuring a rich user experience and user customizable themes. MIUI is updated every Friday based on feedback from its users. Now with over 100 million users and 34 MIUI fan sites worldwide, MIUI is the choice of many Android users globally.

What kind of “much hoped incremental opportunities (by some stock market analysts) for Apple” I was talking about?

From India Will Overtake US to Become World’s Second Largest Smartphone Market by 2017 [July 1, 2015] by Strategy Analytics the following chart has been produced for Dazeinfo’s Global Smartphone Sales 2015 – 2017: India Will Surpass The US [July 1, 2015] report: Strategy Analytics - Dazinfo - Global Smartphone Sales Forecast 2015 - 2017 -- 1-July-2015That chart has been used by  in his Why Apple’s Growth-Related Fears Are Overblown [Aug 12, 2015] article on Seeking Alpha for its final argument that:

the market sees China as imperative to Apple’s future growth outlook and while true at the moment, there’s a catalyst forming that should lessen the company’s reliance on China and lead to many millions of new iPhone sales.

China is not that “forming catalyst” that I mentioned earlier. Instead, Apple has a prime opportunity to grow in India over the next year or two, a market that’s growing rapidly with middle class consumers and is the world’s second largest economy by population behind only China.


… with India’s help, which includes the growth in middle class consumers through 2020, India might very well one day become just as important as China to Apple.

Before coming to such final argument Nichols is talking about the current market situation in China via a chart from Above Avalon’s China Mobile Is a Game Changer for Apple [April 29, 2015] research note and with the following comments around that:

Above Avalon - Total Customers for Largest Chinese and U.S. Mobile Carriers -- 28-April-2015

I expect Apple to find additional growth in China next year, regardless of what has transpired from a macro perspective over the last few months. The reason is simple: Improved network coverage. Fact of the matter is that most Chinese consumers are still using 2G or 3G networks, which are hardly compatible with the iPhone 6. At the end of the first quarter, China Mobile (NYSE:CHL) had 153 million 4G customers, up from 90 million in December of 2014 and just 1.3 million in February of 2014. However, China Mobile had 815 million total customers. So that means the majority of its subscribers are still on 2G or 3G networks. Given the rate at which China Mobile has added 4G customers during the last 16 months, investors can rest assured that its network and 4G customers will be far larger by this time next year. Notably, most of those 4G customers will need smartphones, and Apple has quickly become the most popular choice in China.

As for China’s second and third largest wireless carriers, China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA), they have nearly 500 million customers collectively. And believe it or not, China Unicom and China Telecom’s 4G network is even more underdeveloped than China Mobile’s network. However, both China Unicom and China Telecom are working just as fast to build their respective 4G networks. Once more, this increases Apple’s market opportunity in China, and is the key reason why I think Apple’s growth in China will continue through next year, probably at a very high double-digit rate.

So these are the speculations which IMHO do not take into account the new product waves from major Apple and Samsung competitors, especially Xiaomi.

Xiaomi’s new 5.5″  Redmi Note 2 launched in China just this week for $125/799 RMB (16GB version supporting TDD-LTE for a China specific 4G version of LTE as well as TD-SCDMA, the China specific 3.5G — targeted at China Mobile subscribers) and $140/899 RMB (16GB version supporting both TDD-LTE and FDD-LTE, i.e. both 4G versions — for the subscribers of any mobile operators, and especially of China Unicom and China Telecom) is the actual case in this regard. Watch the Xiaomi Redmi Note 2 Prime first look miui 7 pre-order video direct from the launch (the QR code at the start and the end has been positioned out of my embedded view): 

Announced: August 13 2015
Network Technology:
GSM / HSPA / LTE
Expected release:
August 16, 2015
Body Dimensions:
152 x 76 x 8.3 mm
Weight: 160 g
SIM: Dual SIM
Display
Type: IPS LCD capacitive touchscreen, 16M colors
Size: 5.5 inches (~72.2% screen-to-body ratio)
Resolution: 1080 x 1920 pixels (~401 ppi pixel density)
Multitouch: Yes
MIUI 7.0
Platform OS: Android OS, v5.0 (Lollipop)
Chipset: Mediatek MT6795
CPU:
– Octa-core 2.0 GHz Cortex-A53
– Octa-core 2.2 GHz Cortex-A53
GPU: PowerVR G6200
Memory Card slot: No
Internal Memory:
– 16 GB, 2 GB RAM – 2 GHz model
– 32 GB, 2 GB RAM – 2.2 GHz model
Camera:
Primary: 13 MP, 4128 x 3096 pixels, phase detection autofocus, LED flash
Features: Geo-tagging, touch focus, face/smile detection, HDR, panorama
Video: 1080p@30fps
Secondary: 5 MP, 720p
Sound Alert Types:
Vibration; MP3, WAV ringtones
Loudspeaker: Yes
3.5mm jack: Yes
Comms:
WLAN Wi-Fi 802.11 a/b/g/n/ac, dual-band, WiFi Direct, hotspot
Bluetooth: v4.0, A2DP, LE
GPS: Yes,
with A-GPS, GLONASS, Beidou
Infrared port: Yes
Radio: FM radio
USB: microUSB v2.0
Features Sensors:
Accelerometer, gyro, proximity, compass
Messaging:
SMS(threaded view), MMS, Email, Push Mail, IM
Browser: HTML5
Java: No
– Fast battery charging: 60% in 30 min (Quick Charge 2.0)
– Active noise cancellation with dedicated mic
– MP4/H.264 player
– MP3/WAV/eAAC+ player
– Photo/video editor
– Document viewer
Battery: Li-Po 3060 mAh battery
Stand-by: Up to 144 h (3G)
Talk time: Up to 11 h 30 min (3G)
Music play: Up to 46 h
Misc Colors:
White, blue, yellow, pink, mint green

The 2.2 GHz Redmi Note 2 Prime version with 32GB storage and support of  TDD-LTE + FDD-LTE will sell at $156 (999 RMB).

More information:
Aug 13, 2015All About Redmi Note 2/Prime: Specifications, Price, Hands-on Pictures! review by Xiaomi MIUI Official Forum
– Aug 13, 2015Xiaomi New Product Launch: MIUI 7(China), Redmi Note 2(Prime), Mi Wi-Fi nano full launch information (not only the Redmi Note 2/Prime)  by Xiaomi MIUI Official Forum, from which the major Redmi Note 2 and 2 Pro Android competition (Huawei P8 and P8max with Hisilicon Kirin 930 and 935 SoCs, and Meizu MX5 (with the same MediaTek Helio X10 @2.2 GHz) on the Chinese market is described as:
Redmi Note 2 and 2 Pro Android competition on the Chinese market -- 13-Aug-2015
Note: regarding the benchmarked performance of each SoC I will recommend the results made available in the Exynos 7420 vs Snapdragon 810 vs MediaTek Helio X10 Turbo MT6795T vs Hisilicon Kirin 935: Benchmark Scores [July 3, 2015] GSMinsider article
For a much broader competitive comparison I will recommend the Redmi Note 2’s comparisons by GSMinsider  which currently contains comparisons (spec-wise):

vs Asus Zenfone 2 vs Asus Zenfone Zoom
vs HTC One M9 vs HTC One M9+
vs Huawei Honor 7 vs Huawei Honor 6 Plus
vs Huawei Ascend Mate 7 vs Huawei Honor 6 Plus
vs Huawei P8 vs Huawei P8 Max
vs iPhone 6 vs iPhone 6 Plus
vs Lenovo Vibe Shot vs Lenovo Vibe Z2 Pro
vs Lenovo ZUK Z1
vs LG G Flex 2
vs LG G4 vs LG G3
vs Meizu M2 Note vs Meizu M1 Note
vs Meizu MX5 vs Meizu MX4 Pro
vs Motorola Moto X Style vs Moto X Play
vs Nexus 6 vs Motorola Moto Maxx
vs OnePlus 2 vs OnePlus One
vs Oppo Find 7 vs Oppo Find 7A
vs Oppo N3
vs Redmi Note
vs Samsung Galaxy Note 4 vs Samsung Galaxy S5
vs Samsung Galaxy S6 vs Samsung Galaxy S6 Edge
vs Vivo X5 Pro vs Vivo X5 Max
vs Xiaomi Mi Note vs Xiaomi Mi Note Pro
vs Xiaomi Mi4
vs ZTE Axon Pro vs ZTE Axon Lux
vs ZTE Nubia Z9 Max vs Nubia Z9 Mini
vs ZTE Nubia Z9

Aug 13, 2015Additional videos from XiaomiHK YouTube channel:

Xiaomi – MIUI Introduction (with English subtitles)

Xiaomi – MIUI V7 Endurance

i.e. MIU 7 on [Xiaomi’s] Mi 4, Huawei Honor 6, Meizu MX4 and Samsung Galaxy S5

Xiaomi – MIUI V7 Performance

Xiaomi – RedmiNote2″>Xiaomi – RedmiNote2

Xiaomi – RedmiNote2 Camera

Important videos available on the Bloomberg Business website only, with 3 most important videos added to them from the CCTV America YouTube channel:

June 5, 2014: Here’s Why Hugo Barra Left Google to Be Xiaomi VP: Xiaomi Early Investor Robin Chan discusses Xiaomi’s hiring of Google’s Hugo Barra on Bloomberg Television’s “Bloomberg West.” Former Xiaomi Board Member Hans Tung also speaks.

July 17, 2015Xiaomi’s Hugo Barra: Studio 1.0 (Full Show 7/16): This week on Studio 1.0: Emily Chang sits down with Hugo Barra, vice president of global operations at Xiaomi. (Source: Bloomberg) 21 minutes from which I will include here the only slide displayed Xiaomi - Global ambition -- 17-July-2015

Plus a lot of other unique information is available in that interview: like the 2015 vintage business model of Xiaomi (investments into non-platform startups to build business partnerships, a whole ecosystem around Xiaomi etc.).

I will add to that the product shown in the Bloomberg interview as an example of such ecosystem generation. This has been documented in Xiaomi launches $13 fitness band [CCTV America YouTube channel, Aug 18, 2014] as: “Chinese Smartphone maker Xiao-mi has started selling an interactive wristband called the Mi Band. The device can measure one’s heart rate and monitor sleep patterns. It’s not the first such device to hit the market, but so far, it’s the cheapest.

I will also add the Xiaomi Buying Spree Gives Apple, Samsung Reason to Worry [Bloomberg Business YouTube channel, Jan 8, 2015] video stating that: “Xiaomi zoomed past Apple Inc. and Samsung in China smartphone sales just three years after releasing its first model. Founder Lei Jun is now on a buying spree to take that momentum beyond handsets. Bloomberg’s Edmond Lococo has more on “On The Move Asia.” (Source: Bloomberg)

Then remember the already known facts mentioned in the second video on the Bloomberg website like: “Xiaomi is not Apple“, “Xiami is an Internet company” (“an Internet platform and services brand” heard in another interview), “services are inherent part of Xiaomi“, “Xiaomi is one of the biggest e-commerce sites in China“, “the Xiaomi platform products are enhanced in functionality on requests from its users by around 50%” etc.

As the latest proof-point of such an Internet platform and service strategy of the company watch the Chinese mobile co. Xiaomi launches wallet app [CCTV America YouTube channel, March 26, 2015] video:

Other videos from Bloomberg Business YouTube channel:

Jan 15, 2015Xiaomi’s Rapid Rise to $45B Valuation Topping Uber: Xiaomi is Apple and Samsung’s rapidly growing threat. Now the world’s third-largest smartphone maker, Xiaomi is releasing its next phone on Thursday at an event in Beijing. Bloomberg’s Cory Johnson looks at how just fast this company is growing. (Source: Bloomberg)

June 5, 2014Meet the Billionaire ‘Steve Jobs of China’ Lei Jun:  Xiaomi co-founder and chief executive officer Lei Jun is known as the Steve Jobs of China, complete with a wardrobe of black shirts and a cult following. But what did he do before starting Xiaomi, and how has his personality helped drive Xiaomi’s success? Bloomberg West’s Emily Chang gives us an overview of this rock star CEO.

Jan 5, 2015Xiaomi Doubles Revenue to $12B as Phone Sales TripleXiaomi, whose investors include billionaire Yuri Milner, more than doubled its revenue in 2014, according to a blog posting by CEO Lei Jun.

Feb 13, 2015Xiaomi’s Barra: U.S. Market Is Important in Many Ways:  Xiaomi’s Hugo Barra discusses the company’s global expansion plans with Bloomberg’s Brad Stone on “Bloomberg West.”

June 4, 2015Xiaomi Grows Wearable Device Market ShareXiaomi is looking to elbow its way into the wearable device market. New figures suggest it took a quarter slice of global sales the first three months of the year. Bloomberg Intelligence’s Jitendra Waral discusses the sales figures on “Trending Business.”

Other videos from the CCTV America YouTube channel:

July 22, 2014Hugo Barra on latest Xiaomi products: Chinese tech firm Xiaomi showed off some of its latest products on Tuesday. The Beijing-based company unveiled its new Mi smartphone and billed it as a challenger to Apple’s iPhone. Analysts say the Mi 4 will be a make or break product for Xiaomi after sales of the older model proved disappointing.The company is also aggressively expanding overseas. Hugo Barra, Xiaomi’s Vice President for overseas business spoke with CCTV’s Xia Cheng.

July 14, 2015Eric Schiffer on Xiaomi’s global strategy: For more on Xiaomi’s global strategy, CCTV’s Michelle Makori spoke to Eric Schiffer, CEO of Patriarch Equity.

Dec 22, 2014
Tech company Xiaomi flourishes in China, India despite patent disputes: China’s Xiaomi tech company is often compared to Apple. Founded in 2010, Xiaomi has quickly surpassed Samsung to become the top smartphone in China and third in the world. Xiaomi phones are currently only sold online and in China and India.

Dec 22, 2014
Ari Zoldan of Quantum Networks discusses Chinese companies, patent troubles: CCTV America’s Sean Callebs interviewed tech industry expert and CEO of Quantum Networks Ari Zoldan about the rise of Xiaomi and it’s legal battles.

 



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Tablet and smartphone market trends

September update: Qualcomm’s smartphone AP revenues declined 17% year-over-year in the second quarter of 2015, Strategy Analytics estimated. Qualcomm maintained its smartphone AP market share leadership with 45% revenue share, followed by Apple with 19% revenue share and MediaTek with 18% revenue share. For the rest 18%: After a difficult 2014, Samsung LSI continued to recover and more than doubled its smartphone AP shipments in the second quarter of 2015 compared to the same period last year. Samsung LSI capitalised on its Galaxy S6 design-win in Q2 2015. In addition the company featured in multiple mid-range smartphones from Samsung Mobile. Full report: Smartphone Apps Processor Market Share Q2 2015: Samsung LSI Maintains Momentum
… The global tablet AP market declined 28% year-over-year to reach US$679 million in the second quarter of 2015, according to Strategy Analytics. Apple, Intel, Qualcomm, MediaTek and Samsung LSI captured the top-five revenue share rankings in the market during the quarter. Apple led the tablet AP market with 27% revenue share, followed by Intel with 18% revenue share. Qualcomm ranked number three, narrowly behind IntelGT400150821[1]Full report: Tablet Apps Processor Market Share Q2 2015: Apple and Intel Maintain Top Two Spots

Digitimes Research saw global tablet shipments fall to 45.76 million units in second-quarter 2015, showing a 10% decrease on quarter and representing more than a 15% decrease on year. Full report: Global tablet market – 2Q 2015 End of September update 

Investors.com comments on tablet and smartphone market trends — Q2’2015:Investors.com comments on tablet and smartphone market trends -- Q2'20151. Apple, Samsung lose ground in tablet market — LG and Huawei gain
2. Apple, Huawei [and Xiaomi] buck slowing smartphone sales trend

As the commenting articles by Investors.com are based on press releases of 2 market research companies I will give the web reference here for those press releases themselves, as well as 3 other press releases not commented on by Investors.com (if there are trend indications in the press releases themselves I will copy them alongside the web reference):

  1. July 29, 2015Worldwide Tablet Market Continues to Decline; Vendor Landscape is Evolving, According to IDCIDC on the Top 5 WW Tablet Vendors between 2014Q2 and 2015Q2“Longer life cycles, increased competition from other categories such as larger smartphones, combined with the fact that end users can install the latest operating systems on their older tablets has stifled the initial enthusiasm for these devices in the consumer market,” said Jitesh Ubrani, Senior Research Analyst, Worldwide Mobile Device Trackers. “But with newer form factors like 2-in-1s, and added productivity-enabling features like those highlighted in iOS9, vendors should be able to bring new vitality to a market that has lost its momentum.”
  2. July 30, 2015Huawei Becomes World’s 3rd Largest Mobile Phone Vendor in Q2 2015 [says Strategy Analytics]
    Strategy Analytics - Huawei becomes world's 3d largest phone vendor in 2015Q2 -- 30-July-2015

    • Woody Oh, Director at Strategy Analytics, said, “… Smartphones accounted for 8 in 10 of total mobile phone shipments during the quarter. The 2 percent growth rate of the overall mobile phone market is the industry’s weakest performance for two years, due to slowing demand for handsets in China, Europe and the US.”
    • Neil Mawston, Executive Director at Strategy Analytics, added, “… Samsung has stabilized volumes in the high-end, but its lower-tier mobile phones continue to face intense competition from rivals such as Huawei in Asia. … Apple outperformed as consumers in China and elsewhere upgraded to bigger-screen iPhone 6 and 6 Plus models.”
    • Ken Hyers, Director at Strategy Analytics, added, “… Huawei is rising fast in all regions of the world, particularly China where its 4G models, such as the Mate7, are proving wildly popular. Huawei has finally overtaken Microsoft to become the world’s third largest mobile phone vendor for the first time ever.”
    • Neil Mawston, Executive Director at Strategy Analytics, added, “Microsoft shipped 27.8 million mobile phones and captured 6 percent marketshare worldwide in the second quarter of 2015. Microsoft’s 6 percent global mobile phone marketshare is sitting near an all-time low. Microsoft continues to lose ground in feature phones, while its Lumia smartphone portfolio is in a holding pattern awaiting the launch of new Windows 10 models later this year. Xiaomi shipped 19.8 million mobile phones and captured 5 percent marketshare worldwide in Q2 2015. Xiaomi remains a major player in the China mobile phone market, but its local and international growth is slowing and Xiaomi is facing intense competition from Huawei, Meizu and others. As a result, Xiaomi may struggle to hold on to its top-five global mobile phone ranking in the coming quarters.”
  3. June 17, 2015Business smartphones shipments in Q1 up 26% from last year, now 27% of total smartphone market [says Strategy Analytics]
    Strategy Analytics - 1Q15 Worlwide Business Smartphone Shipments -- 17-June-2015Android was the most dominant OS in terms of business smartphone shipments in Q1, accounting for nearly 60% of all business smartphones (corporate- and personal-liable). It was also the dominant BYOD device; 68% of personal-liable shipments in Q1 were Android. Apple iOS accounted for only 27% of BYOD shipments in Q1, but was the dominant platform in terms of corporate-liable smartphones, with 48% of Q1 CL shipments. The difference in Android/iOS shipments between the CL and IL categories reflects the continuing corporate perception that iPhones are “safer” than Android-based devices.

    • Shipments of personal-liable smartphones (i.e. “bring your own device,” or BYOD, phones) drove market growth in Q1
    • Strategy analytics defines personal-liable devices as devices purchased by the end-user and expensed back to the company or organization, or devices purchased outright by individual users but used primarily for business purposes linking to corporate applications and backend systems.
    • While personal liable devices dominate worldwide business smartphone shipments, some regions are more resistant to the BYOD trend than others. Such regions include Western Europe and Central Europe, where corporate-liable devices are the dominant types of business smartphones. In Western Europe in Q1, 61% of the 10 million business smart phones were corporate-liable. Central and Eastern Europe had a slightly higher rate of BYOD devices shipped in Q1 — 41% — but the majority of smartphones shipped in this regions was also corporate-liable. This a sharp contrast to North America, where three-quarters of business smartphone shipments are personal-liable. The trend in Western and Eastern Europe reflects the more corporate-centric approach businesses take to mobility in these regions.
  4. July 29, 2015Mobile Broadband Tablet Subscriptions to Double to 200 Million by 2021, says Strategy Analytics Strategy Analytics - Mobile Broadband Tablet Subscription forecasted till 2021 - 29-July-2015

    • Strategy Analytics forecasts global mobile data subscriptions on tablets will more than double from 2015 to 2021, reaching over 200 million
    • Around the globe, over 100 million wireless connections on cellular enabled tablets will be added through 2021. By 2021 tablets will only account for 2 percent of total mobile subscriptions, a 2.7 percent population penetration rate.
  5. July 29, 2015Intel Maintains Top Spot in Non-Apple Tablet Apps Processors in Q1 2015 says Strategy Analytics
    Strategy Analytics - 1Q15 Tablet AP Revenue Share $733M -- 29-July-2015
    ⇒The global tablet applications processor (AP) market declined -6 percent year-over-year to reach $733 million in Q1 2015

    • According to Sravan Kundojjala, Associate Director, “Intel maintained its top spot in the non-Apple tablet AP market in unit terms in Q1 2015. Strategy Analytics estimate Android-based tablets accounted for over 70 percent of Intel’s total tablet AP shipments in Q1 2015. We expect Intel’s Atom X3 cellular tablet chip product line to help Intel maintain its momentum in the tablet AP market.”
    • Stuart Robinson, Executive Director of the Strategy Analytics Handset Component Technologies (HCT) service added, “Strategy Analytics estimates that baseband-integrated tablet AP shipments accounted for over one-fourth of total tablet AP shipments in Q1 2015, helped by a strong push from Qualcomm, MediaTek and Spreadtrum. We expect continued momentum for integrated APs as IntelRockchip and others join the bandwagon.”
  6. July 30, 2015Windows Tablet Shipments Nearly Double in Q2’15, says Strategy Analytics
    ⇒Global Tablet Shipments and Market Share in Q2 2015 (preliminary)
    Strategy Analytics - Global Tablet Shipments and Market Share in Q2 2015 (preliminary) -- 30-July-2015

    • Windows-branded Tablets comprised 9 percent of shipments in Q2 2015, up 4 points from Q2 2014
    • Android-branded Tablet shipment market share was flat at 70 percent in Q2 2015
    • Apple continued its slide in market share down to an all-time low of 21 percent in Q2 2015, 4 points lower than Q2 2014
    • Vendors with strong 3G and LTE connected Tablet strategies such as Huawei, LG, and TCL-Alcatel gained market share as leaders like Apple, Samsung, and the White Box community lost ground
Tablet & Touchscreen Strategies Senior Analyst Eric Smith added, “Windows share continues to improve as more models become available from traditional PC vendors, White Label vendors, and Microsoft itself though a healthy Surface lineup and distribution expansion. The key going forward will be if the coming wave of 2-in-1 Detachable Tablets is a hit with consumers or if they go the way of the Netbook—we remain cautiously optimistic on this point.”
Tablet & Touchscreen Strategies Service Director Peter King said, “Apple’s fortunes will turn around soon as it will launch the 12.9-inch iPad Pro as well as an iPad mini 4 in Q4 2015. New features in iOS 9, which are exclusive to iPad such as multi-tasking and a more convenient soft keyboard, will also help compel upgrades by owners of older iPad models. Meanwhile, Huawei and LG have posted fantastic growth primarily due to well-executed 3G and LTE connected Tablet strategies.”

Then I will add 2 additional information pieces from  Strategy Analytics:

Oct 8, 2014: Replacement Demand to Boost PC Sales in 2015, says Strategy Analytics

Having experienced negative growth since 2012, global PC sales are expected to rise 5 percent in 2015 driven by replacement of an ageing installed base according to Strategy Analytics’ Connected Home Devices (CHD) service report, “Computers in the Post-PC Era: Growth Opportunities and Strategies.”

Click here for the report:

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=10146

  • PC sales will fall by 4 percent in 2014 before returning to modest growth in 2015 and beyond to support replacement demand.
  • Strategy Analytics’ consumer research of computing device usage in developed markets indicates that PCs remain essential computing devices despite healthy Tablet sales.
    • Frequent Tablet usage has grown by 22 percentage points from 2011 to Q4 2013 up to 32 percent of all households while frequent Mobile PC (excluding Tablets) usage has stayed steady through this period, as 63 percent of all households indicated they frequently used Mobile PCs.
    • Frequent usage of all PCs (including Mobile and Desktop PCs and excluding Tablets) remained above the 90 percent mark of all households, falling only 3 percentage points during this period.

Strategy Analytics - Global Computing Devices Installed Base 2009-2018 -- 8-Oct-2014Quotes:

Eric Smith, Analyst of Connected Home Devices, said: “Multiple PC ownership is falling as Tablet sales supplant replacement demand for secondary PCs mainly used for casual tasks. Still, PCs will remain essential devices as households eventually replace their primary PCs used for productivity tasks such as spreadsheet and video editing or personal banking.”

David Watkins, Service Director, Connected Home Devices, added: “The modern Tablet user experience is quickly arriving on the PC thanks to more affordable 2-in-1 Convertible PCs and new operating systems which blend traditional PC and Tablet user experiences. We see development of these forces aligning perfectly with an older PC installed base ripe for replacement in 2015.”

May 1, 2015: Children Change Disney’s Digital Strategy: “App TV” Now Central To Content Planning by David Mercer

Multiscreen TV behaviour is at the centre of television’s stormy transformation – viewing of broadcast, linear TV on the TV screen is apparently in decline while consumption on smartphones and tablets is increasing. Making sense of the big picture is increasingly challenging, and legacy players like broadcasters and the major content owners are inevitably somewhat resistant to the idea that their traditional businesses are under serious threat.

Strategy Analytics - The New TV - Global TV Capable Screens Installed Base -- 1-May-2015We have monitored the early stages of this transformation for the past decade and see its results in our own research, and we continue to predict further industry disruption in our forecasts. But sometimes it is only when you hear the evidence given in person by a senior executive at a leading global player that the scale of the challenge and opportunity are finally brought home.

This happened at last week’s AppsWorld event in Berlin, where I chaired the TV and Multiscreen conference. The speaker was Andreas Peters, Head of Digital for the Walt Disney Company Germany, Austria and Switzerland. Andreas presented some of the most compelling evidence I have yet heard that television is truly a multiscreen medium for the next generation of viewers.

Disney’s challenge in Germany was to launch a television show called Violetta aimed at 8-12 year old girls. It had been introduced successfully in Argentina but had failed in the UK. As it often does, Disney had invested considerable amounts in merchandising and retailers were eagerly anticipating sales of the new product lines. The show was first broadcast on German free TV on May 1st 2014 but it achieved only very low ratings.

The question for Disney managers was whether traditional TV had stopped working. A crisis meeting was held with a view to writing off the investment. Disney had previously not made its shows available online in Germany but the Violetta situation was so serious they were persuaded to experiment. Two episodes were made available on Youtube with a link to Disney’s own website. Viewing of the content on Youtube very quickly went viral until Disney had achieved a reach of 50% of 8-12 year old girls and eight million views. Violetta went on to become a success in German-speaking markets.

The evidence was clear: for some shows at least, younger children cannot now be reached using the traditional broadcast TV/big screen model. Peters explained that the Violetta experience was transformative for the Disney organisation and led to the inclusion of online and digital media as a key element in the business case for many products. In fact it also led to the development and launch of Disney’s own Watch App, which includes live streaming and seven-day catch-up programmes from the broadcast Disney Channel.

Even after the Violetta experience Disney was sceptical that an app was needed – there was a feeling that the website would be sufficient. Nevertheless the app was launched and Disney had planned for 20,000 downloads. Instead it has passed one million downloads in its first six months. Peters noted: “This was a real shock for us. We completely underestimated the demand.” Around 500,000 viewers are now using the Disney Watch app for linear television viewing, in addition to millions of shows being downloaded for catch-up viewing. Peak app viewing hours are between 6am and 8am and then between 1pm and 9pm on school days, with a different pattern at weekends. Peters made it clear that children did not want lots of features built in to the app – just like TV, they just want to hit “play” and watch.

“Our TV colleagues of course don’t want to believe this,” said Peters. “But the world has changed and it will continue to change.” Disney has also seen a knock-on effect from its app launch with an increase in free-to-air broadcast TV viewing. But the firm is now clear that mobile is not just an add-on to TV or a promotional tool; it must be an integral part of the entire process.

There are many implications for content strategy. TV and Digital have to “understand each other”, which is a challenge when the KPIs in each world are very different. As we have often heard, the video industry is crying out for a set of common metrics which can apply and support advertisers in both TV and online worlds. Video consumption patterns vary and different content may be relevant to different platforms.

But the overall lesson is clear: “TV” is not just the big screen in the corner of the living room. It must embrace multiscreen distribution strategies in order to reach its maximum potential. TV companies are betraying their audiences and their investors if they don’t target the 6.4bn addressable screens available to them.

HTC RE camera hands-on! (Android Central)

They took a look on the announcement day (Oct 8. 2014) at the HTC RE camera, the first foray into the post-mobile world from the Taiwanese manufacturer. It’s a small, handheld camera with a 16MP sensor that can shoot on its own, or connect to an Android device or iPhone for tethered shooting.

Q3’13 smartphone and overall mobile phone markets: Android smartphones surpassed 80% of the market, with Samsung increasing its share to 32.1% against Apple’s 12.1% only; while Nokia achieved a strong niche market position both in “proper” (Lumia) and “de facto” (Asha Touch) smartphones

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.

My findings supporting the above title:

  • 205 million Android smartphones were delivered in Q3’13, representing 15.2% growth sequentially (Q/Q) and 67.3% growth relative to the same period of last year (Y/Y)
  • Meanwhile the number of Apple iPhones shipped increased only to 33.8 million, growing by 8.3% sequentially (Q/Q), but still representing a 25.65% growth relative to the same period of last year (Y/Y)
  • The shipment of “proper” smartphones from Nokia (S60/Symbian and Lumia/Windows Phone) increased to 8.8 million units, representing 18.9% growth sequentially (Q/Q) and 39.7% growth relative to the same period of last year (Y/Y)

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Than for the lead smartphone market, i.e. Mainland China I will include here:

There were 102.66 million handsets sold in the China market during the third quarter of 2013, growing 13.6% on quarter and 54.5% on year, of which 93.08 million units were smartphones, increasing 20.7% on quarter and 89.3% on year, according to China-based consulting company Analysys International.

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While for the worldwide market:

Lenovo, ZTE, Huawei and Yulong/Coolpad have taken advantage of the surging low-end smartphone market. According to IC Insights, the four major China-based handset companies are forecast to ship 168 million smartphones in 2013 and together hold a 17% share of the worldwide smartphone market.
Lenovo, ZTE, Huawei and Yulong/Coolpad shipped a combined 98 million smartphones in 2012, a more than 300% surge from the 29 million units shipped in 2011, IC Insights disclosed. It should be noted that the China-based suppliers of smartphones are primarily serving the China and Asia-Pacific marketplace, and offer low-end models that typically sell for less than US$200.
Low-end smartphones are expected to represent just under one-third (310 million) of the total 975 million smartphones shipped in 2013. IC Insights forecast that by 2017, low-end smartphone shipments will represent 46% of the total smartphone market with China and the Asia-Pacific region to remain the primary markets for these low-end models.
Samsung Electronics and Apple are set to continue dominating the total smartphone market in 2013. The two vendors are forecast to ship 457 million units and together hold a 47% share of the total smartphone market in 2013, IC Insights said. In 2012, Samsung and Apple shipped 354 million smartphones and took a combined 50% share of the total smartphone market.
Nokia was third-largest supplier of smartphones behind Samsung and Apple in 2011, but has seen its share of the smartphone market fall. Nokia’s smartphone shipments are forecast to decline by another 4% and grab an only 3% share of the total smartphone market in 2013, IC Insights indicated.
Other smartphone producers that have fallen on hard times include RIM and HTC. While each of these companies had about a 10% share of the smartphone market in 2011, IC Insights estimated they will have only about 2% shares of the 2013 smartphone market.

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Worldwide mobile phone sales to end users totaled 455.6 million units in the third quarter of 2013, an increase of 5.7 percent from the same period last year, according to Gartner, Inc. Sales of smartphones accounted for 55 percent of overall mobile phone sales in the third quarter of 2013, and reached their highest share to date.

Worldwide smartphone sales to end users reached 250.2 million units, up 45.8 percent from the third quarter of 2012. Asia/Pacific led the growth in both markets – the smartphone segment with 77.3 percent increase and the mobile phone segment with 11.9 percent growth. The other regions to show an increase in the overall mobile phone market were Western Europe, which returned to growth for the first time this year, and the Americas.

“Sales of feature phones continued to decline and the decrease was more pronounced in markets where the average selling price (ASP) for feature phones was much closer to the ASP affordable smartphones,” said Anshul Gupta, principal research analyst at Gartner. “In markets such as China and Latin America, demand for feature phones fell significantly as users rushed to replace their old models with smartphones.”

Gartner analysts said global mobile phone sales are on pace to reach 1.81 billion units in 2013, a 3.4 percent increase from 2012. “We will see several new tablets enter the market for the holiday season, and we expect consumers in mature markets will favor the purchase of smaller-sized tablets over the replacement of their older smartphones” said Mr. Gupta.

While Samsung’s share was flat in the third quarter of 2013, Samsung increased its lead over Apple in the global smartphone market (see Table 1). The launch of the Samsung Note 3 helped reaffirm Samsung as the clear leader in the large display smartphone market, which it pioneered.
Lenovo’s sales of smartphones grew to 12.9 million units, up 84.5 percent year-on-year. It constantly raised share in the Chinese smartphone market.
Apple’s smartphone sales reached 30.3 million units in the third quarter of 2013, up 23.2 percent from a year ago. “While the arrival of the new iPhones 5s and 5c had a positive impact on overall sales, such impact could have been greater had they not started shipping late in the quarter. While we saw some inventory built up for the iPhone 5c, there was good demand for iPhone 5s with stock out in many markets,” said Mr. Gupta.

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In the smartphone operating system (OS) market (see Table 2), Android surpassed 80 percent market share in the third quarter of 2013, which helped extend its leading position. “However, the winner of this quarter is Microsoft which grew 123 percent. Microsoft announced the intent to acquire Nokia’s devices and services business, which we believe will unify effort and help drive appeal of Windows ecosystem,” said Mr. Gupta. Forty-one per cent of all Android sales were in mainland China, compared to 34 percent a year ago. Samsung is the only non-Chinese vendor in the top 10 Android players ranking in China. Whitebox Yulong [Coolpad] is the third largest Android vendor in China with a 9.7 percent market share in the third quarter of 2013. Xiaomi represented 4.3 percent of Android sales in the third quarter of 2013, up from 1.4 percent a year ago.

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Mobile Phone Vendor Perspective

Samsung: Samsung extended its lead in the overall mobile phone market, as its market share totaled 25.7 percent in the third quarter of 2013 (see Table 3). “While Samsung has started to address its user experience, better design is another area where Samsung needs to focus,” said Mr. Gupta. “Samsung’s recent joint venture with carbon fiber company SGL Group could bring improvements in this area in future products.”
Nokia: Nokia did better than anticipated in the third quarter of 2013, reaching 63 million mobile phones, thanks to sales of both Lumia and Asha series devices. Increased smartphone sales supported by an expanded Lumia portfolio, helped Nokia move up to the No. 8 spot in the global smartphone market. But regional and Chinese Android device manufacturers continued to beat market demand, taking larger share and creating a tough competitive environment for Lumia devices.
Apple:  Gartner believes the price difference between the iPhone 5c and 5s is not enough in mature markets, where prices are skewed by operator subsidies, to drive users away from the top of the line model. In emerging markets, the iPhone 4S will continue to be the volume driver at the low end as the lack of subsidy in most markets leaves the iPhone 5c too highly priced to help drive further penetration.
Lenovo: Lenovo moved to the No. 7 spot in the global mobile phone market, with sales reaching approximately 13 million units in the third quarter of 2013. “Lenovo continues to rely heavily on its home market, which represents more than 95 per cent of its overall mobile phone sales. This could limit its growth after 2014, when the Chinese market is expected to decelerate,” said Mr. Gupta.

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Superphones turning point: segment satured with Tier 1 globals while the Chinese locals are at less than 40% of the Samsung price

OR Samsung is leapfrogging Apple while the Chinese local brands are coming close to Samsung but at less than 40% price. Meanwhile the superphone segment of the market becomes saturated.

This is even more important as coinciding with:
Eight-core MT6592 for superphones and big.LITTLE MT8135 for tablets implemented in 28nm HKMG are coming from MediaTek to further disrupt the operations of Qualcomm and Samsung [‘Experiencing the cloud’, July 20-29, 2013]
GiONEE (金立), the emerging global competitor on the smartphone market [‘Experiencing the cloud’, July 22, 2013]
Xiaomi, OPPO and Meizu–top Chinese brands of smartphone innovation [‘Experiencing the cloud’, Aug 1, 2013]
UPDATE Aug’13: Xiaomi $130 Hongmi superphone END MediaTek MT6589 quad-core Cortex-A7 SoC with HSPA+ and TD-SCDMA is available for Android smartphones and tablets of Q1 delivery [‘Experiencing the Cloud’, Dec 12, 2012; Aug 1, 2013]

Now the following things are coming in addition to that:

  1. [Samsung is] Leapfrogging Apple while regaining only some high-end SoC supply to it
  2. Chinese local brands are coming close to Samsung but at less than 40% price
  3. The superphone segment of the market becomes saturated
  4. Previous (pre-saturation) milestones according to Samsung

This will be the organization of the ‘DETAILS for the assesment of upcoming changes’ part of this post.

To appreciate the real significance of the sudden change characterized above let’s first get acquainted with the current state of the lead market as described in China Report: Device and App Trends in the #1 Mobile Market [by Mary Ellen Gordon on Flurry Blog, July 23, 2013]

Smartphones and tablets have gone from being the latest gadgets for relatively affluent people in relatively affluent countries to ubiquitous devices in mainstream use in many countries around the world. In fact, as we reported in February of this year China surpassed the US to become the country with the largest installed base of connected devices as measured by Flurry Analytics. As we also reported, a second wave of countries around the world is now experiencing the type of growth mobile pioneer countries experienced previously. For example, the mobile markets in the BRIC countries are now all growing faster than the mobile markets in the U.S., U.K., and South Korea.
Knowing that the landscape is constantly shifting, we are beginning a series of blog posts reporting on the use of smartphones, tablets, and apps in particular countries and geographic regions around the world. Given China’s world-leading installed base and considering the China Joy conference (China’s largest digital conference) is this week we thought we would begin there.
In June of this year Flurry Analytics measured 261,333,271 active smartphones and tablets in China. That represented a whopping 24% of the entire worldwide connected device installed base measured by Flurry. The chart below documents the growth in the installed base. The left axis and blue line show China’s growth over the years. The right axis and red line show growth in the world as a whole (including China) a basis of comparison. As can be seen from the gap between the two lines growing through 2010 and much of 2011, growth in smartphones and tablets in China lagged the world as a whole through that period. But starting toward the end of 2011, the installed base in China began a period of exponential growth. During this period it surpassed the growth rate for the world as a whole, as shown by the blue line catching the red line in the graph. We expect China to maintain its leadership (in terms of active installed base) for the foreseeable future because device penetration rate is still relatively low and much opportunity remains, as we reported in a previous post.

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Xiaomi Is A Local Manufacturer To Watch
Examining a random sample of 18,310 of the devices in our system in China that run iOS or Android apps revealed that Apple and Samsung are the top two device manufacturers, as they are most everywhere. China’s own Xiaomi was a strong third, with a 6% share of the market, ahead of HTC, Lenovo and a multitude of others. As we noted in a previous post, Xiaomi has been successful in accumulating a large number of active users for each device model it releases. Worldwide, only Apple, Amazon, and Samsung have more active users for each device model released.

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It will be interesting to see if Xiaomi can continue to gain share in China – possibly by mopping up share from smaller manufacturers of Android devices – and also if they can begin making gains in other markets outside of China to become more of a global player. With rumors of a Xiaomi tablet circulating, we will also be watching to see if their entry into the tablet market will increase the use of Android tablets in China. Currently 21% of the iOS devices in our randomly drawn sample were tablets compared to only 4% of the Android devices.
Chinese Users Over Index in Reading, Utility, Productivity
In looking at how Chinese people use their connected devices we see similarities and differences compared to the rest of the world. As a general rule worldwide, games dominate time spent in apps measured by Flurry Analytics, and China is no exception. On average, Chinese owners of iOS devices spent 47% of their app in games. The percentage of app time devoted to games was even greater for Android at 56%.

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Smartphones and tablets are not just about fun and games in China. Compared to iOS device owners elsewhere, the average time Chinese owners spend using Books, Newsstand, Utility, and Productivity apps is greater than the rest of the world (1.8x, 1.7x, 2.3x, and 2.1x respectively). On average Chinese owners of Android devices spend more than seven times as much time in Finance apps (7.4x) than Android owners elsewhere spend in Finance apps, but they also spend more time in Entertainment apps (1.7x).

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Will China’s Exponential Growth Change The Device And App Markets?
It will be interesting to see how China now having leadership in terms of its installed base will impact the device and app markets elsewhere. Given Xiaomi’s success at building a large number of users for each model it releases, it might try to add further scale by expanding internationally – particularly to the other rapidly-growing BRIC markets where brand preferences are not already well-entrenched.
Within China itself, Chinese competitors may have an even greater advantage in the app market since cultural influences and differences are likely to be even more important in the app market than in the device market. There are already strong Chinese app companies such as Baidu and Tencent and clusters of app developers emerging in places like Chengdu. At first they are likely to concentrate on apps for the large local market, but that may eventually lead to growing app exports. For example, the fact that Chinese consumers over-index on some more work and educational-oriented apps may encourage Chinese developers to focus on those areas and innovate, and that could lead to creation of apps that end up being adopted elsewhere in the world. We’re looking forward to discovering what app is to China what Angry Birds was to Finland.

And it is also important to understand that as far as the current situation is concerned Samsung’s China magic upstages Apple [Reuters TV, July 25, 2013]

Tim Cook may be scratching his head over slumping China sales, but smartphone competitor Samsung is raking in the cash. Here’s how the South Korean tech giant is doing it.

Insight: How Samsung is beating Apple in China [Reuters, July 26, 2013]

Apple Chief Executive Tim Cook believes that “over the arc of time” China is a huge opportunity for his pathbreaking company. But time looks to be on the side of rival Samsung Electronics Co Ltd, which has been around far longer and penetrated much deeper into the world’s most populous country.
Apple Inc this week said its revenue in Greater China, which also includes Hong Kong and Taiwan, slumped 43 percent to $4.65 billion from the previous quarter. That was also 14 percent lower from the year-ago quarter. Sales were weighed down by a sharp drop in revenues from Hong Kong. “It’s not totally clear why that occurred,” Cook said on a conference call with analysts.
Neither is it totally clear what Apple’s strategy is to deal with Samsung – not to mention a host of smaller, nimbler Chinese challengers.
Today, in the war for what both sides acknowledge is the 21st century’s most important market, Samsung is whipping its American rival. The South Korean giant now has a 19 percent share of the $80 billion smartphone market in China, a market expected to surge to $117 billion by 2017, according to International Data Corp (IDC). That’s 10 percentage points ahead of Apple, which has fallen to 5th in terms of China market share.
Cook said Apple planned to double the number of its retail stores over the next two years – it currently has 8 flagship stores in China and 3 in Hong Kong. But, he added, Apple will invest in distribution “very cautiously because we want to do it with great quality.”
Samsung, with a longer history in China, now has three times the number of retail stores as Apple, and has been more aggressive in courting consumers and creating partnerships with phone operators. It also appears to be in better position, over an arc of time, to fend off the growing assault of homegrown competitors such as Lenovo Group Ltd, Huawei Technologies Co Ltd and ZTE Corp, former company executives, analysts and industry sources say.
Apple declined requests for comment for this article.
VARIED MODELS
Samsung’s history and corporate culture could hardly be more different than Apple’s, the iconic Silicon Valley start-up founded by Steve Jobs and Steve Wozniak in 1976. Lee Byung-Chull started Samsung in 1938 as a noodle and sugar maker. It grew over the decades into an industrial powerhouse, or chaebol as Koreans call the family owned conglomerates that dominate the nation’s economy and are run with military-like discipline.
Apple, by contrast, became the epitome of Californian cool, an image the company revels in. That hip image translates in China – its stores are routinely packed – but hasn’t been enough to overcome the more entrenched Samsung.
A stuffy electronics bazaar in the southern Chinese city of Shenzhen illustrates part of the reason why.
Samsung Galaxys and Apple iPhones of different generations sit side by side, glinting under bright display lights as vendors call out to get customers’ attention. With its varied models, Samsung smartphones outnumber iPhones at least four to one.
While Apple releases only one smartphone a year, priced at the premium end of the market, Samsung brings out multiple models annually with different specifications and at different price points in China.
And those models, analysts say, are loaded with features tailored specifically for the local market: apps such POCO.cn, the most popular photo sharing site in China, or the two slots for SIM cards (Apple offers one), which allows service from multiple cell carriers, either at home or abroad.
“The Chinese just love features. They want their phone to have 50 different things that they’re never going to use,” said Michael Clendenin, managing director of technology consultancy RedTech Advisors. “Apple just doesn’t play that game. Unfortunately, if you want to hit the mainstream market in China, and you want a lot of market share percentage points, you have to offer the Swiss army knife of cellphones.”
“SETTING THE PACE”
Analysts believe Samsung’s increasing strength in China is a critical reason behind its rival’s possible intention to introduce globally a new and cheaper iPhone model, as well as one with bigger screens – a staple of Samsung’s offerings.
Said a Samsung executive with experience in China: “We definitely think we’re setting the pace there. They are having to respond to us.”
Most audaciously, Samsung has gone after Apple not simply by offering lower priced smartphones, but by attacking its rival directly in the pricier end of the market. “We put a lot of emphasis on the high end market in China,” co-CEO J.K. Shin told Reuters in an interview.
Samsung launched a China-only luxury smartphone together with China Telecom marketed by actor Jackie Chan that retails for about 12,000 yuan ($2,000). The flip phone, named “heart to the world,” is encased in a slim black and rose gold metal body. The sleek look – called “da qi” (elegantly grand) – is coveted by Chinese when they shop for cars, sofas or phones.
“There are a lot of ‘VVIP’s’ in China, and for them we launched luxury phones promoted by Jackie Chan. This helps target niche customers and build brand equity,” said Lee Young-hee, executive vice president of Samsung’s mobile business.
While Samsung won’t sell millions of these smartphones, the creation of the phone in conjunction with a carrier reinforces Samsung’s willingness to go local – and tap into niche markets.
The key point is that Samsung consistently adapts to the local market,” said TZ Wong, a Singapore-based technology analyst with IDC.
Apple’s latest mobile operating system offers links to popular Chinese applications like Sina’s microblogging platform Weibo, but the application itself must be downloaded onto the phone. On all of Samsung’s entries, it’s already there.
“People know intellectually that Samsung is from Korea, but when it comes to the messaging there is always a local face,” Wong said.
RETAIL PRESENCE
Samsung opened its first office in China in 1985 in Beijing – an era in which it was all but inconceivable that Apple and Samsung would end up in one of the world’s most intense corporate grudge matches. Like other South Korean chaebols, Samsung was a first mover in China, using the market primarily as a base to produce electronics for the world.
In contrast, Apple’s big push in China came only recently, with the advent of the smartphone age roughly five years ago.
The early entry gave Samsung an undeniable edge, and it adapted fast to a rapidly changing environment. By the mid-1990s, with the economy booming, Samsung made the strategic decision to treat the Chinese market not just as a production base, but to start marketing to China higher-priced electronics, said Nomura researcher Choi Chang-hee, who wrote a history of Samsung’s experience in China.
That shift has meant Samsung’s retail presence in China far outstrips Apple’s. Aside from selling via the distribution outlets of the three major telecom carriers, Samsung also has a strong retail presence through its partners Gome Electrical Appliances and Suning Commerce Group, as well as its own “Experience” stores and small retailers all over the country.
Apple works through the same channels, but its relatively late entry means it has a significantly smaller presence. Samsung, for example, has more than 200 official distributors and resellers in Guangzhou province, while Apple lists 95.
Over the last two decades, Samsung has also taken pains to build relationships with Chinese government officials and -perhaps more critically – the three major telecom carriers.
The notion of the importance of connections – or “guanxi” – in China is occasionally overrated in business. Not, according to Samsung’s Shin, in this case. “It’s our core policy to keep friendly relationships with the operators,” he said. In China, each carrier uses a different technology and that requires Samsung “to tweak our smartphones to their request.”
“It’s not easy,” Shin said, “but we do this to be more operator friendly.”
Contrast that with the ongoing negotiations Apple has had with China Mobile, the largest cellphone operator. For years the two sides have been unable to come to an agreement on revenue sharing, effectively precluding Apple from hundreds of millions of potential customers.
SCRUTINY FROM THE TOP
Samsung’s reach extends higher than just the CEOs of the top state-owned telecom companies. Top executives have met each of the last several Chinese leaders, most recently Xi Jinping, who spent time in April with vice chairman Jay Y. Lee, son of K.H. Lee, Samsung Electronics chairman.
“What surprised me most,” said Lee later, “was that they (Chinese leadership) know very well about Samsung. They even have a group studying us.”
The Chinese government has also made clear it’s well aware of Apple – though not always in a good way. In April, state media bashed Apple for its “arrogance,” protesting among other things that its current 1-year service warranty was insufficient. Apple initially dismissed those criticisms, but Cook later apologized to Chinese consumers.
Samsung’s success in China has its roots, one former executive said, in a previous obsession for the company: its desire not to replicate the mistakes made by Japanese rivals.
Samsung spent a lot of time benchmarking Sony, Toshiba and Panasonic,” said Mark Newman, who spent six years in Samsung’s global strategy group and is now an industry analyst at Sanford C. Bernstein in Hong Kong.
“One of the things that came out of that is the realization that the insular approach has its drawbacks, and so Samsung has made an effort over the last 10 years to be much more global.”
This strategy of decentralization is plainly evident in China, he said, home now to more Samsung employees than any country outside South Korea.
FIGHTING HIGH AND LOW
Samsung now leads in both low-end and high-end segments in China, according to IDC, and its logic of going after both ends of the market is straightforward. In China, where the average wage is roughly $640 per month, many users looking to upgrade from feature phones to smartphones cannot afford Apple.
By bracketing the market with multiple models, Samsung can breed deep relationships with customers, many of whom, market research shows, trade up to more expensive models as they get older. Playing high and low also positions Samsung to fend off the intensifying competition from Chinese firms such as Lenovo and Huawei and literally hundreds of smaller local players.
“That’s where the next battle for Samsung will be fought,” said Newman. “We’ll have to see if Apple does introduce a new, cheaper model for China – and the world.”

DETAILS for the assesment of upcoming changes

1. Leapfrogging Apple while regaining only some high-end SoC supply to it:

Samsung sells 76 mln smartphones in Q2, boosting market share-report [Reuters, July 26, 2013]

Samsung Electronics Co Ltd sold 76 million smartphones in the second quarter, expanding its market share to 33.1 percent, Strategy Analytics said on Friday.

Overall, the global smartphone market grew 47 percent to a record 229.6 million, the research firm said.

Second-ranked Apple Inc saw its market share shrink to 13.6 percent after selling 31.2 million iPhones, as smaller rivals such as LG Electronics Inc, ZTE Corp and Huawei Technologies Co Ltd seized larger slices.

Strategy Analytics: Samsung Becomes World’s Most Profitable Handset Vendor in Q2 2013 [PRNewswire, July 26, 2013]

According to the latest research from Strategy Analytics, Samsung became the world’s most profitable handset vendor in Q2 2013. Apple slipped into second position, as margins have been hit by lackluster iPhone 5 volumes and tougher competition in China.

Neil Shah, Senior Analyst at Strategy Analytics, said, “We estimate Samsung’s operating profit for its handset division stood at US$5.2 billion [61% of the overall, see below] in the second quarter of 2013. Samsung overtook Apple for the first time, which recorded an estimated iPhone operating profit of US$4.6 billion. With strong volumes, high wholesale prices and tight cost controls, Samsung has finally succeeded in becoming the handset industry’s largest and most profitable vendor.”

Neil Mawston, Executive Director at Strategy Analytics, added, “Apple’s reign as the world’s most profitable handset vendor lasted almost four years, from Q3 2009 to Q1 2013. Apple’s profit margin for its handset division has been fading recently due to lackluster iPhone 5 volumes and tougher competition from rivals. Samsung is performing well in the US market, while Huawei, ZTE and other local brands are growing vigorously in China. Apple is now under intense pressure to launch more iPhone models at cheaper price-points or with larger screens to fend off the surging competition and recapture lost profits in the second half of 2013.”

Exhibit 1: Global Handset Operating Profits in Q2 2013  [1]

Global Handset Operating Profits (US$ Billions)

Q2 ’13

Samsung

$5.2

Apple

$4.6

Source: Strategy Analytics

The full report, Samsung Becomes World’s Most Profitable Handset Vendor in Q2 2013, is published by the Strategy Analytics Wireless Device Strategies (WDS) service, details of which can be found here: http://tinyurl.com/cr7fhmb.

But: while handset revenue was up by 9% the operating profit for handsets and network products together were down by 3%. Considering that 97.3% of the IM (IT & Mobile Communications) revenue is for handsets that essentially means a similar operating profit drop of ~3% for handsets alone. Note as well that while the margin was 17.7% a year ago (in 2Q ’12) now (in 2Q ‘13) it was the same 17.7%, so with that 3% drop there was no fundamental problem (yet).
From: Earnings Release Q2 2013, Samsung Electronics, July 2013 presentation [July 26, 2013]

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Samsung explains that by “marginal profit decline due to increased costs of new product launches, R&D and retail channels investments, etc.” as you could see below:

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Fundamental problem could well be with the market share outlook, as neither for 2Q ‘13, nor for the outlook market share was talked about at all.

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Samsung Electronics Announces Earnings for Q2 in 2013 [press release, July 26, 2013]

Samsung Electronics Co., Ltd. today announced revenues of 57.46 trillion won [$51.6B] on a consolidated basis for the second quarter ended June 30, 2013, a 9-percent increase from the previous quarter. Consolidated operating profit for the quarter reached 9.53 trillion won [$8.53B, ~61% of which is estimated for its handset division, see above], representing a 9-percent increase on quarter, while consolidated net profit for the same quarter was 7.77 trillion won [$6.98B].

In its earnings guidance disclosed on July 5, Samsung estimated second quarter consolidated revenues would reach approximately 57 trillion won [$51.2B] with consolidated operating profit of approximately 9.5 trillion won [$8.53B].

Samsung Regains Its Biggest Client Apple [The Korea Economic Daily, July 15, 2013]

Samsung Electronics will supply mobile application processor (AP) to Apple Inc. from 2015. The mobile AP is a brain of Apple’s iPhone. Samsung Electronics will supply 14 nano A9 chips that will be used for Apple’s iPhone 7.
Samsung Electronics had supplied the AP to Apple since 2007 but lost the contract to supply 20 nano AP A8 chips [for iPhone6] to Apple to Taiwan’s TSMC last year when it was engaged in patent disputes with Apple. Samsung Electronics developed state-of-the-art 14 nano models ahead of its rival TSMC, regaining the order from Apple.

According to industry sources on July 14, Samsung Electronics signed an agreement with Apple to supply the next-generation AP that it will produce in 2015. The AP that will be produced using 14 nano FinFET technology is mounted on Apple’s iPhone 7 to be released in the second half of 2015.

Since its relations with Samsung Electronics worsened due to patent disputes, Apple has refrained from using Samsung parts since the second half of last year. Apple excluded Samsung memory chips, including mobile DRAMs, from iPhone 5 that it released in September 2012. Apple also decided to procure iPhone 6 APs from TSMC, the world’s No. 1 foundry company.

TSMC reaches deal with Apple to supply 20nm, 16nm and 10nm chips, sources claim [DIGITIMES, June 24, 2013]

Taiwan Semiconductor Manufacturing Company (TSMC) and its IC design service partner Global UniChip have secured a three-year agreement with Apple to supply foundry services for the next A-series chips built using 20nm, 16nm and 10nm process nodes, according to industry sources.
In response, both TSMC and Global Unichip said they do not comment on customer orders and statuses.
TSMC will start to manufacture Apple’s A8 chips in small volume in July 2013, and substantially ramp up its 20nm production capacity after December, the sources revealed. The foundry will complete installing a batch of new 20nm fab equipment, which is capable of processing 50,000 wafers, in the first quarter of 2014, the sources said.
A portion of the upcoming production capacity, estimated at 20,000 wafers, can later be upgraded to process wafers used to build 16nm chips, the sources continued. TSMC is scheduled to volume produce the Apple A9 and A9X processors starting the end of third-quarter 2014, the sources said.
The upcoming Apple A8 processor will be found in a new iPhone [iPhone 6] slated for release in early 2014, and the A9/A9X chips will be used in the newer-generation iPhone and iPad products, the sources claimed.
The sources did not identify whether TSMC will be the sole supplier of these Apple-designed chips.
TSMC’s phase-4, -5 and -6 facilities of Fab 14, its 12-inch fab located in southern Taiwan, will be dedicated to making Apple’s A-series processors, the sources further noted. The foundry will initially allocate a capacity of 6,000-10,000 12-inch wafers for the manufacture of those chips, and output will rise gradually starting 2014, the sources said.
TSMC chairman and CEO Morris Chang remarked previously that the foundry’s 16nm FinFET process would enter mass production in less than one year after ramping up production of 20nm chips. Risk production for its 20nm process kicked off in the first quarter of 2013.

Samsung Electronics is the Biggest Beneficiary of LTE-A [Korea IT News, July 15, 2013]

Samsung Electronics has emerged as the biggest beneficiary of the commercialization of LTE-A services by all of the three South Korean telecom operators. This is because the Samsung Galaxy S4 LTE-A is the only LTE-A smartphone put on the market at the moment. Thus, sales of the Galaxy S4 LTE-A has a good chance of making up for slower than expected domestic sales of the Galaxy S4. LG Electronics and Pantech plan to launch their LTE-A smartphones sometime next month.

150,000 Galaxy S4 LTE-A smartphones were activated in 14 days with SK Telecom alone. In other words, an average of 10,000 Galaxy S4 LTE-A smartphones went into service a day. Sales of the Galaxy S4 LTE-A is much faster than the Galaxy S4, propped up by Samsung-SK Telecom joint marketing campaigns and growing expectations of LTE-A’s twice faster speeds [LTE=75Mbps –> LTE-A=150Mbps] than LTE.

Sales of the Galaxy S4 LTE-A is projected to surge in the weeks to come since LG and Pantech’s LTE-A smartphones are scheduled to come out as early as next month.

The world’s first LTE-A [SK telecom YouTube channel, June 25, 2013]

More information:
– SK Telecom Launches World`s First LTE-Advanced Network [press release, June 26, 2013]
World’s First Mobile Device with LTE Advanced Carrier Aggregation Powered by the Qualcomm® Snapdragon™ 800 Processor [OnQ Blog, June 26, 2013]
Qualcomm Snapdragon 800 Processors Power World’s First LTE-Advanced Smartphone [press release, June 26, 2013]
Samsung LTE Leadership and Future-Focused Innovation Produces World’s First LTE-Advanced Smartphone [press release, June 26, 2013]
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From: 25 things my new Android phone does that makes my iPhone feel like it comes from the 1990s [ZDNet, July 11, 2013]

A few weeks ago, I told you about my plans to ditch my old iPhone 4S and get a brand-new Samsung S4 Android phone. Well, a few days later, I did just that.

  1. You can replace the battery
  2. You can add an memory card to your phone
  3. You can replace the back cover
  4. It supports wireless inductive charging without a bulky sled
  5. Wonder-of-wonders: you can actually plug a USB cable into it and drag and drop files from your computer
  6. It’s got a full 1080p HD display
  7. You don’t have to use iTunes
  8. You can completely replace your launcher
  9. Your home screen can be alive
  10. You can replace your unlock screen with a customized version
  11. It’s a frickin’ tricorder
  12. It supports near field communications (NFC)
  13. It has an IR emitter
  14. You can turn your phone into a stealthy TV-B-Gone
  15. The thing senses hand gestures above it
  16. It watches your eyes
  17. It has a 13 megapixel camera
  18. Its camera can remove objects that don’t belong in the image
  19. Its camera can take multiple images and composite them together automatically
  20. You can install apps from a browser on your PC
  21. It can show two apps on-screen at once
  22. You can automate almost everything
  23. When you buy something on the Google Play store, you get an email receipt within minutes, not weeks
  24. It integrates (mostly) nicely with Google Voice
  25. You can have a new hobby (whether you want it or not)
  • Samsung Galaxy S4 GT-I9500 [16GB] Factory Unlocked: $618 on Amazon ($700 list)
    – Exynos 5 Octa 5410 SoC with 2GB RAM
    – Quad-core 1.6 GHz Cortex-A15 & quad-core 1.2 GHz Cortex-A7 CPU with tri-core 533MHz PowerVR SGX544 GPU
  • Samsung Galaxy S4 GT-I9505 16GB 4G/LTE Factory Unlocked: $611 on Amazon($999 list)
    – Snapdragon 600 SoC with 2GB RAM
    – Quad-core 1.9GHz Krait 300 CPU with 450MHz Adreno 320 GPU


2. Chinese local brands are coming close to Samsung but at less than 40% price

Let’s take Jiayu* quad-core smartphone offerings as of July 15, 2013 in China (as they are the price leaders among the MT6589/MT6589T-based devices in China):
Jiayu G3 Quad Edition (G3s) is from $110 in retail shops throughout the country
(Note that this price is even lower than the spec-wise similar Xiaomi $130 Hongmi superphone.)
– Jiayu G4 Standard (on sale for $155 (thin) and $163 (thick) list price since April 10) now with summer offer is from $130 in retail shops throughout the country
1.5GHz Jiayu G4 Advanced (G4s) is $216 since July 6 with 7 working days delivery
1.5GHz Jiayu G4 thin version is $160 since July 13 with not later than July 24 delivery

* About Jiayu (佳域)

Baoji Jiayuyutong Electronic Co., Ltd was established in April 2009, is one of the high-tech enterprises, committed to the mobile communication product, research and development, manufacturing, sales and service. The company has more than 800 employees, including more than 30 R & D personnel and 60 engineering and technical people. At present, the company has 10 complete product lines, 2 laboratory rooms, a variety of advanced testing equipment.
Brand interpretation: “good domain”, the Chinese word for pioneering domestic smart phone “Best of the Realm”; “JIAYU” to “good domain” Chinese spelling.

Jiayu G3S quick review [nikchris69 YouTube channel, July 13, 2013]

Index: 0:00 : quick look on the external 0:52 : quick look at smoothness 1:30 : quick look at general settings, ram, etc 5:28 : quick look at camera settings 8:10 : quick look at lockscreen Jiayu G3S is my new phone, it comes from China. I bought that very cheap (200$/150€) and it also came with hands-free and a case. Here it is with the paid version of Nova Launcher. More videos of this phone will come soon.

Jiayu Store links: Jiayu S1, Jiayu G4 and Jiayu G3s (other link: Mobile Dad, July 13)image

Update: JiaYu S1 CNC machining process [Gizchina YouTube channel, Aug 6, 2013]

The JiaYu S1 is JiaYu’s first Snapdragon powered phone with a 1080 display. While we have seen this before from Chinese manufacturers it is nice to see that JiaYu are not only concentrating on the performance of the phone but are also ensuring the manufacturing quality is also spot on. In this video from the JiaYu factory we get to see the CNC manufacturing process of the S1’s stainless steel chassis.

imageYiayu S1 (see above) at 1.7GHz is on par with Samsung Galaxy S4 in performance:
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according to the Antutu benchmark results at http://www.jiayu-store.com/blog/

Update: JiaYu S1 wireless charging demo Video [Gizchina YouTube channel, Aug 6, 2013]

The JiaYu S1 is nearing a launch date and as expected the company are releasing videos of the phone showing off some of the great built in functions. In this quick video we get to see the JiaYu S1’s wireless charging in action.

JiaYu G4 Hands On [Gizchina YouTube channel, May 13, 2013]

Here is a hands on video with the JiaYu G4 Basic [Standard]. The phone has a quad-core MT6589 1.2Ghz CPU, 1GB RAM, large 3000mAh battery [there is also a thinner version with 1850mAh battery], 13 mega-pixel rear camera and Android 4.2 Jelly Bean. In this video you will get a good look at the phone along with examples of video streaming, gaming and Antutu results.


3. The superphone segment of the market becomes saturated:

Smartphone slowdown could spell trouble in Taiwan [Reuters TV YouTube channel, July 9, 2013]

July 10 – With signs the high-end smartphone market in the developed world is at a near-term saturation point, Taiwanese chipmakers like TSMC may find once-assured profits are more fleeting than expected.

Samsung’s smartphone champ braves a tough crowd [Reuters TV YouTube channel, July 4, 2013]

July 5 – It’s not easy being J.K. Shin. The Samsung Electronics co-CEO has driven record quarterly profits and handset shipments, and yet investors are still displeased. Reuters’ Jon Gordon reports.

Samsung Confronts Saturated Smartphone Market [Bloomberg YouTube channel, July 5, 2013]

July 05 (Bloomberg) — Howard Lindzon, CEO and Co-Founder of Stocktwits, discusses the size of both Samsung and Apple, and the ability to move beyond the Smartphone. He speaks on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

Has Apple lost its cool factor? [CNNInternational YouTube channel, June 10, 2013]

A look at Apple’s declining fortune and what they need to do to regain luster. CNN’s Dan Simon reports.

China smartphone aims to rival Apple [Financial Times YouTube channel, Jun 25, 2013]

Chinese consumers have been clamouring to get their hands on a Xiaomi smartphone since its launch in 2011. Known as a Chinese rival to Apple, the low-cost phone has been held up as a model of Chinese innovation. The FT’s Leslie Hook talks the Xiaomi’s founder, Lei Jun, about investing in start-ups and growing his business.

China’s Huawei launches world’s slimmest smartphone [AFP YouTube channel, June 18, 2013]

Chinese telecoms giant Huawei launches what it says is the world’s thinnest smartphone, which it hopes will take on high-end rivals like Apple and Samsung in the global market. Duration:00:53

Huawei Ascend P6 — 2-Minute Encounter [HuaweiDeviceCo YouTube, June 18, 2013]

Meet beauty from outside in.

The rise of Chinese smartphones [CNN YouTube channel, May 30, 2013]

Kristie Lu Stout vistis Huawei’s headquarters for a look at how the company’s trying to take on Apple and Samsung. For more CNN videos, visit our site at http://www.cnn.com/video/

Google and Motorola’s Moto X (hands-on) [The Verge YouTube channel, Aug 1, 2013]

David Pierce takes an early look at the new Moto X and speaks with Motorola brass about the philosophies that went into the design of the phone and the company’s relationship with Google.

More information:
Moto X. All Yours. [The Official Motorola Blog, Aug 1, 2013]
Motorola Moto X vs. Samsung Galaxy S4 [Gizmag, Aug 2, 2013]
16GB Motorola Moto X to cost $575 SIM-free [GSMarena.com, Aug 2, 2013]

Motorola Moto X was unveiled yesterday and the smartphone will soon be available from the top 5 carriers in the USA. The 16 GB variant of the Moto X is priced at $200 and the 32 GB unit costs you $250 with a two-year contract.

At the announcement event Motorola did not announce the pricing details of the SIM-free editions, but they are no longer a mystery as AT&T has confirmed the pricing of the device without a contract. At launch, the 16 GB model of the Moto X will cost you $575, while the 32 GB is priced at $629.

Moto X – Motomaker [motorola YouTube channel, Aug 1, 2013]

Design your own Moto X. Over 2,000 ways to customize.

BBC News – Can Moto X revive Motorola’s fortunes? [BBCWorldNewsWatch YouTube channel, May 30, 2013]

Motorola has struggled to keep up in the fast-paced smartphone market, but now the company has announced that it will take on its rivals with a new handset named the Moto X. Can the company really compete against the likes of Apple, Samsung and HTC? The BBC’s Aaron Heslehurst spoke tech expert Stuart Miles, from Pocket-lint, to find out more about Motorola’s plans.

Moto X Phone release date, news and rumours [TechRadar YouTube channel, July 2, 2013] “could be landing in installs in October”,  and “to undercut the big players of the market such as the Samsung Galaxy S4 and the HTC One –meaning we might see some very competitive pricing

All the latest rumours surrounding the highly-anticipated Motorola X Phone.

From: Samsung Electronics 2Q13 review: Fading growth momentum vs improving valuations [The Korea Economic Daily, July 8, 2013]

Samsung Electronics (Samsung) announced 2Q13 preliminary sales of W57trn [$51B] and OP of W9.5trn [$8.5B], a record quarterly high. However, OP fell short of the consensus (W10.2trn) by 6.5% and our estimate (W10trn) by 5%. Despite strong memory prices due to supply shortages and higher OLED sales and margins, OP disappointed on lower smartphone ASP and IM margins due to increased marketing costs.
As the growth of the smartphone market slows due to commoditization, concerns are mounting over eroding ASP and margins. In fact, we estimate OP at the IM division eroded from W6.51trn with an OPM of 19.8% in 1Q13 to W6.23trn [$5.6B] with an OPM of 18.4%. Considering Apple lawsuit provisions were booked in 1Q13, the effective decline in OPM is over 3% as sales of the Galaxy S3 and Note 2 deteriorated.

We revise down our earnings forecasts to reflect lower handset OPM. Specifically, we estimate 3Q13 OP at W10.1trn [$9B] (previously W11.0trn) and full-year 2013 OP at W38.1trn [$34.2B] (previously W40.3trn). We cut Galaxy S4 3Q13 sales to 20mn units (previously 23mn) to reflect the poor sales; however, we maintain OP and OPM at 2Q13 levels given the global launch of the Galaxy S4 Mini and Note 3.

*Source: Korea Investment & Securities Co.

From: Galaxy S4, 20 million sales in just two months … 40 days faster than the previous [ChosunBiz, July 3, 2013] as traslated from Korean by Google and Bing with manual edits

Samsung Electronics (005930) launched the Galaxy S4 20 million sales in two months (on the carrier supply basis) of the fastest selling Samsung smartphones ever, according to industry.
The Galaxy S4  was released only two months ago by the end of June, and the carrier supply sales exceeded 20 million.
When this morning president JK Shin of Samsung Mobile met with reporters in Samsung Electronics Seocho building in response to a question whether the amount of Galaxy S4 sales would be 20 million he told “You know, there are”, and this is a 20 million breakthrough.
Since the official launch of the Galaxy S4 on the 26th of April  in 60 countries 4 million were sold in just five days, then went on to sell 10 million units in a month.

… On the other hand a Samsung official said, “as regards the Galaxy S4 sales numbers there is no answer”.

From: Analyst: Samsung Galaxy S4 Sales vs. Apple iPhone 5 Sales [Wall St. Cheat Sheet, July 7, 2013]

Although the Galaxy S4 has sold faster than any other Samsung device, it appears that it still couldn’t surpass the sales rate for the iPhone 5. Citing the slowing demand for the Galaxy S4, a mid-June report from J.P. Morgan lowered the 2013 earnings estimate for Samsung by 9 percent. After the report was released, Samsung lost $12.4 billion in market capitalization, falling to $187.8 billion.

Samsung analysts ask hard questions as S4 marketing charm wears off [Reuters, June 16, 2013]

(Reuters) – Analysts fell under Samsung Electronics Co Ltd’s marketing spell when they made what they now admit were hopelessly optimistic forecasts for its smartphone sales.

Samsung’s huge share of the high-end smartphone market also persuaded some analysts to downplay industry data pointing to a fast-saturating segment, a reality that is already eating into sales of Apple Inc’s iPhone 5.
Woori Investment & Securities, one of South Korea’s largest securities firms, cut its outlook for Samsung’s earnings and target share price on June 5. It was the first to adjust its view.
A massive wave of downgrades has since followed, with forecasters including JPMorgan, Morgan Stanley and Goldman Sachs taking a harder look at their assumptions of how well the S4, Samsung’s latest Galaxy smartphone, would actually do.
Sales estimates for the S4 were slashed by as much as 30 percent, stirring investor concerns over Samsung’s mobile devices division – the company’s biggest profit generator.
Investors in the South Korean IT giant have paid dearly. Samsung lost nearly $20 billion in market value in a week as shares plunged following the downgrades.
“I’d say most forecasters including myself had this conviction that they’ll outperform again – because it’s Samsung,” said Byun Hanjoon, an analyst at KB Investment & Securities. “They had beaten expectations before, which led many to believe they are bound to excel again with the S4.”
The S4 sold 10 million sets in just one month of its debut in late April, outperforming its predecessor, the S3.
Yet analysts now say the high-end smartphone segment is slowing, citing lacklustre prospects in Europe and South Korea in particular.
The S4, in reality, also lacks any real wow factor, they say.
“The Street, including Goldman Sachs, admittedly extrapolated the first-quarter earnings momentum through the year,” Goldman Sachs analyst Michael Bang said in a report. “This resulted in very optimistic earnings expectations.”
Most analysts have reduced their estimates for S4 shipments to around 7 million units a month from their previous average expectation of 10 million.
Bank of America Merrill Lynch has lowered its S4 sales estimate for this year by 5 million to 65 million units.
Some analysts say a loss in potential sales of 5 million S4 units would cut around $1 billion of Samsung’s operating profit.
“S4 sales are solid. It’s just that some analysts had higher expectations and then they lowered them,” J.K. Shin, head of Samsung’s mobile devices division, told reporters last week.
Over the past month, 17 out of 43 analysts have downgraded their earnings estimates for Samsung, leading to a 0.6 percent drop in their average forecast for the company’s April-to-June earnings to 10.4 trillion won ($9 billion), according to Thomson Reuters StarMine.
The lowered forecast, however, would still be a quarterly record.
Many analysts say weaker-than-expected S4 sales will not necessarily stop Samsung from posting record quarterly profits. The company has diversified into many segments of the smartphone market, Merrill Lynch says.
MID-TIER PHONES
Still, the scale of the downgrades has cast a shadow on Samsung’s dominance in the $250 billion smartphone market.
Doing it no favour, Chinese rivals are aggressively growing their market share, aided by strong sales of mid-tier models – a segment in which Samsung has relatively weak positioning, according to analysts.
The mid-tier segment accounted for less than 15 percent of Samsung’s total shipments last year.
Analysts say Samsung has to focus on this lower tier in the medium term.
The high-end segment is losing momentum, with manufacturers struggling to differentiate themselves and consumers calling for a leap in innovation, they say.
To be sure, Samsung has not sat idle.
It has gradually expanded its offerings. Among four varieties of the S4 introduced in recent weeks, there was one stripped-down version called the Galaxy Mini.
By comparison, Apple has had no new offerings since the iPhone 5 hit the market in September last year.
Samsung bulls are also pinning their hopes on product launches later this year including the Galaxy Note 3, a phone-tablet hybrid.
Some analysts say conservative forecasts will prevail.
Expectations for innovation have been lowered, and I don’t think there’ll be as much buzz surrounding new product launches as it used to be,” said Byun at KB.
Samsung’s stock, which slumped to a six-month low on Thursday, inched up 0.9 percent on Friday.
($1 = 1134.4000 Korean won)
(Reporting by Miyoung Kim; Editing by Ryan Woo)

Samsung GALAXY S4 Hits 10 Million Milestone in First Month [Samsung Mobile Press, May 23, 2013]

Samsung Electronics Co., Ltd. today announced that global channel sales of its GALAXY S4, a life companion for a richer, fuller, simpler life, has surpassed 10 million units sold in less than one month after its commercial debut. Launched globally on April 27, the phone is estimated to be selling at a rate of four units per second.

The GALAXY S4 sets a new record for Samsung, generating sales quicker than any of its predecessors. Sales of the GALAXY S III reached the 10-million mark 50 days after its launch in 2012, while the GALAXY S II took five months and the GALAXY S seven months to reach the same milestone.

“On behalf of Samsung, I would like to thank the millions of customers around the world who have chosen the Samsung GALAXY S4. At Samsung we’ll continue to pursue innovation inspired by and for people,” said JK Shin, CEO and President of the IT & Mobile Communications Division at Samsung Electronics.
The GALAXY S4 was developed to enhance the meaningful moments in our lives through its innovative features and superior hardware. It has the world’s first Full HD Super AMOLED display that showcases images at their very best on a 5-inch screen with 441ppi. Equipped with a powerful rear 13MP camera, the GALAXY S4 also boasts a Dual Camera function that allows simultaneous use of both front and rear cameras. The GALAXY S4’s new and innovative software features include Air View and Air Gesture for effortless tasks, while it also keeps users up-to-date with information about their health and wellbeing using S Health.
Samsung GALAXY S4 is available in more than 110 countries and will gradually be rolled out to a total of 155 countries in cooperation with 327 partners.
Samsung is planning to introduce more color variations to meet various consumer tastes and preferences. In addition to the currently available Black Mist and White Forest, new color iterations will be added this summer, including Blue Arctic and Red Aurora, followed by Purple Mirage and Brown Autumn.
* All functionality, features, specifications and other product information provided in this document including, but not limited to, the benefits, design, pricing, components, performance, availability and capabilities of the product are subject to change without notice or obligation.
** Availability of colors will vary depending on the country and carrier/retailer.

Is Samsung’s Growth at the Expense of Apple? [Bloomberg YouTube channel, April 26, 2013]

April 26 (Bloomberg) — Samsung captured a third of the global smartphone market in the first quarter as growth for Apple’s iPhone dropped to its slowest pace ever, according to data released by Strategy Analytics. Strategic Analytics Senior Strategist Neil Shah speaks with Emily Chang reports on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg) — For more “Bloomberg West” videos: http://bloom.bg/LIZpfr


4. Previous (pre-saturation) milestones according to
Samsung Mobile Press (with relevant video inserts from other sources):

See: Samsung GALAXY S II reaches 3 Million global sales [July 3, 2011]

From: Samsung GALAXY S II reaches new heights with 5 million global sales [July 28, 2011]

Samsung Electronics Co., Ltd, a global leader in digital media and digital convergence technologies, today announced that the Samsung GALAXY S II (Model: GT-I9100) has passed the 5 million global sales milestone.
The GALAXY S II is Samsung’s flagship smartphone device; a beautifully thin, (8.49mm) and lightweight dual-core smartphone that combines an unmatched Super AMOLED Plus viewing experience with incredible performance, all on Android – the world’s fastest-growing mobile operating system. The next generation smartphone also includes exclusive access to Samsung’s four new content and entertainment hubs, seamlessly integrated to provide instant access to music, games, e-reading and social networking services.
The 5 million mark has been reached in just 85 days, a rate which is 40 days faster than the original GALAXY S took to reach the same sales mark. This rate is set to accelerate as Samsung has just launched GALAXY S II in China, the world’s largest market.

image

From: Samsung GALAXY S II continues success reaching 10 Million in global sales [Sept 26, 2011]

Samsung Electronics Co., Ltd, a global leader in digital media and digital convergence technologies, today announced that the Samsung GALAXY S II (Model: GT-I9100) has achieved 10 million global channel sales, doubling from five million in just eight weeks.

The GALAXY S II is Samsung’s flagship smartphone device – a beautifully thin (8.49mm) and lightweight dual-core smartphone that combines an unmatched SuperAMOLED Plus viewing experience with powerful performance, all on Android, the world’s fastest-growing mobile operating system. The next generation smartphone also includes Samsung’s four content and entertainment hubs, seamlessly integrated to provide instant access to music, games, e-reading and social networking services.

Samsung celebrates 30 million global sales of GALAXY S and GALAXY S II [Oct 17, 2011]

Samsung Electronics Co., Ltd, a leading mobile handset provider, today announced that its Samsung GALAXY S and GALAXY SII smartphones have achieved a combined total of 30 million global sales.
GALAXY SII has set a new record for Samsung, generating more than 10 million sales – quicker than any device in Samsung’s history. The device also recently received five out of the total ten Mobile Choice Consumer Awards 2011 in the UK as well as 2011 Gadget Award for being chosen as the best smartphone of the year by T3, confirming it as a run-away favorite smartphone with consumers this year. It continues to gain traction as Samsung’s flagship smartphone – a stylishly designed, slim and ultra-portable device combining an unrivalled viewing experience with powerful dual-core processor performance.
Launched in 2010, Samsung GALAXY S reached almost 20 million unit sales, making it the highest-selling mobile device in Samsung’s portfolio to date, and another record-breaker for the company and the mobile market.
Since launching to high critical acclaim two years ago, the GALAXY S range has continued to gain popularity among consumers and propelled the GALAXY brand to one of the most recognized mobile brands in the world, with Samsung now the largest Android smartphone vendor and the second largest phone vendor overall worldwide (IDC).
“Since its launch only five months ago, GALAXY SII has seen tremendous sales success and garnered enthusiastic reviews from consumers and mobile industry watchers across the globe. This is in addition to the continued sales momentum behind GALAXY S, which we launched at Mobile World Congress 2010 as continues to be a run-away success with consumers,” said JK Shin, President and Head of Samsung’s Mobile Communications Business.
“The phenomenal success of these smartphones once again demonstrates how the GALAXY S smartphones is setting the standard for smart mobile technology around the world.”

From: Samsung GALAXY S II awarded “Best Smartphone” by GSMA at Mobile World Congress 2012 [Feb 29, 2012]

This honor comes in recognition of the device’s powerful performance and overwhelming response from consumers. GALAXY S II, Samsung’s flagship smartphone, achieved worldwide sales of over 10 million units in only 5 months, quicker than any device in Samsung’s history and surpassed over 20 million sales in 10 months.

With SIII, Samsung makes smartphone duopoly official – Tech Tonic [Reuters TV YouTube channel, June 21, 2012]

From: Samsung GALAXY S III Reaches 20 Million Sales Milestone in Record Time [Sept 6, 2012]

Samsung Electronics Co., Ltd, a global leader in digital media and digital convergence technologies, today announced that the GALAXY S III smartphone has achieved 20 million unit sales in just 100 days since its debut in May 2012. As Samsung’s most successful smartphone to date, the GALAXY S III has set a new record, generating sales quicker than any of its predecessors.

From: The Samsung GALAXY S III achieves 30 million sales in five months [Nov 4, 2012]

Putting this number into perspective, during a similar selling period (150 days), the acclaimed GALAXY S II, launched in 2011, globally sold 10 million devices.

Now upgradable to Android™ 4.1 (Jelly Bean)*, the nature-inspired GALAXY S III is a revolutionary smartphone packed with intelligent features that make everyday life easier. Its expansive 4.8-inch HD Super AMOLED display lets users view multimedia and web content in brilliant color and clarity; and its camera understands human gestures to make using the phone incredibly natural and intuitive. A powerful hardware ensures blazing-fast performance and seamless multi-tasking.


* Availability and timing of the Jelly Bean upgrade will vary depending on the country and mobile carrier.

Samsung GALAXY S Series Surpasses 100 Million Unit Sales [Jan 14, 2013]

    • Samsung has announced that global channel sales of the company’s flagship smartphone, GALAXY S III and its two predecessors GALAXY S and GALAXY S II have surpassed 100 million units sales as of January 13, 2013.
    • Samsung GALAXY smartphones are intuitive and easy to use, display photos and videos on dazzling screens, and deliver a premium user experience with a design that is elegant and feels natural.
    • The GALAXY S, has reached over 24 million global channel shipments, achieving 10 million of these during the first seven months after its launch in June 2010.
    • Building on this success Samsung launched the GALAXY S II in April 2011. This smartphone reached around 40 million shipments, achieving 10 million global channel sales in just five months.
    • In May 2012, Samsung unveiled the GALAXY S III – a smartphone designed for humans and inspired by nature. It revolutionized the user experience, and was critically acclaimed, achieving 20 million global channel sales in just 100 days – which made it Samsung’s fastest selling smartphone yet.
    • GALAXY S III has now passed the mark of 40 million unit channel sales.

How Did Samsung Come to Rule Smartphones? [Bloomberg YouTube channel, March 14, 2013]

March 14 (Bloomberg) — Bloomberg West Editor-at-Large Cory Johnson examines how Samsung came to build its smartphone business as it takes aim at Apple’s iPhone with today’s launch of the Galaxy S4. He speaks on Bloomberg Television’s “In The Loop.” — Related Story: http://bloom.bg/ZNshKu — For more “In the Loop” videos: http://bloom.bg/LbOTQk

Linux client market share gains outside the Android? Instead of gains will it shrink to 5% in the next 3 years?

The Linux Foudation quite proundly referred to ReadWriteMobile: The ‘Year of the Linux Desktop’? That’s So 2012 [Feb 3, 2013]

For those Linux enthusiasts still pining for the mythical “Year of the Linux Desktop,” the wait is over. In fact, it already happened. In 2012 Microsoft’s share of computing devices fell to 20% from a high of 97% as recently as 2000, as a Goldman Sachs report reveals [”Clash of the titans” downloadable from here, dated Dec 7, 2012]. While Apple has taken a big chunk of Microsoft’s Windows lead, it’s actually Google that plays Robin Hood in the operating system market, now claiming 42% of all computing devices with its free “Linux desktop” OS, Android.

Read more at ReadWriteMobile.

from which I will include here the following chart:

image

for which Goldman Sachs commented as:

The compute landscape has undergone a dramatic transformation over the last decade with consumers responsible for the massive market realignment. While PCs were the primary internet connected device in 2000 (139mn shipped that year), today they represent just 29% of all internet connected devices (1.2bn devices to ship in 2012), while smartphones and tablets comprise 66% of the total. Further, although Microsoft was the leading OS provider for compute devices in 2000 at 97% share, today the consumer compute market (1.07bn devices) is led by Android at 42% share, followed by Apple at 24%, Microsoft at 20% and other vendors at 14%.

Note from Goldman Sachs: Microsoft has gone from 97 percent share of compute market to 20 percent [The Seattke Times Dec 7, 2012]:
I asked Goldman Sachs about what happened in the 2004-2005 time frame — as seen in the above chart — that made Apple’s vendor share jump, Microsoft’s share plummet and the “other” category to go from zero to 29 percent. Goldman Sachs replied that it has to do with more mainstream adoption of non-PC consumer computing devices but declined to elaborate beyond that.

Microsoft was put into the “Challenged” category (along with Google BTW) by Golmann Sachs noting that:

… we estimate that Microsoft would have to sell roughly 5 Windows Phones or roughly two Windows 8 RT tablets to offset the loss of one traditional Windows PC sale, which we estimate has an overall blended selling price of $60 for business and consumer.

but a kind of more positive than negative outlook was predicted for the company by

… we expect the recent launches of Windows Phone 8 and Windows 8 tablets to help the company reclaim some share in coming years.

Apple, at the same time, was into the “Beneficiaries” category (along with Facebook and Samsung BTW) by Goldmann Sachs for the reason of:

… we believe loyalty to the company’s ecosystem is only increasing and this should translate into continued growth going forward. In particular, we see the potential for Apple to capture additional growth as existing iOS users move to multiple device ownership and as the company penetrates emerging regions with new devices such as the iPad miniAAPL and lower priced iPhones. As a result, we believe Apple’s market share in phones has room to rise much further, and that its dominant tablet market share appears to be more resilient than most expect. We expect these factors to continue to drive the stock higher.

This is, however, not going to happen if taking a judgement from the stock market reflections since then with 13.7% drop in Apple’ share price vs. that of Dec 7 (the report publishing date) and a whopping 34.5% drop vs. its last peak on Sept 19, 2012 (at $702.1):image 
source: Yahoo! Finance

Why Did $AAPL Stock Go Down After Beating Earnings Estimates And $AMZN Stock Go Up After Missing? [Techcrunch, Jan 29, 2013] had the following explanation:

The moves in different directions for Amazon and Apple have been about expectations and guidance. Wall Street has higher expectations for Apple and ‘different’ expectations for Amazon. Wall Street wants Apple’s ‘gross margins’ to grow. They don’t expect Amazon’s ‘profits’ to grow. It sounds silly, but if Apple has reported lower profits and a huge gross margin increase the stock might have shot up. If Amazon had reported record profits today on decreasing margins, Wall Street might have panicked.

Wall Street has stopped caring about Apple’s profits today. They were displeased with forward guidance. Growth rates have slowed measurably at Apple which is understandable for a company of its’ size. Wall Street is worried that growth is slowing and competition from Google and Samsung are taking a toll. Apple has given Wall Street so many wonderful surprises so magic has become the norm. Now that Apple is boring, they have run for the hills.

That moode didn’t change even after Apple CEO Tim Cook was trying to assure investors at the Goldman Sachs Internet and Technology Conference on Feb 12, just a week ago. Read the Wrap up: Apple CEO Tim Cook’s Goldman Sachs Conference keynote [AppleInsider, Feb 13, 2013] from which I will quote only the following excerpts as the most notable ones:

Cook went on to say that introducing a “budget device” was not something Apple would be comfortable with, and instead pointed to the strategy seen with the iPhone lineup. In that model, new variants like the iPhone 5 are sold at the highest price while preceding versions like the iPhone 4S and iPhone 4 are sold at discounted rates.

According to Cook, the iPad is “the poster child of the post-PC revolution” and has driving the push to tablets since its introduction in 2010.

While Apple’s tablet has been the downfall for a number of PC alternatives, such as netbooks, the device is also said to be hurting the company’s own Mac computer sales. During the last quarter of 2012, Mac sales dropped 22 percent year-to-year on low demand and supply constraints. Apple’s iPad business, however, grew by nearly 50 percent over the same period.

The cannibalization question raises its head a lot,” Cook said. “The truth is: we don’t really think about it that much. Our basic belief is: if we don’t cannibalize, someone else will. In the case of iPad particularly, I would argue that the Windows PC market is huge and there’s a lot more there to cannibalize than there is of Mac, or of iPad.”

Cook noted that burgeoning markets like China and Brazil will be major players in future growth, and the company is banking on its ability to draw customers in to the Apple ecosystem with “halo products.”

“Through the years, we’ve found a very clear correlation between people getting in and buying their first Apple product and some percentage of them buying other Apple products.”

At the same conference Microsoft, similarly to Apple, declared a ‘no change’ strategy despite of the obvious failure of its Windows 8 and Windows Phone efforts so far. In the No “Plan B” for Microsoft’s mobile ambitions: CFO [Reuters, Feb 13, 2013] report one can read:

“We’re very focused on continuing the success we have with PCs and taking that to tablets and phones,” Microsoft’s Chief Financial Officer Peter Klein said

“It’s less ‘Plan B’ than how you execute on the current plan,” said Klein. “We aim to evolve this generation of Windows to make sure we have the right set of experiences at the right price points for all customers.”

Gartner estimates that Microsoft sold fewer than 900,000 Surface tablets in the fourth quarter, which is a fraction of the 23 million iPads sold by Apple. Microsoft has not released its own figures but has not disputed Gartner’s.

Windows phones now account for 3 percent of the global smartphone market, Gartner says, which is almost double their share a year ago but way behind Google’s Android with 70 percent and Apple with 21 percent.

To grab more share, Klein said Microsoft was working with hardware makers to make sure Windows software is available on devices ranging from phones to tablets to larger all-in-one PCs.

“It’s probably more nuanced than just you lower prices or raise prices,” said Klein. “It’s less a Plan B and more, how do you tweak your plan, how do you bring these things to market to make sure you have the right offerings at the right price points?”

So the last 3 months went against Goldmann Sachs’ November 2012 predictions. The only question now remains whether those 3 months brought any changes in the non-Apple and non-Microsoft territories which would question other parts of the Goldmann Sachs’ forecast as well?

There were no negative changes just strengthening of the already established dominant position against both Apple and Microsoft:

1. Mainstream tablets 7-inch at US$199, say Taiwan makes [DIGITIMES, Feb 19, 2013]

Google’s Nexus 7 and Amazon’s Kindle Fire HD have reshuffled the global tablet market and consequently 7-inch with a price cap of US$199 has become the mainstream standard for tablets, according to Taiwan-based supply chain makers.

Cumulative sales of the Nexus 7 have reached six million and are expected to reach eight million units before the expected launch of the second-generation model in June 2013, the sources said. The Nexus 7 and Kindle Fire have driven vendors to develop inexpensive 7-inch tablet models instead of 10-inch ones, the sources indicated.

In order to be as reach US$199, 7-inch tablets are equipped with basic required functions such as access to the Internet and watching video, the sources noted. While Google, Amazon, Samsung Electronics and Asustek Computer are competitive at US$199 for 7-inch tablets, white-box or other vendors need to launch 7-inch models at lower prices such as US$149, the sources said. Fox example, China-based graphics card vendor Galaxy Microsystems has cooperated with Nvidia to launch a 7-inch tablet in the China market at CNY999 (US$160).

2. Digitimes Research: 68.6% of touch panels shipped in 4Q12 from the Greater China area [DIGITIMES, Feb 19, 2013] meaning that in supply chain terms there is a growing concentration on suppliers not only from Greater China but especially from mainland China:

Taiwan- and China-based touch panel makers held a 68.6% global market share for touch panels shipped during the fourth quarter of 2012, according to Digitimes Research.

China-based panel makers saw the biggest share in the handset touch panel market during the fourth quarter due to smartphone demand in China, while Taiwan-based panel makers only held a 27.5% share in the market largely due to lower-than-expected sales of the iPhone 5, said Digitimes Research.

In terms of touch panels used in tablets, Taiwan-based panel makers saw a drop in their global market share to 59.9% during the period largely due to the iPad mini using DITO thin-film type touch screens provided from Japan-based touch panel makers. China-based panel makers meanwhile held 18.6% in the market due to demand for white-box tablets in China, added Digitimes Research.

Meanwhile, Digitimes Research found that Taiwan-based TPK provided 70.9% of all touch panels used in notebook applications in 2012.

3. Touch Panel Market Projected for a 34% Growth in 2013 from 2012 [Displaybank, sent in a newsletter form, Feb 19, 2013] published to promote Touch Panel Market Forecast and Cost/Issue/Industry Analysis for 2013 [Jan 30, 2013]

The touch panel market is growing rapidly due to the increasing sale of smartphones and tablet PCs. The touch panel market size in 2012 was 1.3 billion units, a 39.4% growth over 2011. The market is projected to grow 34% in 2013, growing to more than 1.8 billion units.

Touch Panel Market Forecast (Unit: Million)image(Source: Displaybank, “Touch Panel Market Forecast and Cost/Issue/Industry Analysis for 2013”)

Smartphone and tablet PCs, major applications that use touch panels, are expected to continue to grow at a high rate. In addition, most IT devices that use display panels have either switched to or will start using the touch panels soon. Therefore the touch panel market will show a double digit growth annually until 2016, by unit. The market size is expected to reach more than 2.75 billion units by 2016.
With the explosion in the sale of smartphones and tablet PCs during the past few years, our lives have changed dramatically. They are now common place in our lives, and have a huge influence in the IT industry in general. With the introduction of Windows 8 OS in October 2012, upsizing of touch panels has begun. The impact of this event on the immediate growth of the touch panel market and the long-term effect is so immense that it cannot be estimated at the moment.
The financial crisis that started in 2008 left much of the IT industry hobbling worldwide. But only the touch panel market is enjoying a boom. Many new players are pouring into the industry, and those on the sidelines are waiting for the opportune moment to enter. As more players enter the competitive landscape, touch panel prices are falling rapidly. In addition, to gain competitiveness and to differentiate itself in the market has led players to develop and improve structure, technique and process, and seek out new materials.
The introduction of Windows 8 is leading the increase in touch capable Notebook and AIO PCs. It is still too early for the touch interface to completely displace keyboard and mouse, but the touch functionality does add convenience to some operations. We are sure to see an increase in specialized apps that capitalize on such functions. Therefore, touch functions will complement traditional input methods. As the technology is still in early implementation stages, it is used only in select high-end Ultrabooks. But it’s only a matter of time before touch functions make its way to mid-end products.
Forecasting the future of touch panel industry is not only difficult, but also outright confusing in the current landscape due to the rapid expansion; the increase in number of devices that use touch panels; more players in the market; and rapid development of new products and new processes. In serving clients, Displaybank has released “Touch Panel Market Forecast and Cost/Issue/Industry Analysis for 2013” to provide industry outlook by application, product, and capacitive touch structure. The report also includes the supply chain of set makers and touch panel manufacturers; and cost analysis of major capacitive touch panels by size and type. This report will serve as a guide to bring clarity and understanding of rapidly transforming touch panel industry.

4. Cheaper components could allow 7-inch tablets priced below US$150, says TrendForce [DIGITIMES, Dec 14, 2012]

Viewing that Google and Amazon have launched 7-inch tablets at US$199, other vendors can offer 7-inch tablets at below US$150 only by adopting cheaper components, according to Taiwan-based TrendForce.
As panels and touch modules together account for 35-40% of the total material costs of a 7-inch tablet, replacing the commonly used 7-inch FFS panels with 7-inch TN LCD panels accompanied by additional wide-view angle compensation could save over 50% in panel costs, TrendForce indicated. In addition, replacing a G/G (glass/glass) or OGS (one glass solution) touch module with a G/F/F (glass/film/film) one, although inferior in terms of transmittance and touch sensitivity, can cut costs by about 70%. Thus, the adoption of a TN LCD panel and a G/F/F touch module for a 7-inch tablet could reduce material costs by about US$25, TrendForce said.
Given that the type of DRAM affects standby time only as far as user experience is concerned, costs can be reduced through replacing 1GB mobile DRAM priced at about US$10 with 1GB commodity DRAM priced at about US$3.50, TrendForce noted. As for NAND flash, 8GB and 4GB eMMC cost US$6 and US$4, respectively, and therefore the latter should be the preferred choice to save costs.
For CPUs, China-based IC design houses, including Allwinner Technology, Fuzhou Rockchip Electronics, Ingenic Semiconductor, Amlogic and Nufront Software Technology (Beijing), provide 40-55nm-based processors at about US$12 per chip which could be alternatives to chips used in high-end tablets which cost about US$24, TrendForce indicated.
While the sales performance of tablets below US$150 is yet to be seen, such cheap models are expected to put pressure upon China-based white-box vendors, and in turn intensify price competition in the tablet market in 2013, TrendForce commented.

5. Strong demand from non-iPad tablet sector to boost short-term performance of IC vendors [DIGITIMES, Jan 28, 2013]

Demand for IC parts from the tablet industry in China has been stronger than expected in the first quarter of 2013, which could help boost the short-term performance of IC design houses, while offsetting the impact of slow demand from China’s smartphone sector caused by high inventory levels, according to industry sources.

Entry-level tablets meet market demand in terms of pricing and functionality, particularly in China, said the sources, adding that demand for entry-level tablets in China and other emerging markets could top 4-5 million a month in 2013 compared to 2-3 million in the second half of 2012.

MediaTek, while seeing demand for its handset solutions from China decrease in the first quarter of 2013, has also enjoyed emerging IC demand from the tablet sector, with plans to release chipset solutions for the segment in the second quarter of the year, the source revealed.

Since the growth momentum for tablets in 2013 is expected to come from non-iPad vendors in China and other emerging markets, Taiwan-based suppliers of LCD driver, analog and touch-controller ICs as well as those of Wi-Fi, audio and Bluetooth chips will benefit from the trend thanks to cost advantages and strong business ties in these markets, the sources commented.

6. Allwinner A31 SoC is here with products and the A20 SoC, its A10 pin-compatible dual-core is coming in February 2013 [Dec 10, 2012] and The upcoming Chinese tablet and device invasion lead by the Allwinner SoCs [Dec 4, 2012], both from my own separated trend tracking site devoted to the ‘Allwinner phenomenon’ coming from mainland China and having the potential of drastically altering the 2013 device market (not taken into account at all by Goldmann Sachs report):

Allwinner Tech tell us about the new features of their A31 product targeted for tablets, smartphones and smart TVs. Based on quadcore ARM Cortex-A7.

that already resulted in huge growth of the mainland China Android tablet manufacturing in 2012, as well shown by this chart:which has already fundamentally affected the worldwide tablet market in 2012:

7. What Allwinner started in 2012 with the single core A10/A13 SoCs and which was further boosted by the quad-core Cortex-A7 A31 SoC on Dec 5, 2012 with the release of Onda V972 and V812 tablets (for US$ 208 and US$144 respectively) is an incredible strategic inflection point for the whole ICT industry, which ALL SoC vendors should compete with. Rockchip shown as the #2 on the mainland China market just followed the suite:

Rockchip’s new RK3188 chipset: quadcore ARM Cortex-A9 and quadcore ARM Mali-400, 28nm HKMG process. Plus an update on Rockchip’s involvement with products for the education market.

8. Now the most ambitious external challenger Marvell Announces Industry’s Most Advanced Single-chip Quad-core World Phone Processor to Power High-performance, Smartphones and Tablets with Worldwide Automatic Roaming on 3G Networks [press release, Feb 19, 2013] which is going to add to the competition the integrated on the SoC 3.5G modems:

Marvell’s PXA1088 is the industry’s most advanced single-chip solution to feature a quad-core processor with support for 3G field-proven cellular modems including High Speed Packet Access Plus (HSPA+), Time division High Speed Packet Access Plus (TD-HSPA+) and Enhanced Data for GSM Environment (EDGE).

The Marvell PXA1088 solution incorporates the performance of a quad-core ARM Cortex-A7 with Marvell’s mature and proven WCDMA and TD-SCDMA modem technology to provide a low-cost [elsewhere stated by Marvell that this SoC is for the phones space in the “$100 range”] 3G platform for both smartphones and tablets. The advanced application processor technology of the PXA1088 enables a breakthrough end user experience for multimedia and gaming applications with universal connectivity. Marvell’s complete mobile platform solution includes the Avastar® 88W8777 WLAN + Bluetooth 4.0 + FM single-chip SoC and the L2000 GNSS Hybrid Location Processor, and an integrated power management and audio codec IC.

Marvell’s PXA1088 is backward pin-to-pin compatible with its dual-core single-chip Unified 3G Platform, the PXA988/PXA986, enabling device partners to upgrade their next-generation mobile devices to quad-core without  additional design cost.

Currently, the PXA1088 platform is sampling with leading global customers. Products based on this platform are expected to be commercially available in 2013 [elsewhere stated by Marvell thatWe’ll start seeing PXA1088-based phones in the first half of this year”].

9. Yesterday we had two significant advancements described in the Ubuntu and HTC in lockstep [Feb 19, 2013] post here. Especially the Ubuntu related part is remarkable as first time we had a new platform which can span the whole spectrum of devices: from smartphones, to tablets, to desktops, to TVs – actually all from a smartphone capability expanded via docking and other means to a screen, to a TV, a keyboard, and a mouse. This is certainly an extreme case of the new Ubuntu capability which can have implementation in different devices as well. Even in that case, however, the source and binary codes could be the same. This is also cleverly using the already well established Android drivers and Android Board Support Package (BSP) infrastructure of the most cost-efficient ARM SoC vendors. Note that this is furthest from any “license violation” attacks as the original OHA terms and conditions are stating the Apache V2 licencing which:

The Apache license allows manufacturers and mobile operators to innovate using the platform without the requirement to contribute those innovations back to the open source community. Because these innovations and differentiated features can be kept proprietary … Because the Apache license does not have a copyleft clause, industry players can add proprietary functionality to their products based on Android without needing to contribute anything back to the platform. As the entire platform is open, companies can remove functionality if they choose.

10. Finally today came Google Glass: showing how radically the user experience might be changing in the next 2-3 years:

Want to see how Glass actually feels? It’s surprisingly simple. Say “take a picture” to take a picture. Record what you see, hands free. Even share what you see, live. Directions are right in front of you. Speak to send a message, or translate your voice. Get the notifications that matter most. Ask whatever’s on your mind and get answers without having to ask. All video footage captured through Glass. Welcome to a world through Glass. See more athttp://www.google.com/glass/start “New Lipstick” by The Kissaway Trail on Google Play -http://goo.gl/v4dUf

More information: Google Glass – Home [Feb 20, 2013] where it is also possible to grasp its wonderful, non-intrusive seign like this:

image

Conclusion: There are even more uncalculated by Goldmann and Sachs advancements in the non-Apple and non-Microsoft spaces than in Apple and Microsoft ones. Just in these 3 months! Therefore it would be ridiculous if Goldmann and Sachs’ “consumer compute platform share” forecast as shown in the chart above will be fullfilled!

Boosting both the commodity and premium brand markets in 2013 with much more smartphones and tablets while the Windows notebook shipments will shrink by 2%

This is my conclusion after reviewing

  • The ongoing trends in the commodity and premium brand ecosystems of Android devices:
    – Smartphones
    – Tablets

and

  • The emerging new trends in the premium ecosystem of the Windows devices:
    – Notebooks
    – Smartphones

as reported by the most knowledgeable sources.

Updates: – ODMs see weaker profits from tablet business [DIGITIMES, March 26, 2013]

As Google and Amazon reportedly will release their next-generation 7-inch entry-level tablets in the near future, sources from the upstream supply chain have estimated that related ODMs’ profits from these tablets will be about 20% less than those from notebooks.
Since tablets have a simpler design than notebooks, the ODMs are only able to earn about US$9-10 for each tablet made, lower than US$13-20 for notebooks.
In addition, fewer components needed means that ODMs will have difficulties using their purchasing advantages to earn profits, and tablet brand vendors’ demand for specific components will also impact the makers’ profits, the sources noted.
Seeing weak growth in the notebook industry, most ODMs have turned to place their focuses on the tablet market and are competing aggressively for orders through price cuts, the sources said.

Wintel camp mulls measures to rekindle weakening notebook industry [DIGITIMES, Feb 21, 2013]

Suppliers within the Wintel camp are mulling to launch a series of measures, including price cuts for their products, in the second quarter of 2013 to rekindle the stymied notebook industry caused by growing popularity of tablets, according to industry sources.
The launch of Windows 8 has failed to ignite replacement demand for notebooks in the end markets, resulting in a prolonged inventory adjustment process at the supply chain that has been going on since the third quarter of 2012, the sources noted.
With market reports indicating that global tablet shipments are likely to reach 200-300 million units in 2013, including 150 million units in China and other emerging markets, notebook vendors will see their market share continue to be eroded by tablets, commented the sources.
While agreeing to the consensus that price-cutting will be the only way to stimulate notebook demand, related PC chip suppliers are urging the major players in the Wintel camp, mainly Intel and Microsoft, to take the lead in action so that the entire supply chain can follow.
The Wintel camp has always chosen to start cutting their product prices in the third quarter each year, noted the sources, but it would be too late to safeguard the notebook industry as well as its supply chain if Intel and Microsoft do not take actions till the third quarter this year.
Since Intel usually will cut significantly its CPU prices prior to the launch of new models, the planned launch of Haswell platform in June may persuade the chip giant to lower the quotes for its Ivy Bridge family CPUs earlier, the sources revealed.
But it remains to be seen if price cuts by Intel alone could stir up notebook replacement demand amid the squeezing-out effect triggered by the rise of tablets, mobile phones and other mobile Internet devices, commented the sources.

End of updates

Before reading the sections of this post corresponding to the above, do not forget to read my own analytical posts which are based on the new product directions and supporting SoC trends (and as such predicting the year 2013 market even better than the external analyses quoted here which are mainly based on supply chain trends and market changes observed already in 2012):
$48 Mogu M0 “peoplephone”, i.e. an Android smartphone for everybody to hit the Chinese market on November 15 [Nov 9, 2012]
Lowest H2’12 device cost SoCs from Spreadtrum will redefine the entry level smartphone and feature phone markets [July 26 – Nov 9, 2012]
The low priced, Android based smartphones of China will change the global market [Sept 10-26, 2012]
Unique differentiators of Nokia Lumia 920/820 innovated for high-volume superphone markets of North America, Europe and elsewhere [Sept 6 – Nov 13, 2012]
With Asha Touch starting at $83 and Lumia at $186 Nokia targeting the entry-level and low-end smartphone markets [Nov 1, 2012]
Boosting the MediaTek MT6575 success story with the MT6577 announcement  – UPDATED with MT6588/83 coming early 2013 in Q42012 and 8-core MT6599 in 2013 [June 27, July 27, Sept 11-13, Sept 26, Oct 2, 2012]
MT6577-based JiaYu G3 with IPS Gorilla glass 2 sreen of 4.5” etc. for $154 (factory direct) in China and $183 [Sept 13, 2012]
China’s HW engineering lead: The Rockchip RK292 series (RK2928 and RK2926) example [Oct 27, 2012]
Nexus 7: Google wanted it in 4 months for $199/$245, ASUS delivered + Nexus Q (of Google’s own design and manufacturing) added for social streaming from Google Play to speakers and screen in home under Android device control [June 28, 2012]
Giving up the total OEM reliance strategy: the Microsoft Surface tablet [June 19 – July 30, 2012]
ASUS: We are the real transformers, not Microsoft [Oct 17, 2012]
Microsoft Surface: its premium quality/price vs. even iPad3 [Oct 26, 2012]
BUILD 2012: Notes on Day 1 and 2 Keynotes [Oct 31, 2012]
Acer Iconia W510: Windows 8 Clover Trail (Intel Z2760) hybrid tablets from OEMs [Oct 28, 2012]
Microsoft Surface with some questions about the performance and smoothness of the experience [Nov 12, 2012]

Update: The sections of this post are somewhat taking into the account the most dramatic disruption in the whole history of ICT, what I am calling the ‘ALLWINNER PHENOMENON’ (all ‘Allwinner et al phenomenon’ sometimes when including Allwinner’s internal mainland China competitors such as Rockchip into account as well). EVERYBODY SHOULD BE AWARE of the fact, however, that even in the latest forecasts by bigname ICT market researchers the ‘Allwinner phenomenon’ is not taken into account at all. The two very recent updates from IDC given below should therefore be read with that in mind as the ‘Allwinner phenomenon’ will add hundreds of millions to those forecasts starting as early as in 2013. Especially the numbers for the tablets will be affected. To understand more about that please read my special posts given in a newly created blog about the ‘Allwinner phenonmenon’:
Allwinner A31 SoC is here with products and the A20 SoC is coming [Dec 10, 2012]
Is low-cost enough for global success? [Dec 5, 2012]
The upcoming Chinese tablet and device invasion lead by the Allwinner SoCs [Dec 4, 2012]
$40 entry-level Allwinner tablets–now for the 220 million students Aakash project in India [Dec 4, 2012] from this alone 220 million additional tablets would have been delivered from 2013 to 2016
USD 99 Allwinner [Nov 30, 2012]
It’s a Strategic Inflection Point [Dec 1, 2012]

Update: HTC 1Q13 smartphone shipments to grow slower than expected, say sources [DIGITIMES, Dec 18, 2012]

Affected by the launch of iPhone 5 and rapidly declining smartphone prices in China, HTC reportedly has revamped its product roadmap for 2013 and is expected to see its smartphone shipments rise 10-15% sequentially in the first quarter of the year compared to a 20-30% growth projected previously, according to industry sources.

HTC has suspended development of a number of new models for 2013, reducing the visibility of its orders for handset components, the sources revealed.

HTC declined to comment on market speculation.

However, the industry watchers believe that HTC is heading for a bumpy road ahead, since shipments of its Windows Phone 8-based smartphones have not been as strong as expected, while Apple’s iPhone 5 and Samsung Electronics’ Galaxy III have continued to enjoy brisk sales.

In China, HTC is facing cut-throat competition from local white-box smartphone vendors and has been forced to enter the sub-CNY2,000 (US$321) segment, which runs counter to its established policy focusing mainly on the high-end sector, said the sources.

Update: Worldwide Smart Connected Device Market, Led by Samsung and Apple, Grew 27.1% in the Third Quarter, According to IDC [IDC press release, Dec 10, 2012]

image

The worldwide smart connected device market – a collective view of PCs, tablets, and smartphones – grew 27.1% year-over-year in the third quarter of 2012 (3Q12) reaching a record 303.6 million shipments valued at $140.4 billion dollars. Expectations for the holiday season quarter are that shipments will continue to reach record levels rising 19.2% over 3Q12 and 26.5% over the same quarter a year ago. According to the International Data Corporation (IDC) Worldwide Quarterly Smart Connected Device Tracker, 4Q12 shipments are expected to reach 362.0 million units with a market value of $169.2 billion dollars. Holiday season growth will be driven by tablets and smartphones, which are expected to grow 55.8% and 39.5% year-over-year respectfully, while PCs are expected to decline slightly from this quarter a year ago.

From a vendor perspective, Samsung maintained the top position in 3Q12 with 21.8% market share based on shipments. Apple, which ranked second overall in shipments, led all vendors in value with a total of $34.1 billion in 3Q12 and an average selling price (ASP) of $744 across all device categories. Following Samsung’s 21.8% share and Apple’s 15.1% share were Lenovo (7.0%), HP (4.6%), and Sony (3.6%). While Samsung, Apple, and Lenovo have all grown share over the past year, HP, which is virtually non-existent in the mobile space, has dropped its share from 7.4% in 3Q11 to 4.6% in 3Q12 with shipments declining -20.5% during that time.

“The battle between Samsung and Apple at the top of the smart connected device space is stronger than ever,” said Ryan Reith, program manager, Worldwide Mobile Device Trackers at IDC. “Both vendors compete at the top of the tablet and smartphone markets. However, the difference in their collective ASPs is a telling sign of different market approaches. The fact that Apple’s ASP is $310 higher than Samsung’s with just over 20 million fewer shipments in the quarter speaks volumes about the premium product line that Apple sells.”

Looking forward, IDC expects the worldwide smart connected device space will continue to surge well past the strong holiday quarter and predicts shipments to surpass 2.1 billion units in 2016 with a market value of $796.7 billion worldwide. IDC’s research clearly shows this to be a multi-device era, although market dynamics are shifting in terms of product category. In 2011, PC’s – a combination of desktop and portable PCs – accounted for 39.1% of the smart connected device market. By 2016 it is expected to drop to 19.9%. Smartphones will be the preferred product category with share growing from 53.1% in 2011 to 66.7% in 2016. Tablets will also grow significantly with share growing from 7.7% in 2011 to 13.4% in 2016. The shift in demand from the more expensive PC category to more reasonably priced smartphones and tablets will drive the collective market ASP from $534 in 2011 to $378 in 2016.

“Both consumers and business workers are finding the need for multiple ‘smart’ devices and we expect that trend to grow for several years, especially in more developed regions,” said Bob O’Donnell, program vice president, Clients and Displays. “The advent of cloud-based services is enabling people to seamlessly move from device to device, which encourages the purchase and usage of different devices for different situations.”

Top 5 Smart Connected Device Vendors, Shipments, and Market Share, Q3 2012 (shipments in millions)

Vendor

3Q12 Unit Shipments

3Q12 Market Share

3Q11 Unit Shipments

3Q11 Market Share

3Q12/3Q11 Growth

Samsung

66.1

21.8%

33.5

14.0%

97.5%

Apple

45.8

15.1%

33.1

13.9%

38.3%

Lenovo

21.1

7.0%

13.2

5.5%

60.0%

HP

14.0

4.6%

17.6

7.4%

-20.5%

Sony

11.0

3.6%

8.7

3.7%

25.4%

Other

145.6

48.0%

132.7

55.6%

9.7%

Total

303.6

100.0%

238.9

100.0%

27.1%

Source: IDC Worldwide Quarterly Smart Connected Device Tracker, December 10, 2012.

Smart Connected Device Market by Product Category, Shipments, Market Share, 2012-1016 (shipments in millions) 

Product Category

2016 Unit Shipments

2016 Market Share

2012 Unit Shipments

2012 Market Share

2016/2012 Growth

Desktop PC

151.0

7.2%

149.2

12.5%

1.2%

Portable PC

268.8

12.8%

205.1

17.2%

31.1%

Smartphone

1405.3

66.7%

717.5

60.1%

95.9%

Tablet

282.7

13.4%

122.3

10.2%

131.2%

Total

2107.8

100.0%

1194.0

100.0%

76.5%

Source: IDC Worldwide Quarterly Smart Connected Device Tracker, December 10, 2012.

Update: IDC Raises Tablet Forecast for 2012 and Beyond As iOS Picks Up Steam, Android Gains Traction, and Windows Finally Enters the Market [IDC press release, Dec 5, 2012]

image

A strong competitive landscape—including surging Android tablet shipments and robust demand for Apple’s new iPad mini—has led International Data Corporation (IDC) to increase its 2012 forecast for the worldwide tablet market to 122.3 million, up from its previous forecast of 117.1 million units. In the latest forecast update of the Worldwide Quarterly Tablet Tracker, IDC also raised its 2013 forecast number to 172.4 million units, up from 165.9 million units. And by 2016 worldwide shipments should reach 282.7 million units, up from a previous forecast of 261.4 million units.

“Tablets continue to captivate consumers, and as the market shifts toward smaller, more mobile screen sizes and lower prices points, we expect demand to accelerate in the fourth quarter and beyond,” said Tom Mainelli, research director, Tablets at IDC. “Android tablets are gaining traction in the market thanks to solid products from Google, Amazon, Samsung, and others. And Apple’s November iPad mini launch, along with its surprise refresh of the full-sized iPad, positions the company well for a strong holiday season.”

In addition to increasing the unit totals for 2013, IDC also updated its operating system splits for the year to reflect Android’s growing strength in the tablet market. IDC now expects Android’s worldwide tablet share to increase from 39.8% in 2011 to 42.7% for the full year of 2012. During that same time Apple’s share will slip from 56.3% in 2011 to 53.8% in 2012. Long term, IDC predicts Windows-based tablets (including Windows 8 and Windows RT) will grab share from both iOS and Android, growing from 1% of the market in 2011 to 2.9% in 2012, on its way to 10.3% in 2016.

“The breadth and depth of Android has taken full effect on the tablet market as it has for the smartphone space,” said Ryan Reith, program manager for IDC’s Mobile Device Trackers. “Android tablet shipments will certainly act as the catalyst for growth in the low-cost segment in emerging markets given the platform’s low barrier to entry on manufacturing. At the same time, top-tier companies like Samsung, Lenovo, and ASUS are all launching Android tablets with comparable specs, but offered at much lower price points.”

Once again, IDC’s increase in tablet shipments comes at the expense of eReaders. IDC lowered its forecast for eReaders for 2012 and beyond. While the front-lit eReader offerings from Amazon and Barnes & Noble have captured the interest of a subset of consumers who prefer a dedicated eReader, most buyers are gravitating toward multi-use tablet products and finding a ‘good enough’ reading experience on these traditional back-lit tablets. IDC now expects 2012 eReader shipments to top out at 19.9 million units, down from the 27.7 million units that shipped in 2011.

Tablet Operating Systems, Market Share Forecast and CAGR 2012-2016

Tablet OS

2012 Market Share

2016 Market Share

CAGR 2012 – 2016 (%)

iOS

53.8%

49.7%

20.9%

Android

42.7%

39.7%

21.0%

Windows

2.9%

10.3%

69.2%

Other

0.6%

0.3%

7.7%

Grand Total

100.0%

100.0%

23.3%

Source: IDC Worldwide Quarterly Tablet Tracker, December 5, 2012

Table Notes:

  • Windows shipments include Windows RT, Windows 8, and Windows 7 tablets.
  • Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.

The ongoing trends in the commodity
and premium brand ecosystems of Android devices

Smartphones

Motorola likely to bid farewell to Taiwan handset ODMs after Google sells plants to Flextronics [DIGITIMES, Dec 17, 2012]

The partnerships between Motorola Mobility and Taiwan-based handset ODMs such as Foxconn International Holdings (FIH) will begin to fade away, as Google, the parent company of Motorola, has signed an agreement to hand over Motorola’s manufacturing operations in Tianjin, China, and Jaguariuna, Brazil to Flextronics International, according to industry sources.

After the deal between Google and Flextronics is completed in the first half of 2013, Motorola will completely withdraw from the handset manufacturing industry, and instead will transform to a brand operator targeting mainly the mid-range to high-end smartphone segment, the sources indicated.

While the streamlining of Motorola’s operations comes as no surprise to Taiwan handset ODMs, Google’s decision to sell Motorola’s plants to Flextronics, instead of its long-tern partner FIH, has raised concerns among the industry.

Flextronics is purchasing the plants in exchange for orders from Motorola since the Singapore-based EMS giant has made little progress in gaining handset orders from Apple or major players in the Android or Windows Phone camps, the sources commented.

It is also no longer necessary for FIH to buy plants in exchange for orders, as the company has transferred from handset EMS operations to focus on smartphone ODM business, indicated the sources, adding that FIH has also managed to establish partnerships with a number of major players in the smartphone sector.

However, a deepened cooperation between Motorola and Flextronics may affect the handset component supply chain in Taiwan, the sources warned.

Digitimes Research: Android phones to account for 70% of global smartphone market in 2013 [DIGITIMES Research, Dec 6, 2012]

Android will further solidify its market leadership in the smartphone operating system race in 2013, thanks to a broad support from smartphone vendors and the rollout of a wide range of low-priced models for sale in emerging markets. Shipments of Android phones are expected to top 600 million units or over 70% of global smartphone shipments in 2013, Digitimes Research estimates.

iOS will trail Android to take the number two position in the OS ratings with a 20% share, while other smartphone platforms will share the remaining 10%.

Shipments of Windows Phones, including 7.x and 8.x models, will grow 150% on year to 52.5 million units in 2013 for a 6.1% share, followed by RIM’s BlackBerry devices with a 3.7% share, Digitimes Research estimates. Other platforms, including Tizen and Firefox, will take up a portion lower than 1%.

Digitimes Research: Global smartphone shipments to grow 30% in 2013 [DIGITIMES Research, Nov 19, 2012]

Global smartphone shipments are expected to grow 30% to 865 million units in 2013, accounting for 43.9% of total handset shipments in the year, Digitimes Research has estimated.

Factors including relationships between platform providers and hardware makers, support from telecom carriers for new models, and key developments or decisions by some vendors will affect smartphone sales in 2013, Digitimes Research believes.

Google is expected to further strengthen its control over the Android ecosystem and its production partners, which may limit the development of other platforms or variant Android models.

Microsoft’s launch of own-brand smartphones may result in a reduction in support for the Window Phone platform by hardware vendors, which should otherwise serve as a key factor to push for the growth of the Window Phone to become a third major platform in the segment.

While Amazon is likely to enter the smartphone market, 2013 may be crucial a year for Nokia and RIM (Research in Motion) to make vital decisions concerning their smartphone businesses.

Demand for high-end smartphone models in Western Europe will be affected seriously by reduced government budgets and weak consumption in the region because of the prolonged financial crisis.

However, smartphones’ growing penetration in China, Russia, India, Indonesia, South America and other emerging markets will serve as a growth driver for global smartphone shipments in 2013, Digitimes Research believes.

Google, Amazon and other vendors in China to lead pricing in low-cost smartphone segment, say sources [DIGITIMES , Nov 5, 2012]

While sales of low-cost smartphones are expected to continue growing in the next few years, Google, Amazon and other Internet service companies in China may lead price competition in the segment, according to industry sources.

Shipments of low-cost smartphones, defined as models with a selling price of less than US$150, are forecast to double every year from 2010 to 2016, increasing from 4.5 to 311 million units, according to NPD DisplaySearch.

Most of the demand (60%) is from the Asia Pacific region, where a large majority of component suppliers and manufacturing factories are located – providing both time and cost savings, said DisplaySearch.

In China, the trend for telecom carriers to continue cooperating with chipset suppliers, handset design houses and handset vendors for the launch low-priced smatphone models will continue for a while, the sources noted.

Vendors including Huawei Device, ZTE, Lenovo and Coolpad have emerged as the leading group of the smartphone suppliers in China through the offerings of low-cost models, but most of vendors has suffered losses or seen the profits of their handset business decline due to fierce price competition in the segment, the sources revealed.

Lenovo’s handset business unit is still operating in red, and Huawei and Coolpad have seen their profits decline, while ZTE and TCL have seen their handset businesses swing from profitability to loss, the sources indicated.

In order to stemming losses, or improving profitability, most branded smartphone vendors in China have been trying to expand their share in the mid- and high-end segment, while pushing their sales through local retain channels or export sales.

But other China-based smartphone vendors such as Xiaomi Technology, Internet service companies including Baidu and Shada Interactive Entertainment, as well as online retail giant 360buy, are likely to continue to adopt aggressive price strategies to pushing sales of their own models, said the sources.

In the global market, the cooperation between Google and LG Electronics for the launch of Nexus 4 at prices ranging from US$299-349 is also expected to lead to the proliferation of more low-priced Android smartphone models, the sources indicated.

Amazon, which has been aggressive in the tablet segment, is expected to release its first smartphone model in 2013 with the same price tactics, which is likely to further drive down the prices of smartphones, commented the sources.

Digitimes Research: Nexus 4 to be popular in prepaid SIM card and telecom retail channels [DIGITIMES Research, Nov 7, 2012]

Google’s Nexus 4, which comes with a 4.7-inch 720p HD display and Qualcomm quad-core Snapdragon S4 processor, is expected to become a popular model in the prepaid SIM card segment as well as in telecom retail channels for unlocked subscribers, according to Digitimes Research.

With its high hardware specifications and pricing of US$299 for the 8GB version and US$349 for the 16GB version, the Nexus 4 will cause price pressure on other comparable models rolled by rival brands.

Sales of Windows phones are expected to grow 250% in 2013 due in part to support from telecom carriers which are seeking a third platform other than Android or iOS. However, Android will continue to lead the market with a wide margin, Digitimes Research said.

Google aggressive pricing for Nexus 4 smartphone to affect sales of other brands [DIGITIMES, Oct 30, 2012]

Google’s pricing of US$299-349 for its newly released 4.7-inch, quad-core Nexus 4 smartphone is lower than market expectations, and thus could affect the sales of Android-based smartphones launched by other branded vendors, according to industry sources.

Prior to the release of the Nexus 4 in cooperation with LG Electronics, Google had cooperated with HTC and Samsung Electronics, respectively, for the launch of three generations of Nexus smartphones with prices ranging from US$500-700.

The Nexus 4 will enjoy the advantage in pricing even compared to the latest quad-core Android models rolled out by other vendors, indicated the sources, noting that Asustek Computer’s 4.7-inch Padfone 2 is available for US$600, while China-based Xiaomi Technology’s second-generation Xiaomi phone is priced at CNY1,999 (US$320).

Other Android-based smartphone vendors, including HTC, Sony Mobile Communications, Huawei Device, ZTE and even Motorola Mobility, all are likely to adjust their price strategies, since chances are high that the Nexus 4 will make a strong impact on the smartphone market, commented the sources.

China market: Nexus 4 pricing to affect sales, prices of other brands, says report [DIGITIMES, Nov 7, 2012]

The aggressive pricing strategy adopted by Google for its Nexus 4 may affect sales of Xiaomi smartphones in China and may also force other brands including Samsung Electronics, Motorola and HTC to lower the prices of their offerings in China, according to a China-based 21st Century Business Herald report.

The price of US$299 (CNY1,890) for the 8G version of the Nexus 4 is more competitive than Xiaomi’s next-generation quad-core smartphone which is available at CNY1,999, the paper noted.

Xiaomi is selling its first quad-core model below its BOM of CNY2,350 and will limit initial sales of the model to 50,000 units only, said the paper, which added that Xiaomi aims to ramp up volumes to 250,000 units to bring down the BOM when it begins to offer the second round of sales in mid-November.

Although the Nexus is not yet available in China, consumers may hesitate to pick up the quad-core Xiaomi smartphones because they have to wait for several months before Xiaomi will begin delivering the devices, said the paper.

China market: Coolpad hopes to regain mid-range, high-end smartphone share [DIGITIMES , Nov 7, 2012]

China-based handset maker Coolpad hopes to re-enter the mid-range and high-end smartphone market in China by introducing smartphone products with China Mobile that will be priced above CNY5,000/unit (US$800/unit).

In the recent years, Coolpad has been focusing on smartphones at the price range of CNY1,000/unit by cooperating with China’s three telecom service providers. Entry-level and mid-range models have accounted for 85% of Coolpad’s total shipments. The firm recently introduced a new model, Coolpad 9960 (Da Guan HD), with a 4.7-inch screen, Nvidia Tegra 3 quad-core processor, and a 13-megapixel front camera. The model will be priced above CNY5,000/unit.

Currently, China’s mid-range and high-end smartphone markets have been dominated by international brands such as Apple, HTC, Motorola, and Sony. Coolpad has been the only local brand that has a relatively strong market share.

According to industry sources, in 2012, Coolpad increased investment in R&D of high-end products by 20% on year and formed an R&D team of 800 staff to strengthen its high-end product line.

Lenovo, Huawei, ZTE faced with challenges to reach quarterly shipments of 10 million smartphones, say Taiwan makers [DIGITIMES , Nov 5, 2012]

A total of 60 million smartphones were shipped to the China market in the third quarter of 2012, and Lenovo, Huawei and ZTE shipped nine million units, 8.5 million units and 7.5 million units, respectively, with a combined market share of 41.7%, according to DRAMeXchange under consulting company TrendForce.

Except for Apple and Samsung Electronics, other international vendors including HTC, Sony Mobile Communications, LG Electronics, Nokia have not been able to attain quarterly shipments of 10 million smartphones, the sources indicated. Lenovo, Huawei and ZTE stand a chance to ship 10 million smartphones a quarter if they can strengthen their branding operations, marketing and product lines of mid-range and high-end models in overseas markets, the sources pointed out.

Lenovo has focused on entry-level smartphones priced below CNY1,500 (US$240) and relied too much on the domestic market, the sources indicated. In comparison with Lenovo, Huawei and ZTE have the advantage of cooperation with mobile telecom carriers in many countries, but their brand image is not strong enough for marketing mid-range and high-end smartphones, the sources pointed out.

PC vendors recommended to target niche smartphone market to avoid direct competition [DIGITIMES , Oct 3, 2012]

Branded PC vendors including Hewlett-Packard (HP) and Asustek Computer, which plan to reignite their smartphone businesses, are recommended to offer models with strong application platforms, sleek product design and integrated cloud computing capabilities targeting niche markets, while avoiding direct competition with smartphone vendors, according to sources at Taiwan’s handset supply chain.

Among the leading brands, HP, Dell and Asustek have not launched new handsets for some time, while Acer has made little progress in the sector although it has continued rolling out new phones, indicated the sources.

Lenovo’s performance has been exceptional, taking the second-ranked title in China’s smartphone market by optimizing an array of entry-level models priced at around CNY1,000 (US$158).

The reason major branded PC vendors are considering a comeback to the smartphone market hinges on emerging business opportunities that are anticipated to come along with the launch of Windows 8. They are hoping that sales of Windows 8-based PCs will help promote the sale of Windows Phone 8 smartphones as well.

Even so, prospects are still slim for PC brands to make a strong presence in the smartphone market, given that Apple and Samsung Electronics are currently the top-2 vendors dominating the segment, while other smartphone brands including Nokia, RIM, Sony Mobile Communications, Motorola Mobility are lagging behind with heavy losses, the sources commented.

Worldwide Mobile Phone Growth Expected to Drop to 1.4% in 2012 Despite Continued Growth Of Smartphones, According to IDC [IDC press release, Nov 1, 2012]

The worldwide mobile phone market is forecast to grow 1.4% year over year in 2012, the lowest annual growth rate in three years despite a projected record number of smartphone shipments in the high-volume holiday season. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors will ship more than 1.7 billion mobile phones this year. In 2016, IDC forecasts 2.2 billion mobile phones will be shipped to the channel.

Global smartphone volume in the fourth quarter of 2012 (4Q12) is expected to reach 224.5 million units, representing 39.5% year-over-year growth due primarily to strong consumer demand. For the year, smartphone shipments are forecast to grow 45.1% year over year to 717.5 million units. Strong smartphone growth is a result of a variety of factors, including steep device subsidies from carriers, especially in mature economic markets where carriers resell the majority of smartphones, as well as a growing array of sub-US$250 smartphones in emerging markets.

“Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Quarterly Mobile Phone Tracker. “However, the fourth quarter will be relatively bright due in part to sales of high-profile smartphones, such as the iPhone 5 and Samsung’s Galaxy S3, in addition to lower-cost Android-powered smartphones shipped to China and other high-growth emerging markets.”

Smartphone Operating Systems

“Underpinning the worldwide smartphone market is a constantly shifting mobile operating system landscape,” added Ramon Llamas, research manager with IDC’s Mobile Phone team. “Android is expected to stay in front, but we also expect it to be the biggest target for competing operating systems to grab market share. At the same time, Windows Phone stands to gain the most market share as its smartphone and carrier partners have gained valuable experience in selling the differentiated experience Windows Phone has to offer. What bears close observation is how BlackBerry’s new platform, BlackBerry 10, and multiple versions of Linux will affect the market once the devices running these systems are available.”

IDC forecasts Android to be the clear leader in the smartphone mobile operating system race, thanks in large part to a broad selection of devices from a wide range of partners. Samsung is the leading Android smartphone seller though resurgent smartphone vendors LG Electronics and Sony, both of which cracked the top five smartphone vendors during 3Q12, are not to be overlooked. IDC believes the net result of this will be continued double-digit growth throughout the forecast period.

iOS will maintain its position as the clear number two platform behind Android at the end of 2012 and throughout the forecast. The popularity of the iPhone across multiple markets will drive steady replacements and additional carrier partners will help Apple grow iOS volume. However, the high price point of the iPhone relative to other smartphones will make it cost prohibitive for some users within many emerging markets. In order to maintain current growth rates, Apple will need to examine the possibility of offering less expensive models, similar to its iPod line. Until that happens, IDC forecasts iOS to ship lower volumes than Android.

The BlackBerry OS will grow slowly but largely maintain share over the coming years following the BlackBerry 10 launch next year. The new operating system and devices will be valued by some longtime BlackBerry fans, particularly those who have waited for the new OS as Research In Motion delayed its release. This will allow the company to maintain pockets of strength in higher-growth emerging markets such as Indonesia and various Latin American countries. But, as with many other new platforms, the success of BB 10 will be partly dependent upon channel advocacy, like sales associates who can effectively tell the BlackBerry story.

Windows Phone will battle with BlackBerry for the number three spot in 2013, but will gain further clarity in the years that follow. Windows Phone will build on the progress it made in 2012, with Nokia establishing its presence and HTC solidly jumping back into the race. Moreover, contributions by Samsung, ZTE, and Huawei will help grow its footprint. With more vendors releasing more devices aimed at multiple segments, sales associates will be better positioned to tell a compelling Windows Phone story and to explain the value of Windows Phone’s differentiated experience compared to market leaders Android and iOS.

Linux will trail the market leaders throughout our forecast though it is expected to be the dark horse of the forecast. K-Touch has quietly built its Linux volumes this year while Haier recently released its first Linux smartphones. In addition, multiple platforms are expected to announce and launch their Linux-based smartphones in 2013, including Samsung’s Tizen and Jolla’s SailFish. Benefiting these platforms are their ties to previous platforms from the LiMo Foundation and Nokia’s MeeGo, which could lead to greater developer interest.

Top Smartphone Operating Systems, Forecast Market Share and CAGR, 2012–2016

Smartphone OS

2012 Market Share

2016 Market Share

CAGR 2012 – 2016 (%)

Android

68.3%

63.8%

16.3%

iOS

18.8%

19.1%

18.8%

BlackBerry OS

4.7%

4.1%

14.6%

Windows Phone

2.6%

11.4%

71.3%

Linux

2.0%

1.5%

10.5%

Others

3.6%

0.1%

-100.0%

Total

100.0%

100.0%

18.3%

Source: IDC Worldwide Mobile Phone Tracker, December 3, 2012

image

Android Marks Fourth Anniversary Since Launch with 75.0% Market Share in Third Quarter, According to IDC [IDC press release, Nov 1, 2012]

The Android smartphone operating system was found on three out of every four smartphones shipped during the third quarter of 2012 (3Q12). According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, total Android smartphone shipments worldwide reached 136.0 million units, accounting for 75.0% of the 181.1 million smartphones shipped in 3Q12. The 91.5% year-over-year growth was nearly double the overall market growth rate of 46.4%.

“Android has been one of the primary growth engines of the smartphone market since it was launched in 2008,” said Ramon Llamas, research manager, Mobile Phones at IDC. “In every year since then, Android has effectively outpaced the market and taken market share from the competition. In addition, the combination of smartphone vendors, mobile operators, and end-users who have embraced Android has driven shipment volumes higher. Even today, more vendors are introducing their first Android-powered smartphones to market.”

“The share decline of smartphone operating systems not named iOS since Android’s introduction isn’t a coincidence,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Quarterly Mobile Phone Tracker. “The smartphone operating system isn’t an isolated product, it’s a crucial part of a larger technology ecosystem. Google has a thriving, multi-faceted product portfolio. Many of its competitors, with weaker tie-ins to the mobile OS, do not. This factor and others have led to loss of share for competitors with few exceptions.”

Mobile Operating System Highlights

Android, having topped the 100 million unit mark last quarter, reached a new record level in a single quarter. By comparison, Android’s total volumes for the quarter were greater than the total number of smartphones shipped in 2007, the year that Android was officially announced. Samsung once again led all vendors in this space, but saw its market share decline as numerous smaller vendors increased their production.

iOS was a distant second place to Android, but was the only other mobile operating system to amass double-digit market share for the quarter. The late quarter launch of the iPhone 5 and lower prices on older models prevented total shipment volumes from slipping to 3Q11 levels. But without a splashy new OS-driven feature like Siri in 2011 and FaceTime in 2010, the iPhone 5 relied on its larger, but not wider, screen and LTE connectivity to drive growth.

BlackBerry‘s market share continued to sink, falling to just over 4% by the end of the quarter. With the launch of BlackBerry 10 yet to come in 2013, BlackBerry will continue to rely on its aging BlackBerry 7 platform, and equally aging device line-up. Still, demand for BlackBerry and its wildly popular BBM service is strong within multiple key markets worldwide, and the number of subscribers continues to increase.

Symbian posted the largest year-on-year decline of the leading operating systems. Nokia remains the largest vendor still supporting Symbian, along with Japanese vendors Fujitsu, Sharp, and Sony. Each of these vendors is in the midst of transitioning to other operating systems and IDC believes that they will cease shipping Symbian-powered smartphones in 2013. At the same time, the installed base of Symbian users will continue well after the last Symbian smartphone ships.

Windows Phone marked its second anniversary with a total of just 3.6 million units shipped worldwide, fewer than the total number of Symbian units shipped. Even with the backing of multiple smartphone market leaders, Windows Phone has yet to make a significant dent into Android’s and iOS’s collective market share. That could change in 4Q12, when multiple Windows Phone 8 smartphones will reach the market.

Linux volume declined for the third straight quarter as did its year-over-year growth. Samsung accounted for the majority of shipments once again, but like most other vendors competing with Linux-powered smartphones, most of its attention went towards Android instead. Still, that has not deterred other vendors from experimenting, or at least considering the open-source operating system, as multiple reports of Firefox, Sailfish, and Tizen plan to release new Linux-based experiences in the future.

Top Six Smartphone Mobile Operating Systems, Shipments, and Market Share, Q3 2012 (Preliminary) (Units in Millions)

Operating System

3Q12 Shipment Volumes

3Q12 Market Share

3Q11 Shipment Volumes

3Q11 Market Share

Year-Over-Year Change

Android

136.0

75.0%

71.0

57.5%

91.5%

iOS

26.9

14.9%

17.1

13.8%

57.3%

BlackBerry

7.7

4.3%

11.8

9.5%

-34.7%

Symbian

4.1

2.3%

18.1

14.6%

-77.3%

Windows Phone 7/ Windows Mobile

3.6

2.0%

1.5

1.2%

140.0%

Linux

2.8

1.5%

4.1

3.3%

-31.7%

Others

0.0

0.0%

0.1

0.1%

-100.0%

           

Totals

181.1

100.0%

123.7

100.0%

46.4%

Source: IDC Worldwide Mobile Phone Tracker, November 1, 2012
Note: Data are preliminary and subject to change. Vendor shipments are branded shipments and exclude OEM sales for all vendors.

Android Smartphone Shipments and Market Share, 2008 – 2012 YTD (Units in Millions)

 

2008

2009

2010

2011

2012 YTD

Android Total Unit Shipments

0.7

7.0

71.1

243.4

333.6

Android Market Share

0.5%

4.0%

23.3%

49.2%

68.2%

Source: IDC Worldwide Mobile Phone Tracker, November 1, 2012
Note: Data are preliminary and subject to change. Vendor shipments are branded shipments and exclude OEM sales for all vendors.

Gartner Says Worldwide Sales of Mobile Phones Declined 3 Percent in Third Quarter of 2012; Smartphone Sales Increased 47 Percent [Gartner press release, Nov 14, 2012]

Samsung Extended Its Lead in the Smartphone Market Widening the Gap with Apple

Worldwide sales of mobile phones to end users reached almost 428 million units in the third quarter of 2012, a 3.1 percent decline from the third quarter of 2011, according to Gartner, Inc. Smartphone sales accounted for 39.6 percent of total mobile phone sales, as smartphone sales increased 46.9 percent from the third quarter of 2011. 

While the mobile phone market declined year-on-year, Gartner analysts said there were positive signs for the industry during the third quarter. 

“After two consecutive quarter of decline in mobile phone sales, demand has improved in both mature and emerging markets as sales increased sequentially,” said Anshul Gupta, principal research analyst at Gartner. “In China, sales of mobile phones grew driven by sales of smartphones, while demand of feature phones remained weak. In mature markets, we finally saw replacement sales pick up with the launch of new devices in the quarter.” 

Smartphones continued to fuel sales of mobile phones worldwide with sales rising to 169.2 million units in the third quarter of 2012. The smartphone market was dominated by Apple and Samsung. “Both vendors together controlled 46.5 percent of smartphone market leaving a handful of vendors fighting over a distant third spot,” said Mr. Gupta. 

Nokia slipped from No. 3 in the second quarter of 2012 to No. 7 in smartphone sales in the third quarter of 2012. RIM moved to the No. 3 spot with HTC not far behind, at No. 4. “Both HTC and RIM have seen their sales declining in past few quarters, and the challenges might prevent them from holding on to their current rankings in coming quarters,” added Mr. Gupta. 

While seasonality in the fourth quarter of 2012 will help end-of-year mobile phone sales to end users, Gartner analysts said that there will be a lower-than-usual boost from the holiday season. Consumers are either cautious with their spending or finding new gadgets like tablets, as more attractive presents. 

Samsung’s mobile phones sales continued to accelerate, totaling almost 98 million units in the third quarter of 2012 (see Table 1), up 18.6 percent year-on-year. Samsung saw strong demand for Galaxy smartphones across different price points, and it further widened the gap with Apple in the smartphone market, selling 55 million smartphones in the third quarter of 2012. It commanded 32.5 percent of the global smartphone market in the third quarter of 2012. 

Table 1
Worldwide Mobile Device Sales to End Users by Vendor in 3Q12 (Thousands of Units)

Company

3Q12

Units

3Q12 Market Share (%)

3Q11

Units

3Q11 Market Share (%)

Samsung

97,956.8

22.9

82,612.2

18.7

Nokia

82,300.6

19.2

105,353.5

23.9

Apple

23,550.3

5.5

17,295.3

3.9

ZTE

16,654.2

3.9

14,107.8

3.2

LG Electronics

13,968.8

3.3

21,014.6

4.8

Huawei Device

11,918.9

2.8

10,668.2

2.4

TCL Communication

9,326.7

2.2

9,004.7

2.0

Research in Motion

8,946.8

2.1

12,701.1

2.9

Motorola

8,562.7

2.0

11,182.7

2.5

HTC

8,428.6

2.0

12,099.9

2.7

Others

146,115.1

34.2

145,462.2

32.9

Total

427,729.5

100.0

441,502.2

100.0

Source: Gartner (November 2012)

Nokia’s mobile phone sales declined 21.9 percent in the third quarter of 2012, but overall sales at 82.3 million were better than Gartner’s early estimate, largely driven by increased sales of the Asha full touch range. Nokia had a particularly bad quarter with smartphone sales, and it tumbled to the No. 7 worldwide position with 7.2 million smartphones sold in the third quarter. The arrival of the new Lumia devices on Windows 8 should help to halt the decline in share in the fourth quarter of 2012, although it won’t be until 2013 to see a significant improvement in Nokia’s position

Apple’s sales to end users totaled 23.6 million units in the third quarter of 2012, up 36.2 percent year-on-year. “We saw inventory built up into the channel as Apple prepared for the coming holiday season, global expansions and the launch into China in the fourth quarter of 2012,” said Mr. Gupta. With iPhone 5 launching in more territories in the fourth quarter of 2012, including China, and the upcoming holiday season Gartner analysts expect Apple will have its traditionally strongest quarter. 

In the smartphone market, Android continued to increase its market share, up 19.9 percentage points in the third quarter of 2012. Although RIM lost market share, it climbed to the No. 3 position as Symbian is nearing the end of its lifecycle. There was also channel destocking in preparation of new device launches for RIM, which resulted into 8.9 million sales to end users in the third quarter of 2012. With the launch of iPhone 5, Gartner analysts expect iOS share will grow strongly in the fourth quarter of 2012 because users held on to their replacements in many markets ahead of the iPhone 5 wider roll out. Windows Phone’s share weakened quarter-on-quarter as the Windows Phone 8 launch dampened demand of Windows Phone 7 devices. 

Table 2
Worldwide Mobile Device Sales to End Users by Operating System in 3Q12 (Thousands of Units)

Operating System

3Q12

Units

3Q12 Market Share (%)

3Q11

Units

3Q11 Market Share (%)

Android

122,480.0

72.4

60,490.4

52.5

iOS

23,550.3

13.9

17,295.3

15.0

Research In Motion

8,946.8

5.3

12,701.1

11.0

Bada

5,054.7

3.0

2,478.5

2.2

Symbian

4,404.9

2.6

19,500.1

16.9

Microsoft

4,058.2

2.4

1,701.9

1.5

Others

683.7

0.4

1,018.1

0.9

Total

169,178.6

100.0

115,185.4

100.0

Source: Gartner (November 2012) 

Additional information can be found in the Gartner report “Market Share: Mobile Phones by Region and Country, 3Q12.” The report is available on Gartner’s website at http://www.gartner.com/resId=2236115.

 


Tablets

Digitimes Research: Global tablet shipments to surpass that of notebooks in 2013 [DIGITIMES Research, Nov 19, 2012] 

Digitimes Research expects global tablet shipments to reach 210 million units in 2013, up 38.3% on year and surpass those of notebook for the first time, with branded tablet shipments to account for 140 million units, according to Digitimes Research senior analyst James Wang.
[Compare this to the notebook shipment forecast by Digitimes Research of 192 million units in 2012 expected to drop to 189 million units in 2013. See additional details of this forecast below in Digitimes Research: Windows 8 expected to have minimal impact on touch screen notebooks in 2013.]

In 2013, Google is expected to maintain its momentum from the Nexus series products and become the second largest tablet brand vendor worldwide with shipments of 19 million units. Apple will remain the largest tablet vendor worldwide, but its share in the global branded tablet shipments will drop to only 55.6% [i.e. 78 million units], down from more than 60% in 2012, and 37.4% in total tablet shipments (including white-box models).

With surging shipment growth for white-box tablets, Android is expected to become the largest platform in the tablet market, surpassing iOS. In 2013, Digitimes Research expects Android-based tablet shipments including white-box and branded models, to reach 121 million units, up 40.2% on year. [With the global 210 millions and branded 140 millions the white-box tablet shipments are expected to grow to 70 million units in 2013 vs. 50 millions this year. Therefore the branded Android based-tablets to become 51 millions, and as the Nexus tablets are said here to become 19 millions there will be 32 millions other branded Android tablets sold in 2013 .]

Digitimes Research also expects global tablet shipments will reach 320 million units in 2015 with branded tablets to account for 220 million units and white-box models to account for 100 million units.

Digitimes Research: Global Tablet Market to Enjoy Strong Shipment Growth in 4Q12 [DIGITIMES Research, Nov 13, 2012]

Global tablet shipments from major brands worldwide are expected to reach 40.93 million units in the fourth quarter of 2012, up 72.7% sequentially and 89.7% on year, according to Digitimes Research senior analyst James Wang.

As for the tablet vendor rankings in the quarter, Apple will remain as the largest vendor worldwide, while Amazon is expected to return as the second-largest and Google will rank third with assistance from its Nexus 7 and Nexus 10. Microsoft will rank fourth, Samsung Electronics fifth, and Barnes & Noble sixth. Asustek, Lenovo and Acer will rank seventh, eighth and ninth, respectively, Wang noted.

As for the tablet processor supplier rankings, Texas Instruments (TI) will return as the second-largest with Nvidia at third. Intel will also be ranked for the first time due to Windows 8.

Taiwan makers are expected to ship 36.6 million tablets combined in the fourth quarter, up 82.3% sequentially and 86.7% on year, with the volume accounting for 89% of global tablet shipments. Foxconn Electronics (Hon Hai Precision Industry) will be the largest tablet maker, followed by Quanta Computer, Pegatron Technology, Wistron and Compal Electronics.

Digitimes Research estimates that global branded tablet shipments will reach 104 million units in 2012, up 64% on year, with iPad accounting for 63% of the volume, down 2pp on year, while both Android and Windows will see their proportions increase.

In comparison the white-box tablet shipments are up by whopping 317% in 2012 at least (50 million units shipped as a minimum vs. 12 million units in 2011) according to sources given below: 

Digitimes Research: White-box tablet shipments to surpass 50 million units in 2012 [DIGITIMES Research, Nov 8, 2012]

White-box tablets are expected to see a surge in shipment growth in 2012 with volumes surpassing 50 million units, according to Digitimes Research senior analyst James Wang.

There are three major drivers that will help white-box tablets achieve strong growth in the year: a large number of potential consumers brought in by Android handsets, mature development of China-based processors, and decreasing costs o white-box tablets. With the addition of white-box tablet shipments, Android is expected to surpass iOS and become the largest mobile operating system in 2012, while 7-inch displays will also become the mainstream specification for tablets.

As the branded tablet PC market is seeing fierce competition in terms of technology, capacity, yield rates, patents and prices, the rise of white-box tablets has already made these players a new force in the tablet market, with some white-box players even seeing higher shipment volumes than first-tier vendors.

Digitimes Research believes that brand vendors should be aware of white-box tablet players’ developments in the future, since even platform designers such as Google and Microsoft have used their resources to increase price competition in the tablet market, and the situation may gradually turn to favor China-based players with expertise in lowering costs.


Source: Digitimes Research, November 2012
or from the Chinese version of the same [Nov 9, 2012]:

China Fabless: Rockchip rattled by Android tablet wars [by Junko Yoshida on EE Times, Sept 25, 2012]

How many tablets does China make, how big is the Chinese market?
80 percent of media tablets made in China are exported


Unit: Million of units
Source: Chinese industry estimates

For more information see also: Yoshida in China: ‘Shanzhai’ clouds tablet data [EE Times, Nov 8, 2012]

In retrospect: just 4 months ago the forecast was increased from 30 million to 40 million
Global shipments of white-box tablet PCs to reach 40 million units in 2012, say chip designers [DIGITIMES, July 25, 2012]

Forecast global shipments of white-box tablet PCs in 2012 have been upward adjusted from 30 million units originally to 40 million units due to growing demand in emerging markets including China, India, Thailand and Latin America, according to Taiwan-based design houses of ICs used in tablet PCs.

An estimated 10 million white-box tablet PCs were shipped globally in 2011, and shipments increased to 18 million units in the first half of 2012, the sources indicated.

Vendors/makers of white-box tablet PCs currently cluster in Shenzhen and Dongguan, southern China, the sources noted. A large portion originally made netbooks and have stepped into tablet PCs as chips and the Android operating systems have matured, the sources said.

White-box tablet PCs are primarily competitive in price with models launched by own-brand vendors, with retail prices standing at US$59 for 7-inch models and US$149 for 10.1-inch models, the sources indicated.

China market: Domestic chipset vendors ramping up shipments to white-box tablet PC makers [DIGITIMES, July 20, 2012]

China-based chipset solution vendors including Rockchip Electronics and Allwinner Technology have been ramping up their shipments to white-box tablet PC vendors in China, cutting out market share from Taiwan-based VIA Technologies, according to industry sources.

Shipments of white-box tablet PCs in China totaled eight million units in the first half of 2012 and are expected to reach 16-17 million units for the year, compared to 20 million projected previously, the sources indicated.

Rockchip shipped at least 1.6 million tablet chipset solutions in the first half, accounting for 20% of the white-box tablet PC segment. Rockchip’s latest ARM-based dual-core solution, the SoC RK3066, is being built using a 40nm process at Taiwan Semiconductor Manufacturing Company (TSMC), said the sources.

Allwinner has been delivering more of its A10 solutions, which are also manufactured by TSMC utilizing a 55nm process, added the sources.

then came the news that: Demand for white-box tablets keeps growing despite keen competition [DIGITIMES, Oct 15, 2012]

Demand for white-box tablets rolled out by China-based makers remains strong currently despite the launch of US$199 models by Amazon, Barnes & Noble and Google, and the dominance of Apple’s iPads, according to industry sources.

Some white-box makers in Shenzhen are shipping 200,000-300,000 tablets a month, and a number of large-scale operators are even shipping one million units a month, buoyed by their tactics of optimizing hardware specifications, while keeping device prices low, noted the sources.

Most 9.7- or 10.1-inch white-box tablets powered by a dual-core CPU are currently quoted below US$200, while those comparable models with a single-core processor are priced at US$70-120, revealed the sources.

Some 7-inch models built with China-based Allwinner’s A10 solutions can be available for US$50, the sources added.

Additionally, the FOB prices of US$150-250 for 9.7-inch white-box tablets with dual-core CPUs, high resolution displays and 3G modules are also competitive in emerging markets, the sources commented.

Some tablet exhibitors at the ongoing HKEF 2012 (Hong Kong Electronics Fair, Autumn Edition) estimate that China-based white-box makers as a whole are shipping four million tablets a month currently.

Allen Wu, president, ARM China, predicts that shipments of Android-based tablets by China makers are likely to reach 50 million units in 2012 and increase to 100 million units in 2013.

Over 5.0 million Nexus 7s to be shipped in 2012, say Taiwan makers [DIGITIMES Research, Nov 19, 2012]

At the end of the second quarter, Google expected shipments of 2.5 million Nexus 7s in 2012 but since then it has continually placed additional orders in view of booming sales, with the cumulative shipment volume in 2012 will reach 5.0 million units based on orders released, according to Taiwan-based players in the supply chain.

While international vendors usually place orders for shipments to peak in October and November to meet year-end peak demand beginning in late November, Nexus 7 shipments are expected to remain at a high level of 700,000-1,000,000 units in both November and December, the sources pointed out.

After the launch of the 16Gb Nexus 7 for sale at US$199 and a 32GB version at US$249, Google on November 13 launched a 32GB 3G-enabled Nexus 7 for sale at US$299 and Google Play and Google’s partner AT&T have sold out available stock, the sources indicated.

While the iPad mini is thought of as a major competitor for the Nexus 7, Taiwan-based iPad mini supply chain makers indicated that Apply has not adjusted order volumes since the tablet was launched and monthly shipments remain at nearly 4.0 million units currently.

Digitimes Research: Google will become more influential in tablet market [DIGITIMES Research, Nov 2, 2012]

Senior analyst James Wang of Digitimes Research believes that Google’s recently announced Nexus 10, developed in cooperation from Samsung Electronics, and upgraded storage for the Nexus 7, are aimed at starting competition with players such as Apple, Amazon, Barnes & Noble and China-based white-box tablet vendors.

Since Google has prepared a full-range of tablet products, Wang believes the company’s entry-level Nexus tablet, that has not yet been announced, will have the strongest influence on its competitors.

Google’s Nexus 7 shipments performed better than expected, and are forecast to reach 4.3 million units in 2012, accounting for about 20% of non-Apple tablet shipments (excluding white-box models), while the volume in the fourth quarter is also expected to enjoy sequential growth despite the weak global economy, Wang pointed out.

Digitimes Research estimates that Google’s Nexus series tablets will see total shipments of 19 million units in 2013 accounting for 50% of non-Apple tablet shipments. [In a later estimate Wang raised the shiments of other branded Android tablets to 32 millions, see also here in the beginning, so Google’s Nexus marketshare now is only 37% in its own category.]

But note: Nexus 7 not yet allowed to enter China market [DIGITIMES Research, Sept 11, 2012]

While the Nexus 7, the tablet co-developed by Google and Taiwan-based vendor Asustek Computer, has been witnessing booming sales in major markets around the world, it is difficult for the model to be available for sale in the China market because the China government has not yet approved its import, according to industry sources in Taiwan.

The China government’s negative attitude is interpreted as a response to Google’s announcement of withdrawing from the China market in March 2010, the sources pointed out. It is difficult for the Nexus 7 to enter the China market, even through sale of Asustek’s marketing network there, the sources indicated.

Without the Nexus 7 in the market, China-based white-box vendors of tablets are under much less competitive pressure, the sources indicated. This is because the Nexus 7 has the advantage of Google’s and Asustek’s brand image with commensurate product quality and is expected to be strongly competitive with 8GB Android 4.0 tablet models in the 7- to 9-inch range launched by China-based white-box vendors, including Ainol, Onda, Teclast and Cube, at US$149, the sources pointed out. In addition, the Nexus 7 will bring competitive pressure on tablet PC models of equal specifications offered by Samsung Electronics and China-based vendors Lenovo and Hasee Computer in the China market, the sources indicated.

Without the China market, the cumulative global sales volume of Nexus 7 will reach an estimated 3.5 million units at the end of 2012, the sources noted.

Google attitude against modified Android may lead to split in Android, say Taiwan handset makers [DIGITIMES Research, Sept 18, 2012]

Google’s opposition to Taiwan-based vendor Acer’s launch of the A800, a smartphone based on the Alibaba-developed operating system Aliyun, reflects Google’s attempt to check development of modified Android platforms, but if Google cracks down on this, developers of modified Android platforms may be forced to offer own-brand smartphones or tablets and give up on Android, resulting in an increased split in the adoption of Android, according to Taiwan-based handset supply chain makers.

Google explained that Aliyun is incompatible with the Google ecosystem and therefore unable to ensure a consistent user experience among developers, makers and consumers, the sources noted. In response, Alibaba emphasized that Aliyun, while based on open-source Linux as Google is, is not part of the Google ecosystem and therefore is not necessarily compatible with the ecosystem, the sources indicated.

Developers of modified Android platforms such as Amazon and Alibaba are not members of the Open Handset Alliance and are Google’s competitors, they need not care about Google’s attitude, the sources pointed out. However, smartphone vendors need to cooperate with Google to offer Android models and therefore have to be concerned about Google’s attitude against modified Android platforms, the sources indicated.

If Google cracks down by prohibiting smartphone vendors from adopting modified Android platforms, developers of modified Android platforms, such as Amazon, may skip vendors to directly partner with ODMs to offer their own-brand devices, with such platforms to set up their own ecosystems and thereby become more competitive with Android, the sources pointed out. For some China-based smartphone vendors which have adopted many locally developed applications, because losses arising from forgoing Android may be small, they may shift to a modified Android platforms.

Among China-based smartphone vendors, only Huawei Technologies, ZTE, Lenovo, Haier, Oppo and a few others joined the Open Handset Alliance, the sources noted. As China is the largest smartphone market around the world, Google had better pay attention to response from web service operators, smartphone vendors and consumers, the sources pointed out.

Commentary: Is it a blessing for Asustek to have Google backing? [DIGITIMES, Nov 7, 2012]

Asustek Computer has seen its brand image improve in the US and Japan recently thanks to the launch of dual-branded Nexus 7 in cooperation with Google. Asustek is proud of its product design with regard to the Nexus 7, and also aims to capture the top-vendor ranking in the Android tablet segment. But it remains to be seen whether Asustek will be able to continue to expand its brand image based on the charm of the Nexus 7, since Google has announced its Nexus 10 in conjunction with Samsung Electronics.

Google has been backing Asustek in the development of the Nexus 7, offering the Taiwan-based hardware vendor the priority to design-in its latest Android OS and to penetrate into the US tablet market jointly.

Due to aggressive pricing set for the Nexus 7, industry watchers have wondered whether the Google-Asustek cooperation would generate profits for Asustek before the production of the 7-inch tablet reaches economies of scale. But for Asustek, the dual-brand marketing was not aiming at generating profits initially but rather improving its brand image, particularly in North America.

Optimizing Asustek’s design capability and Quanta Computer’s manufacturing muscle, the Google-Asustek team is able to set the price of the Nexus 7 lower. The low-priced tactics is working as sales of the Nexus 7 have been better than expected, while Asustek’s notebook sales in the US are also improving.

Some industry watchers now estimate that total shipments of the Nexus 7 are likely to reach 4-4.2 million units by year-end 2012, while Asustek will also be able to sell more of its own brand notebooks in the US.

But the skepticism about the merits of the Google-Asustek tie-up still remains, since Google has showed its intention to control the development of the Android market, optimizing the production of the 7-inch Nexus 7 at Asustek and the 10-inch model at Samsung. Furthermore, the latest market rumors also indicate that Google may also team up with Lenovo for penetrating into the China market.

Does Google treat Asustek as a brand partner or an OEM supplier? John Lagerling, director of business development for Android, seems to have an answer to the question.

When approached by the New York Times during a recent interview seeking a confirmation of Asustek’s remarks that current shipments of the Nexus 7 have reached as many as one million units a month, Lagerling replied, “We haven’t announced numbers. We typically don’t allow our partners to announce numbers.”

The message clearly indicates that Google treats Asustek as an OEM partner, but not a dual-brand partner.

In the worst-case scenario, Google may tie up with other vendors such as HTC and Lenovo to develop its next-generation Nexus tablets, which will place Asustek under fire from rivals vying for the Android tablet market.

Asustek has estimated its tablet shipments to reach 6.3 million units in 2012, of which the Nexus 7 will account for over four million. In other words, shipments of Asustek’s own brand Transformer and Padfone tablets are limited.

Asustek’s competitive advantage will wane further if it fails to win the design-in priority for the next-generation Nexus tablets.


The emerging new trends
in the premium ecosystem of the Windows devices

[Windows] Notebooks

Third-generation ultrabooks may be able to achieve 40% of notebook shipments, say players [DIGITIMES, Dec 11, 2012]

As Intel failed to achieve its goal of having ultrabooks account for 40% of total notebook shipments with its Ivy Bridge platform, and the proportion only reached about 10%, sources from notebook players believe the goal may be achievable with the upcoming Haswell platform, which is set to launch at the end of second-quarter, 2013.

The sources pointed out that compared to Ivy Bridge, Haswell’s stronger performance and cheaper price, plus the expectation that Windows 8 should become more standardized by then, should mean ultrabooks have a chance to account for 40% of total notebook shipments by the end of 2013.

Although vendors have released ultra-like notebooks with prices around US$699-899 as alternatives, since these devices lack attractiveness in terms of design and weight, while ultrabook models with specifications similar to the MacBook Air have prices a lot higher than the MacBook Air, most consumers have turned to purchase Apple’s product instead, the sources noted.

Digitimes Research: Surface tablet to mainly devour notebook demand in the short term [DIGITIMES Research, Oct 30, 2012]

Microsoft’s recently launched own-brand Surface tablets have raised the question of whether Surface will devour consumer demand for tablets or notebooks, or maybe even both. In terms of hardware, Surface is capable of satisfying consumer demand for notebooks, but to replace other tablets, it still requires a more complete app software ecosystem, according to Digitimes Research senior analyst James Wang.

Currently, the major difficulty Surface faces in gaining a competitive edge in the tablet market is the lack of a complete app software ecosystem, which means that if Surface can achieve growth in the short term, it will mainly be at the expense of demand for notebook products.

To let Surface to become a tablet killer instead of a notebook killer, Microsoft must expand shipments of Windows RT devices to attract application designers to join and establish an ecosystem. However, due to Android’s existence in the market, most notebook vendors are hesitant about joining the Windows RT market.

Although IBM, Microsoft and Intel were able to defeat Apple previously with an open platform strategy, due to Android’s existence, Microsoft will be unable to compete against Google in terms of business model and will be forced to head to the same business direction as Apple of having a closed platform with integrated software and hardware, making it even more difficult for Microsoft to build a complimentary ecosystem built on the Windows RT platform.

The most popular strategy for platform competition is to offer a free or low-price product or service to attract users and establish an ecosystem to strengthen consumer loyalty, and then seek methods to gain profit. Apple, Google and Amazon’s strategies are all similar – by abandoning profit from some segments including hardware, operating system, software, digital content or advertising, they are able to increase their profits from the remaining segments; however, for Microsoft, since all the above segments belong to different business units, internal struggles and external industry fluctuations will all affect Microsoft’s performance in the future.

Digitimes Research: Windows 8 expected to have minimal impact on touch screen notebooks in 2013 [DIGITIMES Research, Nov 13, 2012]

Shipment growth for touch screens used in notebooks throughout the fourth quarter of 2012 and most of 2013 will at large not be affected by the release of Windows 8, according to Digitimes Research.

Research indicates that consumers are more likely to purchase tablets throughout the time period because of the wide variety of tablet products available, and because of the difference in pricing between tablets and notebooks.

The notebook shipment forecast is expected to drop by 192 million units in 2012 to 189 million units in 2013 as a result, as well as due to a lack of recovery in the global economy.

However, Digitimes Research pointed out that the expected drop in notebook shipments will also be due to notebook makers increasing the mainstream sizes of their products to 14- and 15-inch, which will thus decrease the amount of panels available for producing notebook products.

Despite the shipment drop, the usage rate for touch panels used in notebooks is expected to increase to 10% in 2013, added Digitimes Research.

Digitimes Research: Asustek to compete with Acer for top-3 worldwide notebook vendor spot in 2013 [DIGITIMES Research, Nov 15, 2012]

Weak Global notebook demand is expected to reshuffle the top-10 notebook brand rankings in 2013, with Lenovo expected to successfully take over Hewlett-Packard’s (HP) leading position. Meanwhile, Asustek Computer, which will rank as the fourth-largest brand vendor worldwide in 2012, will compete against Acer to become the third-largest vendor in 2013.

Toshiba, the sixth-largest notebook brand worldwide in 2012 is expected to be surpassed by Apple in 2013.

With top brand vendors starting to lose their edge, the four new stars in the notebook brand market – Lenovo, Asustek, Apple and Samsung – are expected to see their combined market share rise from 40.9% in 2012, to 43.2% in 2013.

As for upstream ODMs, their contributions to global notebook shipments is expected to grow from around 70% in 2011 to 75% in 2013, while electronic manufacturing service (EMS) providers will step out of the design business and turn to focus mainly on manufacturing.

In 2013, Pegatron Technology and Wistron are expected to have the best performance among the top-five makers as the former will benefit from increased orders from Lenovo and Fujitsu, while the later will benefit from its enlarged cooperation with Asustek.


Source: Digitimes Research, November 2012

HP, Lenovo aim to ship 40 million notebooks each in 2013, say Taiwan makers [DIGITIMES, Nov 19, 2012]

Despite a stagnant global notebook market in 2012, Hewlett-Packard (HP) and Lenovo aim to ship 40 million notebooks each in 2013, respectively increasing by 25% and 33.3-37.9% from 2012, according to Taiwan-based supply chain makers.

As there have been no signals to indicate an economic rebound in the US and Europe, and demand for Windows 8 notebooks will not take off in the near future because consumers will take time to get accustomed to the new operating system, HP and Lenovo may be too optimistic about their notebooks sales in 2013, the sources analyzed.

Among other vendors, Samsung Electronics aims to ship 17 million notebooks and 40 million tablets in 2013, hiking from 2012 by 21.4% and 300% respectively, while Toshiba and Acer have set respective goals of shipping 20 million units, growing from 2012 by 25%, and 28 million units which will rise by 7.7%, the sources noted.

Lenovo 3Q12 global PC market share rises to 15.6% [DIGITIMES, Nov 9, 2012]

Lenovo saw its total global sales volume of notebooks, desktops and tablets during the third quarter of 2012 increase by 10.3% on year, with corresponding global market share rising to 15.6%, according to the company’s fiscal second-quarter 2012 (July-September) report released on November 8.

Lenovo posted sales revenues of US$8.7 billion, gross margin of 12.1%, net operating profit of US$206 million, pre-tax profit of US$204 million, and net profit of US$162 million for the third quarter of 2012.

Lenovo reached the largest PC market shares in China, Japan, India, Russia and Germany in the third quarter, and is likely to do so soon in Brazil, the company pointed out.

Lenovo shipped 8.5 million handsets in the third quarter, of which seven million were smartphones, the company indicated.

Notebook vendors headhunt R&D talent from ODM partners [DIGITIMES, Nov 19, 2012]

As notebook brand vendors grow more interested in-house R&D and manufacturing to promote their brand image, sources from the upstream supply chain have seen some notebook vendors starting to headhunt talent from their ODM partners.

Sources from notebook ODMs also pointed out that vendors have changed their outsourcing strategies and will check with their chassis and hinge suppliers for component materials and prices, and have their in-house R&D teams complete industrial design before handing the work to ODMs.

The sources pointed out that the new strategy is expected to expand in the notebook industry in 2013 and should benefit notebook brand vendors in terms of gaining more control over component costs as well as keeping their product designs confidential.

Acer and Hewlett-Packard (HP) have already started adopting the strategy.

Acer recently pointed out that the company will increase its R&D investment by 20% each year for the next three years. The company currently has about 1,000 R&D engineers. Lenovo will also continue strengthening its R&D and manufacturing abilities and is set to achieve an in-house production rate of 20% in 2013. Samsung’s in-house production rate is expected to maintain at 85-90% in 2013.

Notebook ODMs offer extra services to attract tablet orders [DIGITIMES, Nov 19, 2012]

With notebook shipments estimated to only have a single-digit percentage growth on year in 2013, notebook ODMs including Quanta Computer, Compal Electronics and Wistron, are aggressively trying to land tablet orders by offering extra services, according to sources in the upstream supply chain.

In addition to offering preferences over price, product specifications and shipment conditions, Compal and Wistron also offer their exclusive touchscreen solutions from related subsidiaries to attract downstream brand vendors to place orders.

Meanwhile, Quanta is offering services through its cloud computing expertise and the company reportedly has assisted brand vendors such as Amazon, to build data centers and successfully acquired their tablet orders.

In 2013, Compal estimates it will ship 6-8 million tablets, up from two million units in 2012, while Wistron expects its tablet shipments to reach six million units, up from 2.5 million units in 2012, and Quanta with shipments of 14-15 million units, up from 10 million units in 2012.

11.6-inch becomes niche-market size for notebooks, say Taiwan makers [DIGITIMES, Nov 15, 2012]

As global sales of netbooks have been decreasing due to competition from tablets, 11.6-inch has become niche-market size, according to Taiwan-based notebook supply chain makers.

Among notebook screen sizes, 11.6- and 13.3-inch have accounted for a relatively small proportion of total shipments, the sources indicated. However, as Samsung Electronics and Acer have launched inexpensive 11.6-inch Chromebooks and Asustek Computer has launched a 11.6-inch VivoBook touch-control notebook, an increasing number of 11.6-inch notebooks are available for sale, the sources commented.

Despite shrinking sales, demand for netbooks still exists, especially in emerging markets, the sources indicated. As most netbooks are have screen sizes of 10-inch, and 10.1-inch is so far the upper limit for typical tablet screen sizes, 11.6-inch notebooks are likely to see considerable demand in the global market, the sources pointed out.

Windows 8 may not start a PC replacement trend for enterprises until after 2014 [DIGITIMES, Nov 19, 2012]

Demand for Microsoft’s Windows 8 is unlikely to start emerging until 2013 for the consumer market, while for the enterprise market, demand is expected to come at an even later time and may not appear until 2014, according to sources from the PC industry.

Although Microsoft is trying to present its latest innovations in Windows 8 to response to consumers’ fluctuating demand, it turns out that consumers need more time to understand the new advantages that the product provides and relatively delay acceptance for the new operating system.

Although notebook brand vendors have a high expectation for the year-end holidays this year, their order placement to the upstream supply chain still shows they are cautious about the shipment performance during the traditional peak season.

To prompt enterprises to adopt Windows 8, Microsoft has recently noted that the company will stop providing support to Windows XP in April, 2014 with most of the enterprises expected to turn to Windows 7 and some to Windows 8 as stability and necessity are the major considerations for enterprises to make a purchase.

Component makers concerned Windows 8 demand may not emerge until 1Q13 [DIGITIMES, Nov 19, 2012]

Some upstream component makers have recently started to be concerned that the PC replacement trend expected to be brought on by Windows 8 may not occur in the fourth quarter of 2012 as originally estimated, but will take off in the first quarter of 2013, according to sources from upstream supply chain.

Since an operating system usually needs to have serious debugging after launch, the sources believe consumers may hold back their new PC purchases until some time later and their actions would impact demand for Windows 8-based systems in the fourth quarter.

However, the component makers are still placing high hopes on the new operating system to bring growth.

Notebook ODMs facing uncertainty as brand vendors take over R&D [DIGITIMES, Nov 7, 2012]

Acer plans to release a new notebook that is designed and developed in-house, creating an alert among notebook ODMs that brand vendors are trying to become more involved in R&D and the component purchasing of their notebook products which could impact ODMs’ profitability, according to sources from the upstream supply chain.

The sources pointed out that Acer’s in-house developed notebook features Windows 8 and a touchscreen display and will be showcased at Consumer Electronics Show (CES) in 2013, at the earliest. Related R&D has already been completed and Acer is currently seeking a partner to conduct assembly.

So far, the device is the only in-house developed project that Acer plans to release in the short term and shipments will be limited, indicating that the project is a test for Acer to try out its R&D capabilities, the sources noted.

With Lenovo also planning to expand its in-house production by establishing its own plants, if Acer also decides to conduct R&D in house, it could seriously impact the values of ODMs for their clients.

However, some ODMs pointed out that they are not concerned about the moves and believe the possibility of the new business model emerging is low since the brand vendors have already outsourced their R&D to ODMs for a long time, and rebooting their R&D capabilities will require a long period of learning.

Since Wintel is no longer dominating the PC market, brand vendors will also need to spend R&D resources on ARM and Android, which would seriously increase their burden.

At its Windows 8 product launch conference, Acer also revealed that the company will focus more on product R&D and will increase its R&D resources by at least 20% every year.

Commentary: Notebook ODMs face uncertainties in tablet market [DIGITIMES, Nov 7, 2012]

The rise of tablets and smartphones, plus the economic downturn in the US and Europe, have been causing PC brands such as HP, Dell and Acer to report unsatisfactory sales results. This has been affecting the performance of notebook ODM firms such as Quanta Computer, Compal Electronics and Wistron.
ODM firms have been hoping that Windows 8 can stimulate a new wave of demand as consumers switch to new PC models with the Microsoft operating system in 2013. Also, ODM firms have been aggressively fighting over tablet orders as demand in 2013 is likely to reach 200 million units.
Quanta Computers targets revenues from non-notebook business to increase to 30% of total revenues in 2012. Compal is looking to ship 6-8 million tablets in 2013, while Wistron aims to achieve its tablet shipment target of 6 million units in 2013.
Compal’s and Wistron’s targets of shipping 6-8 million tablets to a market whose total shipments are expected to reach 200 million in 2013 show how difficult it has been for notebook ODMs to obtain tablet orders.
One of the reasons is that most of the market has been dominated by Apple while other tablet vendors such as Amazon and Google have yet to see strong sales. Manufacturing orders have been over-concentrated, causing tough competition among firms. As a result, both Quanta and Compal have trimmed their tablet divisions.
The ODM firms have been facing uncertainties regarding tablet orders, such as multiple platforms, unstable orders, and different device sizes.
Apple’s iOS and Google’s Android platforms continue to dominate the market while Microsoft’s Windows comes in third. Samsung is planning to develop its own platform and HP’s webOS may also become one of the major players. The multiple platforms mean firms need to bet on the right one to maintain orders.
As for orders, clients may place large volumes expecting strong sales in the end market. But when sales turn out worse than expected, inventory will build up and orders will be cut. That is the case with Amazon’s Kindle Fire earlier this year. For the tablet segment, manufacturing partners are under much higher pressure from inventory management.
Another uncertainty comes from the size of the devices. There are currently products that are 7-, 8.9-, 9.7-, 10.1-, and 11.6-inch. A small difference in size can mean significant differences in revenues.
In addition, profits have been unstable. Some tablet brands want to increase market share by resorting to low price and sacrificing their gross margin. This directly affects the profit margin of ODM firms.

Taiwan component makers worried about Lenovo plans to hike in-house notebook production [DIGITIMES, Oct 8, 2012]

As China-based vendor Lenovo plans to increase in-house production of own-brand notebooks and will therefore procure components instead of letting ODMs release orders, as a result Taiwan-based component makers have felt pressure of losing orders, according to Taiwan-based notebook supply chain makers.

In-house production currently accounts for 20-30% of Lenovo’s shipments of notebooks, desktops and other types of PCs, the sources indicated.

Lenovo will have LCFC (Hofei) Electronics Technology, its joint venture with Taiwan-based ODM Compal Electronics in Hofei, northern China, start volume production at the end of 2012 or the beginning of 2013, to increase in-house production of notebooks, the sources pointed out. In addition, Lenovo is setting up PC production lines in the US and will do so in Brazil in 2013, with volume production to begin in 2013, the sources noted.

In addition to increasing in-house production, Lenovo may set up a supply chain consisting of China-based component makers, the sources pointed out.

Compal/Lenovo joint venture expected to output 3-5 million notebooks in 2013 [DIGITIMES, Sept 4, 2012]

The notebook manufacturing joint venture of Compal Electronics and Lenovo in Hefei, China was reported by local media to enjoy more than 10 million units of notebook production volume in 2013, but sources from notebook players estimate that the plants may only be able to output around 3-5 million units next year as their yield rates still need improvement, while the related process of shifting orders from other ODMs to the joint venture may also affect the total output volume from the joint venture.

The sources pointed out that Compal and Lenovo’s cooperation will create benefits for both firms as Lenovo will be able to directly control the quality of its products, understand the ODM manufacturing process and reduce its cost, while Compal will be able to tighten its relationship with Lenovo and benefit from Lenovo’s orders.

The joint venture will start pilot production in October and start mass production in the fourth quarter of 2012 with monthly capacity at around 300,000 units. Initially, the plants will focus on notebook production, but will later add production for all-in-one PC. The local media has reported that the plants will manufacture about one million notebooks in 2012, 13 million units in 2013 and 20 million units in 2014.

Currently, Lenovo has 51% stakes in the joint venture with Compal holding the remaining 49% and some market watchers are concerned that Lenovo may shift all its Compal orders to the joint venture, affecting Compal’s own orders and profitability since Compal will need to share its profit with Lenovo for any order received by the joint venture.

Commenting on the concerns, Compal president Ray Chen has noted that the two firms have already signed a contract to avoid from this type of situation, but he refused to reveal further details of the contract.

In 2013, sources from the supply chain pointed out that Lenovo will still maintain about 30% of notebook shipments being in-house manufactured and will outsource the remaining 70% with the orders to the joint venture considered as outsourcing.

Compal Electronics lays off tablet R&D, testing personnel [DIGITIMES, Oct 23, 2012]

Taiwan-based notebook and tablet ODM Compal Electronics has laid off more than 100 employees responsible for tablet R&D and testing.

Compal confirmed the layoffs, explaining that the company recruited staff members to meet growing orders for tablets in 2011 but orders received have been far short of expectations and therefore it is necessary to adjust manpower. Although Compal stressed that only one wave of layoffs is planned, internal sources indicated that there may be more.

Compal’s staff cuts signal that tablet vendors have encountered difficulties and notebook supply chains are under pressure, industry sources pointed out. For tablet vendors, the iPad has dominated the high-end segment while competition in among entry-level models, which includes the Amazon Kindle Fire series and Google Nexus 7, is already intensive, the sources analyzed. In addition, tablet vendors originally rested their hopes on Windows 8 models, but Microsoft’s launch of the Windows RT Surface at US$499, and Apple’s planned launch of the iPad mini will cut into their competitive advantages, the sources said.

Compal’s tablet clients are mainly Acer and Lenovo, the sources indicated.

In September 2011, Quanta Computer laid off over 1,000 production line workers due to a large decrease in orders for tablets from RIM, and in October 2011 Inventec laid off 432 employees because Hewlett-Packard reduced its tablet orders.

Lenovo to launch a table-shaped all-in-one PC [DIGITIMES, Nov 5, 2012]

Lenovo plans to launch a Windows 8-based all-in-one PC that features a similar industrial design as Microsoft’s Surface [on June 18, 2012, a Microsoft tablet of the same name was unveiled, the original Microsoft Surface was rebranded as Microsoft PixelSense, see the About Microsoft PixelSense [Microsoft PixelSense press page, June 18, 2012]], a table-shaped PC. The machine features four legs and when the display is laid flat, it becomes like a table and can be used by multiple users simultaneously, according to sources from the upstream supply chain.

The all-in-one PC features a 27-inch display with initial shipments of 20,000 units.

In addition to Lenovo, Acer, Asustek Computer and Hewlett-Packard (HP) all plan to launch new all-in-one PCs with some models will appear as soon as the end of 2012.

At Computex 2012, Asustek chairman Jonney Shih demonstrated an all-in-one PC product under its Transformer series and the all-in-one PC can be detached and become an 18.4-inch tablet, supporting both Windows 8 and Android; however, the product, so far, still has not yet been mass produced.

Meanwhile, Acer has also launched two Windows 8-based all-in-one PCs with special designed hinge and Lenovo also displayed its IdeaCentre A720 with a function to lay out flat.

In 2012, all-in-one PC shipments are expected to reach 16.4 million units, up 20% from 13.7 million units in 2011, according to figures from IHS iSuppli, while IDC also forecast that the all-in-one PC shipments will reach 17 million units in 2013.


[Windows] Smartphones

FIH reportedly lands handset orders from Microsoft and Amazon [DIGITIMES, Nov 26, 2012]

Foxconn International Holding (FIH) has reportedly landed handset orders from Microsoft and Amazon and is set to launch the devices in mid-2013, according to sources from the upstream supply chain. However, both the parent company Foxconn Electronics (Hon Hai Precision Industry) and FIH declined to comment about clients or orders.

Foxconn is the major manufacturer of Apple’s iPhone products, while its subsidiary FIH has clients including Nokia, Sony, Lenovo, Huawei and ZTE.

Microsoft’s own-brand handset will adopt its Windows Phone 8 operating system, the sources noted.

The sources pointed out that Microsoft and Amazon’s own-brand handsets will only have a limited shipment volume initially and may become a new business model for the manufacturers in the future.

In addition to provide manufacturing services to first-tier brand vendors, FIH also supplies white-box handsets to regional vendors in China, Europe and the US.

Taiwan IC design houses to benefit from Samsung aggressive product roadmaps in 2013 [DIGITIMES, Dec 7, 2012]

… the Korea-based vendor is reportedly set to adopt a more aggressive ‘shotgun’ strategy wherein many models will be created in the smartphone, tablet, notebook, LCD TV and DSC sectors that cover a wide range of market segments in 2013, according to industry sources.

In the smartphone sector, Samsung will move into the Windows Phone platform and roll out models targeting the entry-level, mid-range and high-end segments simultaneously, in an attempt to duplicate its success in the Android space, the sources revealed.

Digitimes Research: Android phones to account for 70% of global smartphone market in 2013 [DIGITIMES Research, Dec 6, 2012]

Shipments of Windows Phones, including 7.x and 8.x models, will grow 150% on year to 52.5 million units in 2013 for a 6.1% share

Worldwide Mobile Phone Growth Expected to Drop to 1.4% in 2012 Despite Continued Growth Of Smartphones, According to IDC [IDC press release, Nov 1, 2012]

For the year, smartphone shipments are forecast to grow 45.1% year over year to 717.5 million units.

Windows Phone will battle with BlackBerry for the number three spot in 2013, but will gain further clarity in the years that follow. Windows Phone will build on the progress it made in 2012, with Nokia establishing its presence and HTC solidly jumping back into the race. Moreover, contributions by Samsung, ZTE, and Huawei will help grow its footprint. With more vendors releasing more devices aimed at multiple segments, sales associates will be better positioned to tell a compelling Windows Phone story and to explain the value of Windows Phone’s differentiated experience compared to market leaders Android and iOS.

Top Smartphone Operating Systems, Forecast Market Share and CAGR, 2012–2016

Smartphone OS

2012 Market Share

2016 Market Share

CAGR 2012 – 2016 (%)

Windows Phone

2.6%

11.4%

71.3%

Total

100.0%

100.0%

18.3%

Source: IDC Worldwide Mobile Phone Tracker, December 3, 2012

The previous forecasts taken together mean:
– IDC: 18.7 million Window Phones in 2012 (calculated as 2.6% of 717.5 million units)
– IDC: 161 million Window Phones in 2016 (with 71.3% CAGR of that 18.7 million)
– DIGITIMES Research + IDC: 46.6 million Window Phones in 2013 (150% growth predidicted for WP in 2013 by DIGITIMES Research over 18.7 million given by IDC for 2012)
which makes DIGITIMES Research’s forecast of 52.5 million Window Phones in 2013 quite feasible for me, at least for three reasons:

  1. Samsung aggressive move into the Windows Phone platform as noted above by DIGITIMES.
  2. The kind of breakthrough for the WP8 Lumias, and WP8 in general, especially against iPhone 5, as described by my recent blog entries ragarding:

    High-end smartphones state-of-the-art:
    Lumia 920 vs. iPhone 5 (and vs. Android, Galaxy S3, HTC One X+) [Dec 7, 2012]
    Windows Phone 8 vs. Android 4.1 and 4.2 [Dec 6, 2012]

  3. The additional, not yet recognized end-user and business partner advantages as described in all detail in my:
    – Lead post: Marko Ahtisaari from Nokia and Steven Guggenheimer from Microsoft on the Internet of Things day of LeWeb Paris’12 [Nov 6, 2012]

Uncertain Windows 8 future may relatively affect Windows Phone 8 [DIGITIMES, Nov 5, 2012]

Although Microsoft has been aggressive promoting its new Windows 8 operating system (OS), a weak global economy has the notebook supply chain remaining conservative about the OS’ contribution to their performance in the fourth quarter and the OS’ uncertain future may relatively affect the software giant’s plan for its Windows Phone 8 platform, according to sources from the upstream supply chain.

Microsoft’s aggressive promotion of Windows 8 touchscreen functions is meant to blur the boundaries between smartphone, tablet, notebook and desktop through a similar usage experience, while expanding its advantages in the IT industry through a unified OS platform structure and gain some benefits from the smartphone market, where the company is currently still behind.

Microsoft originally hoped to strengthen its Windows Phone 8 penetration through a PC replacement trend brought by Windows 8, but since the OS may not trigger a replacement trend as expected, while Microsoft’s smartphone partners such as High Tech Computer (HTC) and Nokia are also conservative about their Windows Phone 8-based product shipments, the sources believe Microsoft’s plans for its operating systems will be further delayed.

Microsoft’s launch of own-brand smartphones in 2013?
It is based on rumors that Microsoft Is Reportedly Testing Its Own Smartphone [TechCrunch, Nov 2, 2012]

First it built the Surface, and now Microsoft is said to be working on another new hardware product, this time a smartphone. That’s according to a new report from the Wall Street Journal, which says Microsoft is currently working with Asian component suppliers on its own handset design, though it isn’t yet clear whether or not the device will ever go into mass production.
Details about what a Microsoft smartphone would look like are scarce, but the report does say that the version being currently tested has a screen between four and five inches, which is in keeping with recent designs from Apple and Android handset OEMs. It’s also probably pretty reasonable to assume that any device Microsoft puts out now will have more in common with the flagship phones from its hardware partners for Windows Phone 8, which include Nokia and HTC, than with its previous Kin smartphones. The teen-focused Kin carried Microsoft’s branding, but was made by Sharp, and lasted only 48 days on the market.
Microsoft had made a more dedicated approach to creating its own hardware with the Surface, albeit to mixed reviews. And as the WSJ reports, it’s also been more aggressive about enforcing hardware standards with its partners in recent years, both in terms of the look and makeup of Windows-certified PCs and in minimum specs for partner mobile handsets. That Microsoft could be considering an approach like Apple’s, wherein it would sell both hardware and software and control all aspects of the ecosystem, definitely seems more plausible than it has in the past.
Also, rumors have been building that Microsoft is working on a smartphone since back in June, thanks to Nomura analyst Rick Sherlund, who said that Microsoft was already working with a “contract manufacturer” to create their own Windows Phone 8 mobile device. Then at the beginning of October, Boy Genius Report received a tip that Microsoft was indeed working on its own smartphone, that would sell alongside and compete with partner OEM devices like the HTC 8X and Nokia Lumia 920. The company has shown it’s willing to go there with the Surface, and Nokia CEO Stephen Elop even said on a conference call two weeks ago that a Microsoft-made device would be a boost to the entire Windows Phone 8 device sales ecosystem.
Even if it didn’t become a top seller in and of itself, a Microsoft-branded smartphone could offer Windows Phone what the Nexus line provides Android: a place to show off the latest and greatest software, experiment and build hype around the platform. I think the biggest risk would be in potentially alienating hardware partners, but so far the Surface doesn’t seem to have dampened the enthusiasm of Windows PC OEMs all that much, and Elop has already declared his support. If nothing else, a Microsoft-made Windows Phone 8 smartphone would be interesting, and generating interest is maybe the key ingredient to Microsoft’s future mobile success.

Why Microsoft believes latest-gen Windows Phones are ‘killer hardware’ [TechRadar, Nov 18, 2012]

INTERVIEW We talk to the head of Windows Phone: Terry Myerson

For the last year, Nokia has been the poster child for Windows Phone but recently HTC and Samsung have seemed more in favour.

Samsung announced their Windows Phone 8 handsets first and the HTC 8x was handed out to enthusiasts at the Windows Phone 8 launch.

We asked corporate vice president of the Windows Phone Division Terry Myerson to explain how Microsoft juggles partnerships with rival phone makers and how much influence manufacturers have on the design of Windows Phone.

“We work in different ways with each of them on the engineering and on the marketing,” Myerson told TechRadar.

Nokia gets priority when it comes to development because of the commitment it’s made to Windows Phone; “Nokia is exclusive to Windows Phone and we definitely, on the engineering side, prioritise platform work to support their differentiation coming through.”

Despite the restrictions it puts on handset specs, Microsoft doesn’t want to see the same handset from every phone maker. “Our goal is that Windows Phone is a platform that our partner differentiation can shine through on.

We do spend time planning with HTC and Samsung, sitting down with them and collaborating on what a product is where their differentiation elegantly coexists with Windows Phone and what we bring. There are different cultures to each of these companies and they all have their own plans for how they want to bring their technologies to market.”

“The best devices”

He’s predictably enthusiastic about the handsets that come out of the collaboration with all three partners. “I think the result is the most fantastic killer hardware we’ve ever had, not only for the windows ecosystem – I think these devices are better than any device – well, I they’re the best devices. They’re colourful, they’re beautiful, they’re thin, amazing cameras…”

Some of what you see in Windows Phone 8 handsets is Microsoft’s idea, some comes from the OEMs. “In the case of wireless charging, that was definitely Nokia’s initiative to say they wanted that; they had technologies inside their labs, they took the initiative to put forward a number of engineering designs. There were definitely platform modifications we made to support their innovation but Nokia led on that. All the credit goes to them.”

“The Wallet feature is a place where the Windows Phone team thought about how to use NFC. Roaming content though SkyDrive, encryption; these are all features coming from Microsoft. But the wide angle camera that HTC did with Skype in mind, Nokia’s wireless charging – those are innovations coming from our hardware partners.”

Although app developers get far more access to the platform in Windows Phone 8, Microsoft is still keeping some control and treading a fine line between the free for all of Android that Google is increasingly trying to rein in and the central control of the Apple ecosystem.

We like to think of it as the structured ecosystem that allows the differentiation of partners to shine though on our platform, at the same time providing consumers the confidence that we will protect their privacy, keep malware off the platform, provide a consistently familiar user experience, and providing developers confidence they can write apps once and target our platforms. So there is more structure and structure at times can feel constraining but also there are benefits to it. It’s helpful that everyone drives on the same side of the road, for example…”

Why was the SDK so hard to get?

Myerson is unapologetic about not making the Windows Phone 8 SDK widely available before the launch (when most developers didn’t have phones to work with) and concentrating instead of key developers to get big-name apps; 46 of the top-selling 50 apps from other phones will be on Windows Phone 8 (and yes, he knows who the missing four are and is working on changing their minds).

The sheer number of apps in the Store is far from the most important thing. “It’s a balance; definitely there is magic that occurs in that long tail of apps, [you get some] delightful things… but it is also true that working with these incredibly popular mobile apps is important as well.”

Windows Phone 8 is the future and it’s getting all the marketing love at the moment, but Windows Phone 7 is far from dead. Myerson assured us. “We’re going to have more to say about 7.8 in the coming weeks,” he promised.

I would expect both platforms to exist for quite some time, from a global point of view. Windows Phone 7.8 devices will span much lower price points than Windows Phone 8 devices, initially, and given the application compatibility across the platforms, it makes the ecosystem stronger to have more device and more price points. We value every 7 and 7.8 customer we have; we’ll continue to work for them as well but it is true that Windows Phone 8 is our future platform.”

Of course that only matters if Microsoft can finally start selling Windows Phone devices in significant numbers. Just as Steve Ballmer promised you wouldn’t be able to escape Windows 8 ads, Myerson promises what sounds like an advertising blitz, focussing on Windows Phone rather than on the handset makers.

This holiday it’s very important to us to get out there and tell the Windows Phone story: how we do have this amazingly unique point of view, the smartphone that can be so personal and reflect your interests and the people in your life. Telling that in the most pure sense without confusing them which brands we’re talking about is important. We need consumers to understand and love Windows Phone.”

More advertising money

Certainly Microsoft has promised to advertise Windows Phone better before, without much to show for it, and Myerson seems happy to admit it.

“We weren’t out there with same experience as Windows, even we though shared the same brand; we didn’t have all the right teamwork in place with our partners on the go to market, and we were not advertising the product. We were not out there telling the story to consumers – and that changes now. We will start telling our story. We are going to go out there and advertise the product and tell people.”

What’s different now? In a word, Windows 8 – but also more operator support. “It’s a special time. We have a great product that expresses this unique differentiated point of view, that we are the most personal smartphone, we’ve got killer hardware from partners and we have a great partnership with the mobile operators.

“The fact that they’ve ranged so many phones at such great price points is fantastic. And of course having Windows out there at the same time is exciting; making the experience familiar to users and being the best phone for Windows; if you’re a Windows user, this is the phone for you.”