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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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32-bit Qualcomm Snapdragon 805 Processor (ARM TechCon 2014, Oct 1-3): “our latest and greatest”

Only 3 devices based on Snapdragon 805 SoC have been announced yet (since September): Amazon Fire HDX 8.9 (will be released on Oct 21), Samsung GALAXY Note Edge and Samsung GALAXY Note 4 (release for both–17 model varieties–is scheduled to take place in 140 countries throughout the rest of October after 17th in the U.S. and into the month of November). In addition Google Hopes Whale of a Phone Will Make Splash in Phablet Market with the 5.9″ Motorola (soon Lenovo) Nexus 6 (Shamu) sporting the Snapdragon 805 SoC, and competing with Apple’s iPhone 6 Plus. It might be released in mid-October (October 15 or 16) quite probably together with groundbreaking Android L.

New Krait 450 CPU cores (of Qualcomm’s own Krait microarchitecture for ARMv7-A CPU instruction set architecture–ISA) and new Adreno 420 GPU (for Qualcomm’s brand new Adreno 4xx GPU architecture) as well as the explained below:
– Ultra HD 4K display with integrated Hollywood Quality Video (HQV) technology [0:50⇒]
– HEVC codec feature [2:02⇒]
More information: Snapdragon 805 Processor Product Brief of Sept 20, as well as AnandTech | Qualcomm Snapdragon 805 Performance Preview of May 21 (also giving details about the Adreno 4xx GPU architecture) plus The first wave of computational photography capabilities from Qualcomm for its new Snapdragon 805 SoCs [this same blog, Jan 4-12, 2014].

Note that the Snapdragon 805 SoC was announced 11 months ago (Nov 20, 2013) with:

sampling now and expected to be available in commercial devices by the first half of 2014.

The 4 months delay is quite explainable by the onslaught of high-end SoCs from aspiring competitors, such as MediaTek (first and foremost, see more below), Rockchip, Allwinner etc., all using 3d party semiconductor IP for CPU and GPU cores. While pushing for maximum attainable performance with Krait 450 and Adreno 420 by adding more time to development, meantime Qualcomm itself was forced to move to high-end 64-bit ARMv8-A ISA cores from ARM Holdings (Cortex-A57/A53 big.LITTLE) for its upcoming 2015 SoCs (Snapdragon 810 and Snapdragon 808) in order to remain competitive, as even with Krait 450 the DMIPS/MHz gain against the first Krait 200 core is marginal: 3.51 vs 3.3. So the Krait 450 is the end-of-the-road implementation of the original Krait microarchitecture (but Qualcomm might come out with a brand new microarchitecture of its own for ARMv8-A ISA cores in order to remain competitive from 2016 and on).

Note as well that MediaTek will pose a direct challenge to Qualcomm in high-end 32/64-bit smartphone SoC space as per MediaTek May Narrow Qualcomm’s Lead in China’s 4G Market [EE|Times, Oct 1, 2014]:

MediaTek, Taiwan’s largest chip designer, has a chance to narrow Qualcomm’s lead in China’s 4G smartphone market with the launch of a new octo-core processor in the first quarter of 2015. MediaTek is sampling now the MT6795, a new 64-bit LTE True Octa-core SoC and will start selling the chip early next year, according to Joey Lee, a company spokesperson.

“The chip will provide Samsung Galaxy Notes-like performance at half the price,” Abrams [Randy Abrams, a Taipei-based analyst with investment bank Credit Suisse] said in a phone interview. “It’s for Chinese brands that want performance comparable to Galaxy Notes or the Apple iPhone at the equivalent of $300 to $400 retail for a handset.”

By the first quarter of next year, MediaTek’s MT6795 shipments are expected to reach 30 million units, giving MediaTek a chance to take the lead from Qualcomm, the Commercial Times report said, without citing the source of its information. Qualcomm has a 68% share of the global baseband chip business that was worth $5.2 billion in the second quarter of this year, according to Strategy Analytics.

The current MediaTek challenge for Qualcomm is MediaTek’s 64-bit ARM Cortex-A53 octa-core SoC MT8752 is launched with 4G/LTE tablets in China [this same blog, Oct 14, 2014]

Regarding the MediaTek competitive edge over Qualcomm before that you can read on this blog:
– Qualcomm’s SoC business future is questioned first time [May 1, 2013]
– 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 [July 20, 2013 – March 15, 2014]
– MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2 [Dec 22, 2013 – Jan 27, 2014]
– ARM Cortex-A17, MediaTek MT6595 (devices: H2’CY14), 50 billion ARM powered chips [Feb 18 – March 13, 2014]
– MediaTek is repositioning itself with the new MT6732 and MT6752 SoCs for the “super-mid market” just being born, plus new wearable technologies for wPANs and IoT are added for the new premium MT6595 SoC [March 4-13, 2014]

Microsoft could be acquired in years to come by Amazon? The joke of the day, or a certain possibility (among other ones)?

Discussion with one of my friends in the profession, let’s call him Gabriel (ezt diszkutáltuk itt Gábrielként szereplő szakmai barátommal az elmúlt 24 órában):

GABRIEL:
“the Wintel camp is destined to fail since the two giants have been keeping most of the profits to themselves, which is indirectly pushing many players to Google’s ecosystem” [see: The question mark over Wintel’s future will hang in the air for two more years]
Continuing this logic Apple is the most vulnerable one. It is also true, however, if there is no profit, no investment, innovation and progress. Rather, I see it as the old world order is overturned, and there is a new world order being formed, where there will be  no dominant player like Wintel back in time, but there will be big groups of power. Majority of the profit will be harvested by dominant integrated players, like Samsung and Lenovo. The effect of transistor radio has been started to get felt, and there is a need of fundamental business model transformation. This is why MS is changing a lot, in the field of Devices & Services. Gadgets are getting cheaper and cheaper, OEMs do not want and can’t pay license fees, and therefore HW and SW integration is needed in order to offer a better user experience, and Cloud Services is going to be the big battlefield. And here’s the big loser could Apple, and there will be a giant battle between MS, Google and Amazon.
GABRIEL:
“the Wintel camp is destined to fail since the two giants have been keeping most of the profits to themselves, which is indirectly pushing many players to Google’s ecosystem” [ld. The question mark over Wintel’s future will hang in the air for two more years]
Ezt a logikat folytatva, az alma a legsebezhetobb. Viszont az is igaz ha nincs profit, nincs befektates, innovacio es haladas. En inkabb ugy latom hogy a regi vilagrand felborult, es kialakuloban van egy uj vilagrend, ahold nem less dominans jatekos mint a Wintel idejen, de azonban lesznek nagy ero-csoportok. A profit nagy reszet az dominans integralt jatekosok mint a Samsung es a Lenovo fogjak aratni. Elkezdodott a tranzisztor radio effektus es alapveto uzleti modell transzformaciora van szukseges. Ezert valt egy nagyot a MS is, a Devices & Services teruleten. A kutyuk egyre olcsobbak lesznek, az OEM-ek nem akarnak es tudnak licensz dijt fizetni, es igy szukseges a HW es SW integracio hogy jobb felhasznaloi elmenyt nyujtson, es a Cloud Services lesz a kovetkezo nagy csatater. Es itt a nagy vesztes az alma lehet, es a MS, a gugli es az Amazon kozott lesz a titani csata.
SÁNDOR:
IMHO the great battle will be between Amazon and Alibaba-Tencent-Xiaomi-Baidu etc., the Chinese company or group going out of the fight in Mainland China into a world domination. I will not be surprised if on the Western side Amazon will first acquire ONE MICROSOFT now turned to the right direction (it is worth for everybody to orient him/herself towards Seattle), and then even Google. Facebook and the global financial interests clustering around it will be the third major group, which will enter the battle after the 2016 both with the great Western technologies group and the big technology group/company coming out of the Mainland China as a global force by that time. The great strength of the Facebook-rooted group will be the Facebook currency (not a typo), which will be able to surpass the U.S. dollar as much as any other currency. Now, this will of course come well after 2016. … and I dare advance this projection not as some kind of a SEER, but based on hard-core current facts, trends etc., as well as the result of 3 and a half years of unrelenting work.
SÁNDOR:
A nagy csata SZVSZ az Amazon és az Alibaba-Tencent-Xiaomi-Baidu stb. közötti belkínai küzdelemből világuralomra jutó kínai cég vagy csoportosulás között lesz. Nem lepődnék meg, ha nyugati oldalról először a most jó irányba váltó ONE MICROSOFT-ot venné meg az Amazon (érdemes Seattle-be orientálódni mindnkinek), majd még a Google-t is. A Facebook és a körülötte csoportosuló globális tőkeérdekeltségek alkotta együttes lesz a harmadik nagy csoport, mely majd 2016 után lép csatába úgy a nagy nyugati technológiai csoporttal, mint a Belkínából addigra globálissá lett nagy technológiai csoporttal/céggel. A Facebook gyökerű csoport nagy erőssége lesz a Facebook valuta (nem tévedés), mely úgy a dollárt, mint bármi más devizát überelni lesz képes. No persze ez már bőven 2016 után. … és ezt egyáltalán nem valamiféle látnokként, hanem kőkemény jelenlegi tények, trendek stb. alapján, valamint 3 és fél éves lankadatlan munka eredményeként merem előre vetíteni.
GABRIEL:
Amazon buys the MS? This is worth of being the joke of the day. Thanks for the entertainment. I am on a bike tour and just stopped. The guys asked why I started all of a sudden to guffaw. …
[later] I just read over to the end. Even more, they will swallow even Google? Oh wow! And how, pray tell, will they do this? Oops! Giant market cap, but only just marginably profitable. Back last year they were in loss. So how will they scrape together 600 billion dollars? Perhaps the Chinese People’s Army will lend them? Amazon Q3 2012 earnings: $13.18 billion revenue, net loss of $274 million [engadget, Oct 25, 2012]
GABRIEL:
Az Amazon megveszi a MS-t? Ez feler a nap viccevel. Koszi a szorakoztatast . Motoros turan vagyok es epp megalltunk. A haverok kerdeztek hogy miert kezdtem hirtelen hangosan rohogni. …
[később] Most olvastam vegig. Sot, meg a guglit is bekebeleznek? Oh wow! Es hogyan, tennek, pray tell? Oops! Oriasi piaci ertek, de epp hogy marginalisan profitabilisak. Tavaly meg vesztesegesek voltak. Szoval hogyan fognak 600 Milliard Dollart osszakapirgalni? Talan a kinai nephadsereg majd kolcson ad nekik? Amazon Q3 2012 earnings: $13.18 billion revenue, net loss of $274 million [engadget, Oct 25, 2012]
SÁNDOR:
My dear friend Gabhri’-el  (“man of God“)!
I did not want to disappoint you. My point was simply to indicate in a gentle way that in the current, quite unpredictable situation even the most unimaginable outcomes are as much possible as yours. Glance at the posts I referred to in the closing part of The question mark over Wintel’s future will hang in the air for two more years post of mine, and I hope you will agree with the above “indication statement” at least. Regarding the current market caps vs. that of Amazon I will draw your attention to certain historical stock prices given below. I will also dare to comment on them as suits my purpose here.
SÁNDOR:

Kedves Gábri-Él (“Úr embere”)!
Nem szerettem volna csalódást okozni neked. Egyszerűen azt kivántam volna érzékeltetni, szelíd formában, hogy a jelenlegi, meglehetősen megjósolhatatlan helyzetben még a leginkább elképzelhetetlen kimenetek is legalább annyira lehetségesek, mint a tiéd. Vess egy pillantást a The question mark over Wintel’s future will hang in the air for two more years című bejegyzésem befejező részében hivatkozott bejegyzésekre, és remélem legalább a fenti “érzékeltetési kijelentésemmel” egyet fogsz érteni. Ami az Amazonéval szembeni, jelenlegi részvénypiaci cégértékeléseket  illeti az alábbiakban felhívnám figyelmedet bizonyos történelmi tőzsdeárazásokra. Veszem a bátorságot magamnak ahhoz is, hogy a szándékaim szerint megjegyzéseket fűzzek ezekhez.

imageLet’s see first Microsoft vs. Nokia (lássuk először a Microsoft kontra Nokia összehasonlítást):
– Nokia had exactly 10 times higher share price ($39.72) at its latest peak (October 2007)than the one on the August 30, 2013 ($3.90)
– Microsoft’s latest peak of $36.81 on the same date never recovered ever since despite its continuous good profit and cash accumulation performance
– Even the acquisition of Nokia’s Devices & Services business on Sept 3, 2013 did not help much, while Nokia’s share jumpstarted by 60% since then (see the combined small chart on the right by clicking on it for a detailed comparison since the acquisition)

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imageThen go to an Amazon vs. Google comparison (lássuk ezután az Amazon kontra Google összehasonlítást):
– Amazon’s share price is growing since November 2008 when it was $42.70 and it came to around $300 for the last two months.
– At same time Google’s share price was growing at such a pace in much earlier period, since Nov 17, 2008 ($262.43) to Dec 21, 2009 ($619.98), then after sharp decline during 2010 recovered to a generally below $600 level till July 9, 2012 ($576.52), only after which started an Amazon-like sharp till May 13, 2013 ($909.18), then continuing to be mostly below of that with rise to $889.07 for the week of Sept 9, 2013. See a recent timeframe on the right.

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Final observations and conclusions:

  1. Microsoft swallowed the once most promising part of Nokia’s business, the one for which Nokia was famous for. Why the same thing could not happen to Microsoft when its upcoming 2 years of market trials will end in a similar niche market result in the Devices & Services space now to be joined under Stephen Elop’s leadership? That is Amazon acquiring that part of Microsoft the same way Microsoft that part of Nokia. Two years from now Amazon would not want anything else than that business only to join with one of its own (Kindle etc.). Meanwhile the rest of Microsoft will continue as an enterprise vendor with an alternative cloud platform to consumers as well.
  2. If that is a definite scenario (albeit one of many others) why the same thing could not happen to Google’s overall Motorola device and Android software business, thus leaving Google with classic advertising part. 

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]
image

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:
image
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

Qualcomm’s SoC business future is questioned first time

Among the hits for simple ‘Qualcomm’ search between April 25 and 30 you will first time find headlines such as:

  • Qualcomm And The Demise Of The Commodity Processor >>>
  • Qualcomm’s profit hurt by competition from China >>>
  • Qualcomm’s earnings outlook points to rising competition from smaller rivals >>>

While such headlines are in minority by far and had been market balanced by Qualcomm’s media wide Snapdragon 800 communication (“Snapdragon 800 to enter mass production in late May”) we are witnessing first time that Qualcomm’s SoC future had been questioned for very first time. So it is worth to examine this abrupt change in a little more detail than the articles behind those worries:

First of all China: Entry-level dual core IPS WVGA (480×800) smartphones $65+ now, quad-core $70+ in June [‘Experiencing the Cloud’, April 29, 2013] behind of which there is a very said turn of events from Qualcomm’s point of view that:

Qualcomm recently quoted its quad-core solutions at less than US$10, slightly cheaper than MediaTek’s offerings, the sources indicated. Meanwhile, Spreadtrum has lowered its quad-core processor prices to similar levels. Both firms are trying to gain market share through aggressive pricing, the sources said.

That is Qualcomm has no other way against its market dominant entry-level rival MediaTek as start an outright price competition. In fact it is an even bigger problem as its hastily reworked new SoC product line setup:
was meant to be a very broad offensive move as it was noted in Qualcomm moving ahead of Allwinner et al. in CPU and GPU while trying to catch up with Allwinner in Ultra HD [‘Experiencing the Cloud’, Jan 12 -Feb 27, 2013]

Even more, in China: Entry-level dual core IPS WVGA (480×800) smartphones $65+ now, quad-core $70+ in June [‘Experiencing the Cloud’, April 29, 2013] we already had the following slide from yet another Chinese rival Spreadtrum:

So while Qualcomm is trying to undercut MediaTek prices in the quad-core entry-level SoC segment its another rival had been pushed to do the same, and now Qualcomm has another very potent rival, already much better established in the entry-level segment than Qualcomm, even outside China as was shown by Temporary Nokia setback in India [‘Experiencing the Cloud’, April 28, 2013]. Should Qualcomm drop its quad-core entry level price further? Hardly, as those $10 SoC prices are at the very bottom from the point of view of deterring additional entry-level quad-core rivals like Allwinner to enter that segment at large.

The competition between these three parties in terms of the entry level functionality looks like as follows (availability data is suggesting Q3 2013 entry level smartphone devices with extremely high volume production from Tier 1 international vendors down to a large number of white-box Chinese vendors):

 

MediaTek

Qualcomm

Spreadtrum

Product

MT6582

MSM8225Q, MSM8625Q

SCXXXX

Availability

Q3 2013 volume

Q1 2013 sample

Q2 2013 sample

Modem

TD-SCDMA/W-CDMA/ TD + W

CDMA multimode / UMTS modem options

TD-SCDMA/W-CDMA/ TD + W

Integrated App processor

Quad Cortex-A7

Quad Cortex-A5

Quad Cortex-A7

Speed

1.x GHz

1.4 GHz

1.x GHz

GPU

ARM Mali 400

Adreno 203

ARM Mali-400MP2 likely

Block diagrams of the MT6572 entry level SoC from MediaTek, the quad-core MT6582 will differ from that only in the number of cores:

image
From: Mediatek “Wu Song” [MT6572] uphill [product], against the Spreadtrum “Tiger” [SC8825] / 联发科武松上山,展讯猛虎迎战 [52RD, March 8, 2013]

and

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from 28-nanometer dual-core MT6572 WCDMA version is first to debut / 28纳米双核MT6572临近 WCDMA版本率先登场 [MTK手机网/MTK Mobile Phone Network, March 23, 2013] based on which a brief English report was the Mediatek MT6572 Chipset Details [Quazmo, April 6, 2013]

Meanwhile the first MT6572-based products are already launched:
MTK6572 mobile phone, Sunspan [天迈] D18/D28X first appearance [China Unlocked Phone Review, April 26, 2013] which is the rough English translation (therefore I made some manual edits to it) of MTK6572手机来了 天迈D18/D28X率先亮相 [MTK手机网/MTK Mobile Phone Network, April 26, 2013] article

MediaTek MT6572 dual-core processor was adopted some time ago by the majority of mobile solution providers. Informed sources said MT6572 began mass production, in addition to the dual-core MT6572, quad-core chip MT6582 coming soon. There is no quad-core version of the specific information of MT6582 chip, but to guess from the naming of the quad-core chip may be rumors it is MT6572 quad core version .

Description of MT6572

MediaTek MTK/MT6572 is a low-power highly integrated single-chip phone processor. The chip is based on Cortex-A7 architecture, using the 28-nanometer process. a single core’s clocked at 1.xGHz, it also has built-in Mali-400MP graphics processor, support for TD-SCDMA, WCDMA and EDGE 2.75G network, integrated 4-in-1 wireless chip. In addition to that it has been listed dual-core and quad-core chip versions. The MT6572 product line also has speed and price advantages. It is learned that old Spreadtrum customers, including WingTech (闻泰) etc. will be launching MTK6572 products, but the end product equipped with MT6572 chip will be officially listed in May.

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T-SMART D28X/D26X

T-Smart Sunspan Communication, operating in the field of TD for many years and in good cooperation with China Mobile and other operators, signed a 600,000 full year supply agreement with D.Phone [who claims to be China’s largest retailer of mobile phones and accessories, with over 1300 stores, more than 800 of which are directly owned stores, see its TMall store for current offerings]. In this year’s upcoming new machine, Sunspan D28X/D26X and D18/D96X, several new machines will be using MTK6572 program, the listing of these models has been formed, will soon be listed.

Sunspan D28X/D26X

The two Sunspan D28X/D26X machines have the same appearance. Body size is 132 * 68 * 10.5 mm, which is equipped with MTK6572 dual-core processor, clock frequency is 1GHz, the screen size is 4.5 inches with 5MP camera, and running Android 4.2 version of the system. Another standard capacity of 1600 mAh battery, built-in commonly used sensor. The D28X/D26X both support different network standards, the D28X will provide the China Mobile’s customized one, i.e. can support the TD-SCDMA network, while the D26X has the Unicom [W-CDMA] version.

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T-SMART D18/D96X

In addition to the Sunspan D28X/D26X, there are also new D18/D96X machines which to be powered by the MTK6572 dual-core processor. The D18/D96X models also differ in supported networks. D18 is the China Mobile version and D96X is the Unicom version. In addition to that the D18 will run Android 4.2 system, equipped with a 2MP camera, while the the D96X using system version 4.1, the camera pixel is higher, 3MP. D18/D96X body style is more upright, while the color is much richer, the machine size is 126 * 64 * 10.9 mm.

Hardware parameters of both are also consistent: with a 4-inch screen, the battery capacity of 1500 mAh, supports common sensors.

MT6572 is primarily intended for [so called] one thousand yuan [~$150] mobile terminal products, so the MTK6572 phone sells are worth of the wait, as several new machines with lower to Sunspan hardware specifications, maybe the same, will have a friendly price. After May a large number of MTK6572 dual-core processor models will become available, the choice available to users will be more and more, and we look forward to the MT6572′s performance.

And those first Sunspan products were produced by the largest cellphone ODM in mainland China, WingTech [闻泰] Communications:
From the feature to quickly switch your Smartphone / 从功能机到智能机的快速切换 [Jiaxing Daily, March 22, 2013] as traslated by Bing and Google, with manual edits:

Decoding the “top ten 2012 to take a new road to industrialization enterprises”: WingTech Communications Review

“Sales of only 640 million yuan [$104M] in the first half of last year, while in the second half, sales more than doubled over the first half, jumped to 1.2 billion yuan [$195M]. In January to February period of this year, sales have exceeded 600 million yuan [$97M], an increase of 140%.” At the time of describing the achievement WingTech Communications Vice Chairman Xiao Xuebing [肖学兵] conceals his excitement inside: benefit from timely adjustment, increased research and development, decisiveness in the transformation and upgrading.

… From the first half of 2012 Xiao Xuebing introduced in Wingtech a timely transformation and upgrading, increased investment in the development of 3G smart phones in order to gradually force new products onto the market in the second half of the year, and quickly switch from the feature phone market to the most popular smart phone market.

… WingTech has large scale, low-cost advantage, which thanks to ODM orders from Huawei [华为], Haier [海尔], Sunspan [天迈], TCL and other domestic brands, as well as a powerful combination with carriers and falling smartphone prices lead to rapid sales growth and rapid adoption in the market. Now WingTech is still mass recruiting the staff, nevertheless it is expected that the whole production would exceed 3 million units in March, again hitting an all-time record.

Even in the worst economic situation of the winter of 2008 the 1000 people strong R&D team of WingTech Communications, under the leadership of CEO Zhang Xuezheng [张学政], still advocated a “while others are ‘dormant’ we need to have ‘winter’ “ approach – a gathering of its hundreds of elite “retreats” hundred days focus research and development. This spirit of innovation remains to this day – still coming down.

“After the 4-inch dual-core smartphones, we will soon launch 5-inch and 6-inch quad-core smart phones, as well as 7-inch, 8-inch and 10-inch PAD tablets, for which WingTech will use its own core technology, building more ordinary people affordable smart electronic products.” said Xiao Xuebing “The new products apply a lot of new technologies from the latest R&D. In the upcoming smartphones we’ve designed in a dual microphone, one for sound recording and the other for filtering the background noise. In the dual camera space, as distinct from the existing front camera, the light rear camera consists in fact two cameras, so as to achieve a 3D effect shooting.”

Outside of research and innovation, during the manufacturing process, WingTech is also vigorously promoting technological innovation, introducing more robots and constantly increasing automation. Automation can not only rapidly increase productivity, but also can help with the stability of product quality. “Product testing was done by manual inspection in the past, only one at a time, and now with automated tools, we can have a simultaneous inspection, measuring eight mobile phones at once” – young workers of the company are saying.

Meanwhile, thanks to the technology innovation, there are cost savings to the WingTech. “Circuit boards used to have a border. Now with a free border process, as long as the increase in the tray, the circuit board does not require a border.” For businesses less materials, for society reduced energy consumption and reduced waste generation.

“Last year we had less than 2000 people working for us, of which 500 were short-term employed, but at full horsepower we may take up to 3000 employees.” Xiao Xuebing told reporters that: “In March this year, the unit sales of cell phones would reach 3 million units and sales volume will reach 500 million yuan [$81M]. WingTech Communications’ annual target for the year 2013 is to exceed unit sales of 40 million and the value of production to be over 4 billion yuan [$649M], up to 6 billion yuan [$973M].”

Automation was indeed a primary direction when moving to the smartphone production, as evidenced by Wingtech Chooses LitePoint IQ2010 to Calibrate and Test Smartphones [LitePoint press release, Feb 5, 2013]

/PRNewswire/ — LitePoint( http://www.litepoint.com )(R) announced today that Wingtech Electronics Tech( http://www.wingtech.com/EngLish ), one of China’s leading providers of mobile phone design and manufacturing services, has chosen LitePoint’s IQ2010 for production calibration and verification of Wi-Fi and Bluetooth functionality in its new line of smartphones.
With the surge in the use of high-end smartphones and the increasing complexity of technology built into these devices, Wi-Fi testing is expected—and often mandated by the cellular service provider. Being at the forefront of smartphone design and development, Wingtech recognized the need for a fast, accurate and cost-effective production test solution. YeHua, Director of Research and Development at Wingtech, said, “We looked into a variety of solutions to test our products and chose the IQ2010 because of the system’s overall performance, as well as the confidence we have in LitePoint as a total solution provider. The IQ2010 addresses our need for a high-quality, turn-key test solution, so it was the obvious choice for us.”
Manufacturing cost-effective mobile devices requires a comprehensive wireless test solution that provides complete functional verification while maximizing unit throughput—the deployment of which typically occurs under intense time-to-market pressure. “Cost considerations in setting up a production line, coupled with demanding quality assurance requirements, mandate high-speed wireless test without sacrificing test coverage,” said Gary Wang, general manager of LitePoint, China. “The IQ2010 is well suited for the growing China smartphone market and designed to meet rigorous production test requirements while optimizing the total cost of ownership.”
Availability
LitePoint’s IQ2010 solution is available today.
About Wingtech
Wingtech ( http://www.wingtech.com/EngLish ) is a new technology enterprise group in the China wireless network communication market that provides mobile phone design services, manufacturing services and value-added services based on wireless terminal series. Wingtech is mainly dedicated to product customization, research and development, production and sales of wireless terminals. It also focuses on providing solutions using new business models with vertical integration of cell phone design and manufacturing of integrated terminal, brand, mobile Internet solutions for the Internet of things.
About LitePoint
LitePoint( http://www.litepoint.com ), a wholly owned subsidiary of Teradyne, Inc.(http://www.teradyne.com ) (TER), is based in Sunnyvale, California. The company designs, develops and supports advanced wireless test solutions( http://www.litepoint.com/Solutions.html ) for developers of wireless devices and consumer electronics, contract manufacturers and wireless integrated circuit designers. LitePoint solutions( http://www.litepoint.com/Solutions.html ) have enabled optimization and verification of the operation of more than one billion wireless devices worldwide. LitePoint products( http://www.litepoint.com/Products.html ) are used in development and high-volume manufacturing, providing its customers with improved ROI, time-to-market, manufacturing yields, and product quality. For more, go to www.litepoint.com.

Previously WingTech was supported by the state and party to becomer the largest feature phone maker in China, as evidenced by: Party Secretary and Chief Executive of Huangpu District in Shanghai Zhou Wei Inspected Industrialized Base for Wingtech Cell Phones [WingTech press release]

On June 18, 2009, accompanied by … <a long list of people> … Zhou Wei, deputy party secretary and chief executive of Huangpu District paid a visit to the industrialized base for Wingtech cell phones.
Zhou Wei and his companions toured the showroom, test room and production lines of Wenxun and Wendi. After that, the leaders and Zhang Xuezheng, the CSO of Wingtech Group, held a symposium, where Mr. Zhang reported in details the company’s history and achievements since its establishment, and current situations.
Zhou Wei, deputy party secretary and chief executive of Huangpu District, said that it was not easy for Wingtech to be developed into the largest cell phone maker in China within less than two years. As a leading enterprise in the communication industry, Wingtech has made its great contributions in terms of fiscal revenue, personnel introduction, protection of intellectual property rights and technological innovation. He also added that the District Government of Huangpu should pay closer attentions on caring about and supporting high-tech groups like Wingtech so as to support its sustainable development.
With regards to patent application and protection, leaders from the Science Committee of Huangpu District expressed that more supports would be provided to enterprise like Wingtech in protecting the intellectual property rights, and the smooth transfer should be ensured in executing the policies of the state, municipality and the district and the enterprise, so as to promote Wingtech to make new progresses in technological innovation and application and protection of intellectual property rights.
With respect to finance and taxes, the leader from the Finance Bureau of Huangpu said special funds invested in Wingtech would increase and preferential tax policies supporting Wingtech and other high-tech enterprises be implemented so as to reduce their burdens and enhance their strength for development.
For the issue of personnel indraught, the leaders concerned expressed that Shanghai may need a large number of highly qualified personnel in the field of communication to satisfy the economic development, whereas Wingtech, as a leading enterprise in the sector, can serve as a cradle to attract and foster the communication personnel. In order to support enterprises like Wingtech to attract and retain personnel, the government of Huangpu District will further study and discuss such matters as household registration policies, individual income tax and education of children so as to figure out a practical preference scheme as soon as possible. In addition, as Wingtech Group develops rapidly, its office space becomes over crowded due to the suddenly increased number of personnel. Leaders from Huangpu said they would solve this issue as soon as possible.
During the meeting, Zhou Wei, the deputy secretary and chief executive of Huangpu District, presented on behalf of Huangpu District Government a gift—Hangguang Porcelain to Wingtech Group. The gift indicates that Wingtech Group could develop stably, maintain its foundation permanently and make innovations and breakthroughs continuously so as to be the model enterprise in the communication industry in both China and the world.

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More information of the above kind is in the Wingtech Group honored with “outstanding performance prize of China mobile phone industry 2010 [press release, Dec 21, 2010]

The still old company profile About Wingtech [闻泰] Group [集团] [LinkedIn, originally created on July 23, 2009], the corrections in square brackets are from the WingTech profile page in Chinese (http://www.wingtech.com/Chinese/Company-Content-ID-8.html) in the hope that it contains later information

As a high-tech company, Wingtech Group mainly provides clients with the integrated cell phones program design, production, and wireless terminal-based value-added service, and is committed to the customized service, R&D, production, sales, after-sales service of wireless terminal products.

Founded in 2006, Wingtech Group consists of Shanghai R&D Center, Shenzhen Operation Center, and Jiaxing Production Center. Currently, Wingtech has a team of nearly 2000 [4000] employees. Its products cover PHS, GSM(GPRS), CDMA(1X), EDGE, TD-SCDMA[, EVDO] and all handheld device series ranging from 2G to 4G, with an annual turnover of hundreds of millions of US dollars.

Since its foundation, Wingtech has always persisted in the independent technical innovation, and make a lot of efforts in development and application of new technology of wireless communication. So far, Wingtech has owned nearly one thousand technical patents, a number of the world leading technologies, and is increasing 500 patents every year. Meanwhile, Wingtech has been in possession of perfect sales networks and under total process control systems (ISO9001:2000, ISO14001, QC080000).

Wingtech puts focus on local strengths while eyeing the world. Due to strong innovation, reliable quality, and high cost performance, Wingtech products have been very popular with customers at home and abroad. Currently, Wingtech products have been exported to over 30 countries, and over 50 [80] million consumers around the world are enjoying happy wireless mobile experience through Wingtech products and services.

Website: http://www.wingtech.com

Industry: Telecommunications

Type: Privately Held

Company Size: 1001-5000 employees

The latest external to China (actually for India) Overview [Callbar, July 15, 2011]

Callbar is a world leading mobile phone brand owned by WINGTECH GROUP LIMITED. Registered in HK with operation center in Shenzhen, manufacture base in Jiaxing and R&D center in Shanghai & Xi’an, we directly or indirectly employ over 4,000 people in China and other countries worldwide. Since establishment in 2006, we’ve evolved into a leading ODM supplier serving customers including MOTOROLA, LG, Philips and HUAWEI. In last 2 years we successfully extended our business into Wireless Terminal Internet Service and international distribution with our own brand WING. Our annual turnover reached USD 600million in 2009. Consumers around the world are enjoying Callbar mobile phones which features innovation, quality and cost effectiveness.

Better Quality, Better Price.

And the latest external to China milestone descriptions (actually for India):
History [Callbar, July 15, 2011]

2006 Y
In 2006,Wingtech Telecom was registered in Hong Kong and marched into cell phone PCBA industrial.
2007 Y
In May 2007, Zhejiang Communication Industry (Jiaxing) Base and Wingtech Cell Phone Industrialization Base started to be built.
In May 2007, Wingtech Telecom cooperated with SpreadTrum in the field of 3G industry in order to promote the development of 3G industry
In November 2007, Wingtech Telecom joined TD-SCDMA industry alliance, focusing on development and application of TD technique.
In December 2007, Wingtech Telecom sold 20 million sets of cell phones in total, which made Wingtech to be NO.1 of iSuppli.
2008 Y
In April 2008, Wingtech Telecom ranked the top one in the Chinese IDH industry.
In April 2008, Wingtech and Indian famous cell phone company-FRIWO cooperated to establish a mobile terminal product showroom in New Delhi, which is a totally new mode of cooperation between China and India.
In November 2008, Wingtech held the “Wireless Communication New Tech Summit”.
In November 2008, Zhejiang Communication Industry (Jiaxing) Base and the Wingtech Cell Phone Industrialization Base were put into production.
2009 Y
In March 2009, Wingtech and China Telecommunication Technology Labs entered into the cooperative agreement to establish the strategic cooperative relationship.
In May 2009, Xi’an R&D centre established, which further enhances Wingtech telecom R&D capability.
2011 Y
Wingtech launches its Callbar brand strategy all over the world so as to make more people to be serviced by Wingtech.

While the latest external to China (actually for India) Structure [Callbar, July 15, 2011], with geographical inserts added as required

Shanghai R&D centre
Shanghai R&D Center has a team of over one thousand R&D staff members, with R&D achievement covering the whole series of mobile terminal products of GSM, CDMA, EDGE, TD-SCDMA, EVDO etc, ranging from 2G to 3G. So far, the R&D Center has owned nearly one thousand national patents.
With strong R&D strength and firm technical foundation, the R&D Center has been rewarded many titles by Shanghai Government.Meanwhile, Wingtech joins the TD-SCDMA industrial alliance to actively conduct the R&D and application of TD products so as to speed up the Chinese industrialization.
Jiaxing production centre
In addition to the cell phone design service, Wingtech can provide customers with the high-efficiency and high-quality production service.Wingtech invested $70 million in building a cell phone industrial base of over 140 000 square meters in Jiaxing,in which Wingtech produces mobile phones of first class for world famous brands.
Wingtech Cell Phone Industrial Base has given an impetus to the development of the local communications industry.  And with this impetus, a world-class cell phone industrial cluster with an output of more than 30,000,000 sets, and an annual turnover of RMB 10 billion formed around this Cell Phone Industrial Base.
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More information: Jiaxing [Wikipedia article]
Shenzhen operation centre
To better serve market and customers, Wingtech Telecom establishes the Operation Center in Shenzhen which is responsible for the procurement, sales and technical support. And with the help of its reliable supply chain system, professional marketing team, the world-class ERP and logistics guarantee system, Shenzhen Operation Centre provides first class service to our local and worldwide customers.
At present, over 70 million consumers around the world are enjoying happy wireless mobile experience through Wingtech products and services.
Xi’an R&D Centre
Founded in 2009, Xi’an R&D Centre is a wholly-owned subsidiary of Wingtech Group. It is mainly engaged in R&D and application of wireless communication new technology for providing 2G-4G GSM, CDMA and TD-SCDMA full system mobile terminal devices.
Xi’an Wingtech enjoys an internationally top grade R&D team and powerful R&D capacity. Among the over 100 R&D engineers, above 60% of them are doctoral degree holders and master degree holders. As for quality control, Xi’an Wingtech has introduced whole process quality control system (ISO9001:200, ISO14001, QC080000), and performs Six Sigma Management following quality control standards of internationally top grade enterprises for developing and providing stable and reliable products to customers.
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Xi’an is on the far left of this map, Jiaxing and Shanghai are on the far right
More information: Xi’an [Wikipedia article]

Note that in Xi’an another cellphone industrial cluster has been created, as evidenced by World’s biggest wireless semiconductor producer establishes branch in N.W China city [Xinhua, Dec 23, 2011] news article

Qualcomm, the world’s largest wireless semiconductor company, has announced it will set up a branch in Xi’an, capital of northwest Shaanxi province, according to the management committee of the city’s high-tech area on Friday.
In the past years, the U.S.-based global leader in 3G and next generation wireless telecommunication technologies has established cooperative relationships with Chinese counterparts such as Huawei, ZTE, Yulong Coolpad and Wingtech.
Qualcomm’s branch in Xi’an is a strategic option and also a good beginning, said Zhao Hongzhuan, director of the Xi’an high-tech area management committee, adding that the area will provide “big support and quality service” to Qualcomm, and said he hopes the company will expand its investment in Xi’an.
China has already become one of the fastest growing markets for Qualcomm, said Wang Xiang, president of Qualcomm greater China. “Qualcomm decided to set up its branch in Xi’an because of the city’s complete industrial chain, strong technical strengths and rich talent,” Wang said.
Qualcomm entered the Chinese market in the late 1990s and already has branches in Beijing, Shanghai and Shenzhen.

Note as well that Wingtech’s engagement with Spreadtrum goes much older:
Spreadtrum and WingTech Enter Strategic Partnership [joint press release, April 24, 2008]

JIAXING, China, April 24 /Xinhua-PRNewswire-FirstCall/ — Spreadtrum Communications, Inc. (Nasdaq: SPRD), one of China’s leading wireless baseband chipset providers, today announced during the “International Handset Supply Chain Summit 2008” that Spreadtrum and WingTech Group have entered into a strategic partnership aimed at leveraging their respective leading edge chip and handset design technologies. This two-day summit, sponsored by Jiaxing Communication Industry Association and organized by WingTech Communication Science and Technology Co. Ltd., promotes the theme of “Developing hand in hand for mutual benefits in the future.”
The announced Spreadtrum-WingTech partnership is expected to benefit both companies and their customers as it is intended to capitalize on Spreadtrum’s technology expertise in developing chipsets and WingTech’s strengths in handset design for the industry. With the establishment of this new strategic partnership, WingTech will deploy Spreadtrum’s SC6600W chip in its handsets. The SC6600W is a single chip quad-band GSM/GPRS multimedia baseband intended for WingTech handsets targeted at feature rich entry-level phones that include features such as MP3 playback, stereo output, voice recording, and Bluetooth interface for wireless data transmissions. Like Spreadtrum’s other highly integrated basebands, the SC6600W features an integrated multimedia processor and built-in power management circuits on a single chip, which should reduce production costs, while enabling customers such as WingTech to develop new, differentiated products within a quick time-to-market threshold.
Referring to this strategic partnership, president of WingTech Group, Zhang Xueying said, “WingTech and Spreadtrum have a long history of close and steady partnership. Spreadtrum’s advanced technologies and products are one of the important factors that account for WingTech’s rapid growth. By entering this partnership, we believe we will be in the best possible position to win additional market share through use of the customized SC6600W chip, since it may greatly reduce the time-to-market and overall cost while improving core competitiveness of our products. This announcement further strengthens the strategic alliance between our two companies, but also starts a new mode of business collaboration in the industry to push the differentiation of the terminal products. WingTech will commit itself to unite all the segments in the industry to develop hand in hand for mutual benefits in the future.”
Dr. Ping Wu, President and CEO of Spreadtrum, expressed, “By establishing this strategic partnership, we hope to expand and deepen the cooperation with WingTech in technology, marketing and other aspects to further expand our markets and accelerate our respective technology innovation. We believe that closer cooperation between the handset design solution provider and chip designer will be in everyone’s interest to further improve the features and diversity of future handset products. We look forward to a sustained, close partnership with WingTech and to driving a new round of development in China’s communication industry.”
About Spreadtrum:
Spreadtrum Communications, Inc. (Nasdaq: SPRD; “Spreadtrum”) is a fabless semiconductor company that designs, develops, and markets baseband processor solutions for the mobile wireless communications market. Spreadtrum combines its semiconductor design expertise with its software development capabilities to deliver highly-integrated baseband processors with multimedia functionality and power management. Spreadtrum has developed its solutions based on an open development platform, enabling its customers to develop customized wireless products that are feature-rich and meet their cost and time-to-market requirements.
For more information, please check: http://www.spreadtrum.com
About WingTech:
WingTech group was founded in Hong Kong at the end of 2005 and ever since then, it has been devoting to R&D, manufacturing and marketing of mobile terminals. The main business scope includes complete design solution for mobile phones and value-added services based on mobile terminals. With technological strength and excellent products, after only two years from its establishment, WingTech has risen to be one of the top Chinese mobile companies

Meanwhile WingTech has well established itself in India:
– originally as a feature phone ODM for a number of leading local brands in India, as evidenced by: Wingtech Group [microsite on Importers.com, May 31, 2010]:

Company already designing mobiles for Lava, Karbon, Spice, Intex, Videocon, Micromax, G-five. Now plannig to launch their own brand”WING”. Looking for importers.

– in addition indeed introducing its first own brand, WING in 2010, as evidenced by the History page of a separate http://www.wingtele.com/ site
– then by the already referenced Callbar brand a year later, as evidenced by another separate site http://www.callbar.in
– then becoming available under the Wingtech brand itself, evidenced by Wingtech Mobile Phones in India [Sulekha.com] microsite


Background: MediaTek: Ready For Prime Time [stock analysis report from Maybank, April 25, 2013]

With smartphones hitting the mainstream market, the replacement cycle for feature phones seems to be accelerating and tablet adoption in the emerging markets (in particular China) is gathering momentum. Against this backdrop, we think MTK may have to raise its target unit shipments of 400-450m smartphones and 100m tablets for 2013.

Best positioned to benefit from new secular trend. MTK is stepping up efforts to diversify its product portfolio to capture the proliferation of smart devices. It will have all its application processors (APs) on 28nm node this year, with designs based on the latest Cortex-A7 and/or Cortex-A15. By mid-year, it will introduce several low-cost models (MT6572/6582/6589M) to consolidate its position in the white-box market and enhance its cost structure. Also, MTK will foray into tablet markets (MT8389/8135 [big.Little design]), a new addressable market. By 4Q13, it will sample its high-end 4G/LTE/LTE-TDSCDMA modem chipset. Importantly, the ongoing consolidation of the AP industry and recent hiring of high-profile executives from Qualcomm could spur MTK to become a major force in the global smart device industry.

We note that MTK’s shipments include the white-box market, which is not captured by third-party research firms such as IDC. As such, analysing the change in MTK’s handset types may offer a clue to the dynamics of the handset industry, especially in the global emerging markets. We estimate MTK may ship close to 90m smartphones in 1H13 and its full-year target of 200m units (400-450m for global emerging markets) thus seems too conservative to us. An official upgrade in shipment per se and industry revisions should be expected. We currently forecast MTK to ship 235-240m smartphones in 2013. Back in November last year, our industry forecast of 500-550m unit shipments sounded aggressive, but now, it might look realistic given the speed of the replacement cycle and the popularity of smartphones in the global emerging countries.

Best positioned to benefit from new secular trend. MTK is stepping up efforts to diversify its product portfolio to capture the proliferation of smart devices. It will have all its APs on 28nm node this year, with designs based on the latest CortexA7 and/or Cortex-A15. In this section, we provide an update on MTK’s new products and compare them to some of the solutions offered by its peers. Figures 7-8 illustrate the timeline of product introduction and specifications.

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  1. MT6572 enters mass production in 2Q13 with the first shipment expected between late-May and June. MT6572 (dual-core, Cortex A7) is designed to replace MT6515 (single-core, Cortex A9) with significant cost savings and battery life enhancement. The die size of MT6572 is significantly smaller (than MT6515) and this AP comes with an integrated WiFi chipset – the first for MTK. Coupled with 28nm node and requiring only four layers of PCB board, we believe MT6572 offers significant cost savings for handset OEMs. MT6572 will also be a significant volume runner for MTK as it comes with various connectivity such as MT6572E (for 2.75G), MT6572T (TD-SCDMA) and MT6572W (WCDMA). The W-version targets smartphones with ASP of CNY1,000 (USD160) while the E-and-T-versions will go well-below CNY1,000 (USD100-125), and both should be well-received by the white-box market. We believe MT6572T can hold its own against Spreadtrum’s latest SC8825 (dual-core Cortex A5, TD-SCDMA on 40nm node and without integrated WiFi).
  2. The MT6582 has features similar to those of the MT6572 but the former comes with Quad-core, Cortex A7 engines as opposed to the latter’s dualcore engine. Like the MT6572, MT6582 targets the white-box market for better system performance. We expect volume shipments to commence in 3Q13. We believe the MT6582W will compete well with Qualcomm’s MSM8225Q, the low-end Quad-core Cortex A5 AP which only supports WCDMA networks.
  3. MT6589M is a cost-down version of the currently leading quad-core MT6589, which began shipment in March and has found favour among OEM customers (60-70 clients) in China. MT6589M shares most of the features and design architecture of MT6589. But it comes with HD and 8MP camera compared with full HD and 13MP camera for the latter. In addition, we estimate MTK could achieve 15-20% cost savings on MT6589M by tweaking some foundry and back-end processes. As such, MT6589M offers a lower cost solution for handset OEMs who do not wish to equip their smartphones with similar high-end features as MT6589. With a lower ASP, MTK could narrow the price gap between MT6589M and Qualcomm’s MSM8225Q by 10-15% and yet offer better features. We estimate the price gap between MT6589 and MSM8225Q currently is at least 30-40%. That being said, we note that MSM8225Q is a quad-core using Cortex A5 and 40nm node, and does not support TD-SCDMA network.

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.”

The low priced, Android based smartphones of China will change the global market

During the 12 months or so China took over the overall leading market role for smartphones from the key markets considered to be in the lead: US, Australia, Brazil, Great Britain (GB), Germany, France, Italy and Spain.

An even more dramatic change was that while on the old, combined lead market of the above countries high/moderate margin products were the dominating ones, on the new lead market of China average retail prices went down in the second quarter of 2012 to 1560 yuan (i.e. US$246) for the #1 Android with a whopping 82.8% market share, and to 1320 yuan (i.e. US$208) for the #2 Symbian now having only 6% share of the market.

It is notable as well that in China Apple had only a 6% market share vs. 23.7% in the combined old lead markets. According to a recent Reuters video report from Hong Kong we are witnessing (you can also watch this report in this post, as embedded well below in the following elaboration of details):

… commoditization of smartphones … hardware specifications for the handsets have already peaked…

A race to the bottom therefore will present a major challenge for Apple and Samsung who put together have dominated the industry in the last couple of years. If the China trends spread globally the shift to cheaper handsets will mean tighter margins and slower growth for this industry powerhouses and new opportunities for little known upstarts like Xiaomi.

Given my previous trend tracking posts the change will even be more dramatic as:

  1. The best smartphone based on the MediaTek MT6577 both technically and in terms of price is the 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], which is also the best example of the low priced, Android based smartphones of China will change the global market.
  2. Lowest H2’12 device cost SoCs from Spreadtrum will redefine the entry level smartphone and feature phone markets [July 26 – Aug 16, 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]
    Smartphone-like Asha Touch from Nokia: targeting the next billion users with superior UX created for ultra low-cost and full touch S40 devices [July 20 – Aug 12, 2012]
    MediaTek’s ‘smart-feature phone’ effort with likely Nokia tie-up[Aug 15-31, 2012]
  3. Update: China to ship 300 mil. smartphones in ’13: MediaTek head [The China Post, Sept 26, 2012]: … overall shipments in China may reach 200 million in 2012.
  4. Update: China market: Dual-core CPUs, 4-inch displays become standards for entry-level smartphones [DIGITIMES, Sept 17, 2012]:
Local brands in China have made upgrades to the specifications of their entry-level smartphones for the CNY1,000-1,500 (US$158-237) segment making dual-core 1GHz processors and 4-inch displays the industry standards, according to industry sources.
Prices of the previous mainstream models with single-core CPUs and displays below 4-inch sizes for the CNY1,000 segment in the first half of 2012 are now expected to drop to CNY500-800, the sources added.
China Unicom has led the purchase of the upgraded dual-core, 4-inch display smartphones recently, and its suppliers are all China-based vendors including Huawei Technologies, ZTE, Lenovo, Coolpad, TCL, Hisense, K-Touch and Wanlida, the sources revealed, adding that those makers will source chipset solutions from Qualcomm or MediaTek.
First-tier international players did not participate in China Unicom’s procurement on concerns of pricing and hardware specifications, the source asserted.
However, the pace of hardware upgrading may start slowing down as telecom companies in China are mulling reducing their subsidies to smartphone subscribers, while smartphone makers are also trying to maintain their profit margins, commented the sources.
The next round of competition will shift from hardware to software including product design, user’s interface and also smart audio recognition, the sources noted.

Neither Apple nor Samsung reacted to these challenges yet. Nokia was also playing safe with its recent announcement:
Unique differentiators of Nokia Lumia 920/820 innovated for high-volume superphone markets of North America, Europe and elsewhere [Sept 6, 2012]

We may expect a fundamental reorganisation of the market in the next two quarters.

Meanwhile read through the details included below and make your own, hopefully more fine-tuned conclusions and predictions:

imageimage

See: Kantar: Windows Phone has overtaken RIM Market Share in USA, “Key 8 Countries”
[WMPoweruser, Sept 3, 2012]

imageimage

Note that in terms of mobile data traffic the market share is quite different. For North America (U.S. and Canada) Chitika Insights, the independent research arm of online ad network Chitika, released the following web usage market share report [Sept 5, 2012]:

image

Remark: iPads and other tablets are included here as well!

Relative to all that China is a quite different story:

3G phones months shipments reach 21.64 million, domestic mobile share over 70% – 3G手机月出货量达2164万部 国产手机份额超七成 [Sohu IT – 搜狐IT, Sept 10, 2012]

According to data published by the Telecommunications Research Institute of the Ministry of Industry and Information Technology …
根据工业和信息化部电信研究院公布的数据 …

[the data in the translated Chinese text I’ve compiled into the below table:]

image

China sees soaring smartphone market in Q2 [Xinhua, Sept 3, 2012]

Beijing: China’s smartphone market saw its sales volume soar to 38.19 million units in the second quarter, according to a report released Monday by market researcher Analysys International.

The figure represented a 22.5-per cent increase compared with that of the previous quarter and a sharp rise of 127.1 per cent over the corresponding period in 2011, said the report.

Nearly 67 million mobile phones were sold in China in the second quarter, the report said, representing a 1-per cent decrease from the previous quarter and a 2-per cent decrease from the corresponding period in 2011.

Stellar growth sees China take 27% of global smart phone shipments, powered by domestic vendors [Canalys press release, Aug 2, 2012] – Android is the clear platform of choice, accounting for 81% of Chinese shipments

Shanghai, Palo Alto, Singapore and Reading – Canalys published its final Q2 2012 country-level shipment estimates to clients yesterday. Results show that China saw phenomenal growth of 199% year-on-year and 32% over the previous quarter. In total, more than 42 million smart phones were shipped into the channel in China in Q2 2012, representing the second consecutive quarter of record breaking volumes in a single country market. China accounted for 27% of the 158 million global smart phone shipments, compared to 16% for the United States.
Notably, growth in China was heavily driven by domestic vendors, while international vendors struggled to keep pace.
While Samsung maintained its overall leadership position in China with a 17% market share, this reduced sequentially as volumes were flat and as several local vendors closed the gap. ZTE, Lenovo and Huawei were the second-, third- and fourth-placed vendors, ahead of Apple, making up a third of the market. They achieved growth of 171%, 2,665% and 252% year-on-year respectively. Collectively, domestic Chinese vendors shipped 25.6 million units, representing a growth of 518% and 60% of the market. By comparison, international vendors grew by a more modest 67% to 16.7 million units. Apple fell to fifth place in China. While its shipments were up 102% year-on-year, they were down 37% compared to Q1 2012.
‘The rise of the domestic tier-one brands has been aided by a number of factors. Their reactiveness to market demands and deep understanding of local consumer behavior and preferences have been key in helping them surpass international peers in the fast-evolving Chinese market. Local tier-one vendors have worked hard in recent quarters to greatly improve their brand resonance among consumers and to expand and enhance their relationships and influence within operators,’ said Canalys Research Director for China, Nicole Peng. ‘But the tier-two vendors — the likes of Oppo, K-Touch and Gionee — have also stamped their mark, boosting smart phone shipments into tier-three and tier-four cities, predominantly through the open channels. As feature phone vendors, they already have established partnerships and strong brand awareness. These domestic vendors are making significant progress transitioning their portfolios and customer bases to be more focused on smart phones.’
Nokia and Motorola both lost significant ground in China, with Nokia’s volumes down 47% on Q2 2011. ‘Among the international vendors, only HTC managed an outstanding performance in mainland China. Its shipments grew 389% year-on-year to reach 1.8 million units for the quarter,’ said Jessica Kwee, Canalys Research Analyst. ‘Its success this quarter is heavily based on the strong performance of Desire V series devices, designed with the local China market in mind, underscoring the importance of tailoring propositions to local consumer preferences.’
Android has become a major growth driver in China, running on 81% of the smart phones shipped in China in Q2 2012.
On a global basis, Android continued to grow in significance, surpassing 100 million quarterly smart phone shipments for the first time and reaching two-thirds share of the market. ‘Growth in Android volumes of 110% far outpaced growth in the overall market of 47% year-on-year, heavily driven by Samsung, which saw Android volumes of over 45 million, contributed to by a full and broad portfolio of products, from its high-end flagship Galaxy S III down to its aggressively priced Galaxy Y and Galaxy Mini. Its sponsorship of the London Olympics and subsequent product placements are sure to attract new customers to ensure that Q3 delivers a strong performance,’ commented Pete Cunningham, Canalys Principal Analyst.
Samsung retained its gold medal position in the global smart phone market with a 31% share, followed by Apple and Nokia once again. Huawei and ZTE were unable to push in on the global top five with shipments of their own branded devices. HTC moved up to fourth place, though, just ahead of RIM, which shipped 8.5 million units in the calendar quarter.

Global smart phone market

Analyst contacts
To speak with any analyst quoted in this release, please contact the appropriate Canalys office: Nicole Peng, Jessica Kwee (Canalys APAC), Pete Cunningham (Canalys EMEA). Alternatively, you can speak with other members of Canalys’ global team of mobile analysts: Chris Jones (Canalys Americas), Rachel Lashford (Canalys APAC), Tim Shepherd (Canalys EMEA).
About Canalys
Canalys is an independent analyst firm that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. Our customer-driven analysis and consulting services empower businesses to make informed decisions and generate sales. We stake our reputation on the quality of our data, our innovative use of technology, and our high level of customer service.

Smart phone and pad forecasts show varying OS fortunes [Canalys press release, Sept 10, 2012] – China and Android influence smart phone landscape, the US and Apple dominate pads

Shanghai, Palo Alto, Singapore and Reading – The latest product announcements by leading smart phone and pad vendors will help drive consumer demand to new heights, according to Canalys. It forecasts that in 2016, global annual smart phone shipments will be around 1.2 billion units, meaning a CAGR (Compound Annual Growth Rate) of 19.5%. It predicts pad shipments in the same year will hit 207 million – a CAGR of 26.8%.
Apple’s latest unveiling is attracting extraordinary interest and competitors have also made several major announcements in the past week, including Windows 8 devices from Nokia and Samsung; new Android smart phones from Sony, Motorola and Samsung; and Amazon’s enhanced Kindle Fire pads. With these big vendors attracting the headlines, Canalys has issued a timely reminder that the trends across pads and smart phones in various countries will be markedly different.
In smart phones, Canalys expects Asia Pacific to remain the largest region by volume, with annual shipments reaching 594 million by 2016. China will account for almost half of all shipments in the region and nearly a quarter of the world’s smart phones in 2016. This equates to only 10 million less than is forecast to ship in the whole of the Americas in that year.
Canalys managing director for Mobile and APAC, Rachel Lashford, said, ‘The latest, in-depth research for our dedicated Smart Phone Analysis China service reveals there will be a substantial increase in the number of first-time smart phone users in China over the next 12 months, while feature phone shipments will continue to decline. Smart phone sales will move beyond tier-one and tier-two cities.’
China’s domestic feature phone vendors are rapidly moving their businesses to smart phones, supported by low-cost solutions from chipset providers, such as MediaTek, Spreadtrum and Qualcomm’s QRD.
‘We anticipate strong demand from local Chinese vendors selling in both operator and open channels,’ said Nicole Peng, Canalys Research Director for China. ‘Chipset vendors are reporting growing momentum in 2.5G (EDGE) smart phone solutions. For less developed areas where 3G coverage is limited, 2.5G smart phones have advantages in cost and battery life. They are becoming popular with consumers, especially where prices are already close to those of feature phones (around RMB500, US$78). The tier-three and tier-four cities are feature phone vendors’ traditional strongholds. Local vendors will use their long-standing relationships with open channels and their established infrastructure to distribute smart phones, with or without operator subsidies, over the next few years.’
In terms of percentage growth, Canalys expects Latin America to move fastest, with a CAGR to 2016 of 27.3%. It forecasts good double-digit growth in all countries, but Brazil and Mexico will account for more than half of all shipments in the region.
Globally, Canalys expects Android to remain dominant, with 57% of the smart phones shipped in 2016 running the OS (up from 49% in 2011). It expects Apple’s share of this much larger market to remain similar to today, at around 18%. Microsoft is expected to make inroads over the coming years.
In the pad market, however, the OS picture will be quite different. Canalys expects Apple to take a little under half of the market in 2016. The plethora of Windows 8 pads that will be introduced over the next few years are predicted to bring Microsoft’s share to around 17%. Competitively priced Android pads, such as Google’s Nexus 7 and Amazon’s Kindle Fire models will have an impact in terms of volumes, but Android’s share is forecast to remain relatively stable at 35%, unless vendors make radical improvements to the overall user experience. In contrast to smart phone market trends, the US is expected to dominate pad shipments, with the volume more than doubling to 88 million units in 2016. China is expected to be the second largest country market, with shipments of around 20 million.
‘Pads are the fastest growing consumer electronics products in history and are forecast to represent 29% of total PC shipments in 2016. But the market remains dominated by a single vendor. Other PC and smart phone vendors are currently finding it hard to weaken Apple’s position,’ said Canalys Analyst Tim Coulling. ‘The only product that most would consider a big hit is the Kindle Fire, brought to market by Amazon – an Internet retailer. Tight integration of hardware, software and services is a prerequisite for competing in the pad market, even at low price points, and fragmentation among other pad vendors’ offers helps Apple maintain its position.’
Analyst contacts
To speak with any analyst quoted in this release, please contact the appropriate Canalys office: Rachel Lashford, Nicole Peng (Canalys APAC), Tim Coulling (Canalys EMEA). Or contact another member of Canalys’ global analyst team: Chris Jones (Canalys Americas), Jessica Kwee, Pin-Chen Tang (Canalys APAC), Pete Cunningham, Tim Shepherd, Tom Evans (Canalys EMEA).

Analysys data: 2012Q2 China Android Smartphone market 82.8% [Analysys International release, Sept 5, 2012] as translated by Bing:

Easy views network hearing” easy views international: according to EnfoDesk easy views intellectual library industry database recently publishing of 2012 2nd quarter China phone terminal market monitoring report under displayed, 2 quarter, China smart phone terminal (does not containing parallel and cottage machine) market in the, Android Department sales accounted for than from Shang last quarter of 76.7% upgrade to this quarter of 82.8%, net 6.1%. While the Symbian sales percentage has continued to free fall to the ground from the parent 11.8% to 6%. In addition, iOS small callback to 6%.

2012Q2 OS smartphone market penetration in China (not including parallel and cottage)
2 quarter pick-up systems from Smartphone ( encyclopedia of Analysys : smartphones ) [average smartphone] price changes, Android from 1670 [yuan i.e. US$263] last quarter, continuing down to the quarter of 1560 [yuan i.e. US$246]; 1320 [yuan i.e. US$208] of Symbian from last quarter down to 1170 dollars [yuan i.e. US$185] this quarter.

2012Q2 China Android and Symbian Smartphone price
(not including parallel and cottage)
Information about the mobile Internet more relevant data, please visit
http://data.eguan.CN/yidonghulian
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Analysys data: 2012Q1 China Android Smartphone market share increased from 76.7% [Analysys International release, June 6, 2012] as translated by Bing:

Analysys Web video” Analysys: at present, according to EnfoDesk Analysys think-tank on traditional retail markets of mobile phones (of the last quarter of 2012 quarterly monitoring mobile terminal market) data monitor display: Chinese smartphone market, Android system’s market share in handset sales rising 5 consecutive quarters.
Vulnerability analysis:
In the last quarter of 2012 China Mobile end-markets quarterly monitoring data show end of 2012 Q1, carrying Android in the Smartphone market system’s market share in the Smartphone Terminal 76.7%, 10% average quarterly market share gain. At the same time, as the Smartphone market continues to mature, carrying Android system average Smartphone prices are also way down to 1670 [yuan i.e. US$263 from 2300 yuan i.e. US$363 a year earlier].
Combined with traditional mobile phone sales channels under the line status, EnfoDesk Analysys Research think-tank believes that mobile phone sales market share of Android system continue to enhance, benefit from its open source nature attract numerous manufacturers to participate in, and China in the past two years in the Smartphone market and 3G business increment. Through the performance of manufacturers on the market today as well as the impact of EnfoDesk Analysys think tank study says
1. Is now dominated by application of the formation of eco-systems, as well as the Android open source, attracting new industry participants, such as Internet companies to enter product prices are depressed, make the increasingly intense market competition environment, product prices are driven down, threats to traditional enterprise bargaining power in the channel.
2012Q1 China smartphone sales share
2. Fragmentation trends exacerbate the Android system. Traditional manufacturing enterprises to overcome the effects of homogenization of products of intelligent systems, secondary development on the Android system, causes the application to version adjusted accordingly, application developer development costs gradually increased.
Smartphone price quarterly changes of 2011Q1-2012Q1 Android system
3. Sales in this period dominated by domestic brands in the low-end products, intelligent products of these enterprises continue to 3G input costs on the production line. But at the same time, while veteran international brand market share continues to decline, it would shorten the product line, focusing its research and development production 4G products research and development. With the advent of 4G era, will reshuffle the mobile terminal market. (Analysys International)
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Or call the customer service-4006-515.
Related reading:
2011Q2 China’s massive increase in Android share Symbian tumble

Is sun setting on smartphone profit miracle? [ReutersVideo YouTube channel, Aug 16, 2012]

… in 2 years the low-end has blown up …
China smartphone sales by price tier Q1 – 2010 Q1 – 2012
<1,500 yuan [<US$ 237] 17.7% 60%
1,500-3,000 yuan [US$ 237-473] 51.5% 24%
>3,000 yuan [>US$ 473] 30.8% 16%
Source: Jefferies Research
Faster, bigger, better: the smartphone tech arms race has produced great handsets and great returns. But China’s market trends suggest cheaper is set to be the next battle cry.
Cynthia Meng, China/HK TMT Equity Research, Jefferies Hong Kong:
[00:49] Next year it’s going to be about who is going to provide the best value for my money from a consumer point of view, from a telco point of view, because we think that hardware specifications for the handsets have already peaked. [01:03]
Narrator, xxx Gordon in Hong Kong:
In other words the oversized screen and quadcore processors of your precious Samsung [Galaxy] S III will soon be standard and achieved in handsets in China. [01:13]
commoditization of smartphones
[02:11] A race to the bottom will present a major challenge for Apple and Samsung who put together have dominated the industry in the last couple of years. [02:19] If the China trends spread globally the shift to cheaper handsets will mean tighter margins and slower growth for this industry powerhouses and new opportunities for little known upstarts like Xiaomi. [02:26]

The Chinese View: VIDEO: STUDIO INTERVIEW: CHINA’S SMARTPHONE MARKET [CCTV News – CNTV English, Sept 3, 2012]

iPhone Ranked Seventh in China’s Smartphone Market — Watch Out, ZTE [AllThingsD.com, Aug 24, 2012]

Apple’s iPhone has been gaining a lot of traction in China recently. As Apple CEO Tim Cook said during the company’s third-quarter earnings call, greater China accounted for two-thirds of Apple’s revenue in the Asia-Pacific region during the period.
“In terms of iPhones in general in mainland China, we were incredibly pleased with our results,” Cook said. “We were up over 100 percent, year over year.”
That’s an impressive achievement. But Apple still has a lot of work to do in China before the iPhone claims the same levels of market penetration it enjoys in the U.S. In China, the iPhone has captured about 7.5 percent of the smartphone market, compared to rival Samsung, which has claimed more than 20 percent, according to IHS iSuppli. Despite its popularity in the country, the iPhone is still ranked seventh in the Chinese smartphone market.
Why? Two reasons. First, Apple doesn’t yet offer a truly low-end smartphone that appeals to price-conscious Chinese consumers. (To be clear, China Telecom is offering the iPhone fully subsidized, but it requires subscribers to sign a contract that ties them to a two-year $62 per month plan.) Second, and more importantly, the iPhone doesn’t yet support Time Division Synchronous Code Division Multiple Access (TD-SCDMA), China’s homegrown wireless standard. And until it does, China Mobile, the world’s largest wireless carrier, can’t offer it to its 688 million or so subscribers.
“Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with the domestic TD-SCDMA air standard,” IHS iSuppli’s Kevin Wang said in a statement. “For Apple, this is a huge disadvantage, as TD-SCDMA represents the fastest-growing major air standard for smartphones in China, with shipments of compliant phones expected to rise by a factor of 10 from 2011 to 2016.”
In other words, if Apple wants access to the massive addressable market that China Mobile has to offer, it’s going to have to offer a lower-end iPhone variant designed specifically for TD-SCDMA, something it has been loath to do in the past, and hasn’t given any indication that it’s willing to do in the future. As Cook said during Apple’s last earnings call, the company feels that its business is strongest when it focuses on making the best products it can, not the most inexpensive ones.
“I firmly believe that people in the emerging markets want great products, like they do in developed markets,” Cook said. “And so we’re going to stick to our knitting and make the best products. And we think that if we do that, we’ve got a very, very good business ahead of us. So that’s what we are doing.”

Breakingviews: Apple v. Samsung [ReutersVideo YouTube channel, Aug 27, 2012]

Breakingviews columnists discuss the implications of Apple’s U.S. victory in the high-profile tech patent spat and the implications for future smartphone devices and lawsuits elsewhere.

Apple Should Take The $199 Chinese Smartphone Seriously [Seeking Alpha, Sept 6, 2012]

At a time when China is set to overtake the U.S. as the world’s largest smartphone market, little-known Chinese firms are prepared to battle it out for market dominance with the maker of the game-changing iPhone, Apple (AAPL). As per the predictions of IDC and Gartner, China’s smartphone shipments could hit 140 million this year, exceeding those in the United States.
There are a number of Chinese brands offering similar capabilities, nominally, as the iPhone at half the price, most of them using a forked version of Google’s (GOOG) Android. The names include ZTE Corp., Lenovo Group, and other small private firms like Xiaomi, Gionee, and Meizu Technology. Even cheaper smartphones are offered by Alibaba Group, Shanda Interactive, and Baidu (BIDU) for fewer than ¥1,000 (~$150 U.S.).
Xiaomi Technology, founded just two years ago, has emerged as a serious potential threat to the likes of Apple and Samsung in smartphone arena. According to its CEO, the company sold more than 3 million phones with revenues close to $1 billion for the first half of 2012. Its latest offering, a successor to its popular MiOne (MI) smartphone, the MI2, costs less than half the price of iPhone 4S, but exceeds its specifications. Xiaomi not only tries to mimic the iPhone’s specifications, but has also been able to charge fans ¥199 (~$31) to attend the Beijing launch of the phone, the same way as Apple followers would pay to see Steve Jobs showcasing new products. The Xiaomi conference was attended by more than 1,000 people, with the proceeds going to charity. The MI2, which is expected to hit the markets in October, will have quad-core Qualcomm (QCOM) S4 Pro SoC, an 8 mega-pixel camera, and a voice-assistant similar to Apple’s Siri, and is priced at ¥1,999 ($310). This is no cheap knock-off, but rather a serious piece of hardware packed with the latest technology.
The fascinating part of Android’s rise here is that Microsoft (MSFT) will likely see more profit from many of these phones than Google will due to the licensing agreements many of them have made to avoid patent issues with Redmond. Reports are spotty, but Microsoft collects anywhere from $5 to $15 per Android license and has deals with at least half of the phones sold. Moreover, it is very possible it makes more money than Google does.
In the coming years it is expected that Apple’s market share may flatten out or even dip, as it has this year, but market share is not Apple’s goal; it has always been about margins — selling a premium product at extremely high margins to those with the resources to not care about the upfront cost. Estimates from IDC place the sub-$200 smartphone at 40% of the shipments, while devices costing more than $700 made up 11% of the market, which is where Apple plays and why it still controls most of the profits generated by the industry. China and India make up 40% of new smartphone activations.
This huge difference in shipments is mainly due to the limited purchasing power of an average Chinese person, which is around ¥800-¥1,500 ($130-$240). By contrast, the iPhone comes with a price tag of around $800, the equivalent of two months of earnings of an urban Chinese person (in an area that has around 670 million people).
According to a report from Gartner, Apple’s market share by volume has been sliding and iOS‘ share of the mobile operating system space is expected to slip to third place by 2016 below Android and Windows Phone. The Gartner report is, however, very controversial as Windows Phone has not proven anything to this point, although Nokia’s (NOK) sales of its Lumia 610 and Asha line of proto-smartphones are keeping its brand alive while it searches for the killer phone. Even in its second-largest market, iPhone sales slipped for the April-June quarter due to inventory adjustments after the huge launch of the iPhone 4S.
Apart from these estimates, Apple also suffers on various fronts in China. The iPhone is backed by China Telecom and China Unicom, but the country’s and the world’s leading telco China Mobile (with about 655 million subscribers) has still not supported it. Apple and China Mobile are still working on the details of China Mobile’s implementation of CDMA, which requires Apple to build a specific phone for its network.
Responding to the competition and the difference between the iPhone and the local offerings, Apple recently slashed the price of the iPhone 3GS below $200. While an entry-level Apple phone is something that the market will absorb, part of Apple’s appeal is the status it confers and a 3GS simply not a strong enough status symbol to drive sales. Mix in that with Chinese preferences for buying from Chinese companies and this market becomes a whole lot harder for Apple to maintain not its sales per se — it can manipulate prices to maintain sales — but its extreme margins. The latest earnings call highlighted this as it sold a lot of lower-end iPads and iPhones in Asia, which pushed its results and future guidance under 40% net margins.
Companies like Lenovo, ZTE, and Huawei are gaining because they are Chinese and are providing good products at reasonable prices. Lenovo, in particular, is pushing its smartphone and PC strategy both up and down the value chain, similar to Samsung’s approach. It is working very well for Lenovo, whose revenues were up 40% in the second quarter when everyone else was complaining of softening business.
Apple’s problems are the standard problems for a company on top of the world; everyone will nibble away at it in various little ways. How it responds to this is key.
The recent lawsuit victory over Samsung and its pressing of the legal attack smacks of a company that is frightened. Why should it fear Samsung? And if it doesn’t, why did it go after Samsung and restrict consumer choice, a clear breach of its branding compact with its fans? Is it trying to push Samsung into Windows 8 Phone’s arms? All of these things point to further margin erosion for Apple and a slowing of its titanic growth without a new market to push into. As things stand now, staking a new position in Apple requires believing none of these issues matter.
It points to Apple becoming a value trap at some point in the future. Not every country, especially China, will grant Apple an injunction against knockoff competition; quite the opposite is true. Many investors are sitting on capital gains so large they can’t sell, and the dividend will pay them well enough to stay in even if the price goes nowhere. But new investors should be very careful in light of the market dynamics.

Microsoft adding staff, R&D in China mobile push [Associated Press, Sept 6, 2012]

BEIJING (AP) — Microsoft Corp. will hire more than 1,000 additional employees in China this year and boost research and development spending by 15 percent as it tries to catch up with Apple and Google in the fast-growing mobile Internet market, executives said Thursday.
The announcement adds to intensifying competition in wireless Internet in China, where nearly 400 million people surf the Web using mobile phones and other devices. Microsoft is promoting its Windows 8 mobile operating system but came late to the market and trails Apple Inc. and Google Inc., whose Android system is widely used in China.
“We respect that we have two players in the market which have a strong role, and we feel ready to attack and have different offers to basically change the game plan on that one,” said Microsoft’s CEO for China, Ralph Haupter, at a news conference.
The new employees will be in addition to Microsoft’s workforce of 4,500 in China and will be spread across research and development, marketing and customer service, Haupter said.
Research spending in China will rise by 15 percent over last year’s $500 million, according to another executive, Ya-Qin Zhang, Microsoft’s Asia-Pacific chairman for research and development. He said the current research staff of 3,000 would be expanded by about 15 percent.
Global technology companies and local rivals are spending heavily to gain a foothold in mobile Internet in the world’s most populous online market as Chinese users shift quickly to the new technology.
This week, Chinese search engine Baidu Inc. released its own new mobile browser to compete with Google and Apple and announced it will open a cloud computing center.
China had 538 million people online at the end of July, up 11 percent from a year earlier, according to the China Internet Network Information Center, an industry group. The share that uses wireless devices grew twice as fast, rising 22 percent to 388 million, or 70 percent of the total.
Android dominates the Chinese smartphone market, used on 76.7 percent of phones in the second first quarter of this year, according to Analysys International, a research firm. Apple’s iPhone dominates the higher end of the market.
Microsoft plans to recruit more local partners to develop mobile applications specifically for China, said Haupter. He said the company believes it has an advantage in doing that because developers can draw on their experience working on other Microsoft products.
Zhang said Microsoft’s six development centers in China that now spend about 80 percent of their time working on products for global markets will focus more on creating offerings tailored to Chinese customers.
Microsoft also plans to expand its cloud computing business in China, the executives said. Zhang said about 100,000 commercial customers now use its private cloud computing service and a service for use by the public is being developed.

Microsoft Names New Leaders in Key International Markets [Microsoft press release, April 13, 2012]

Ralph Haupter, currently serving as area vice president (AVP) for Microsoft Germany, has been promoted to corporate vice president and named CEO for Microsoft GCR. Haupter is replacing Simon Leung who has decided to leave Microsoft for personal and family reasons. Gordon Frazer, currently serving as managing director (MD) for Microsoft U.K., has been named chief operating officer (COO) for Microsoft GCR. He is replacing Michel van der Bel, who will assume the role of MD for Microsoft U.K. Haupter and van der Bel will report to Jean-Philippe Courtois, president of Microsoft International, and Frazer will report to Haupter. …
Haupter is a seven-year veteran of Microsoft, having delivered excellent and sustainable results in growth and profitability and repeatedly proving his ability to build and grow high-performing, diverse organizations. He previously served as head of the partner division for Europe, Middle East and Africa and general manager (GM) of Microsoft’s Small and Midmarket Solutions & Partners Group for Western Europe, both based in Paris, and served as COO for Microsoft Germany before becoming the German AVP. Before that, he worked for IBM both in Germany and internationally.
Frazer is a 16-year veteran of Microsoft, having served as the GM for Microsoft South Africa for four years and most recently as the Microsoft U.K. MD for the past six years. He brings a tremendous amount of operational expertise to the Microsoft GCR team from his various roles across both developed and emerging markets. His leadership in managing the full breadth and depth of Microsoft’s business in the U.K. will serve as a strong asset in helping take Microsoft China’s operations to the next level of efficiency and growth.

Leading the New Era, Winning the Future—Microsoft Announces Development Strategy in China [Microsoft China press release, Sept 6, 2012]

Partnering for an Innovative, Competitive, and Talented China

New leadership team in Greater China
(third from left is the COO Gordon Frazer and the fourth is the CEO Ralph Haupter)
September 6, 2012, Beijing– Microsoft China today announced its new strategy and commitment to partnering with the country for an innovative, competitive and talented China by further enhancing and accelerating investments. In the new fiscal year, Microsoft will recruit more than 1,000 staff in China, 50% of which will be college graduates. Microsoft’s annual R&D investment will exceed $500 million, and the company will explore local markets in more provinces and deepen its engagement in industrial informatization.
Over two decades of growth, Microsoft China has continued to penetrate deeply into increasingly important local markets. Ralph Haupter, Corporate Vice President, Chairman & CEO Microsoft Greater China Region, said: “Since entering China 20 years ago, Microsoft has grown steadily in China and acquired a deeper understanding of the Chinese market. Our new strategy reflects our perception, emphasis and commitment to the China market. In this new era, China and the entire Greater China Region will become the source of global innovations. Through comprehensive devices and services combined with cloud computing, Microsoft is working closely with the Chinese government, partners, customers and the academic world, entering this new era by leveraging our advantages.”
Haupter stressed that this year is a big year for Microsoft, with the introduction of many new products and technologies, and also a year where Microsoft China is making a great effort to further develop the market. “Our new leadership team in Greater China has helped develop a new strategy for customers and partners, deepening cooperation with governments of all levels to strengthen innovation in China. The team will popularize new technologies and explore new markets,” Haupter said.
Through continuous investment of innovation resources and improving the scale of partnerships in China over the years, Microsoft Asia-Pacific R&D Group has become Microsoft’s largest R&D base outside of the United States, with the most complete functions and innovation chain covering basic research, technology incubation, product R&D and industry cooperation. Chinese R&D teams have made great contributions to Microsoft products launched this year, such as Windows Server2012, Windows 8, New Office, SQL Server 2012 and Surface. Ya-Qin Zhang, Corporate Vice President and Chairman of Microsoft Asia-Pacific R&D Group, said: “We are lucky to be in an era where globalization is deepening, the IT revolution is emerging and China is rising. Microsoft’s continuous exploration in natural human-machine interfaces, mobile Internet and cloud computing will help us win the future and contribute to China’s sustainable development.”
Samuel Shen, COO of Microsoft Asia-Pacific R&D Group, said Microsoft’s software outsourcing business was now worth more than $200 million per year. In the future, Microsoft will continue to work closely with local communities through programs such as the Internet of Things, Big Data, cloud computing, cloud-based smart cities and the Microsoft Accelerator for Cloud Computing, accelerating the vision of “Innovation in China, Innovation for the World”
According to Microsoft’s new strategy in China, Microsoft is committed to cooperating with the Chinese government and industry, aligning with China’s priorities and partnering for an Innovative, Competitive, and Talented China. Gordon Frazer, Vice President and COO of Microsoft Greater China Region, said that over the next five years, Microsoft China will expand its footprint in China, deepen cooperation with governments of all levels and partners, improve customer support and foster talents on a broad scale:
  • Expand Microsoft’s footprint in local markets: Over the next five years, Microsoft will expand its presence in over 20 cities across 15 provinces by expanding local teams, enhancing local management, working closely with local governments, making contributions to local informatization, building cloud-based smart cities, and providing cloud-based solutions for e-government, city management and citizen services.
  • Accelerate local partner ecosystems and expand service coverage: Microsoft will deepen customer services, deliver joint services and solutions with partners, and engage in further convergence of informatization and industry upgrading to improve the core competency of Chinese enterprises. By the end of this year, Microsoft will set up its second technical support center in China to enhance support for Chinese customers and partners, share best practices and knowledge of supporting global customers to help them accelerate the adoption of new technologies and share with them the experience of providing cloud services to customers in Asia. Microsoft will also drive partners’ development through many forms: system-grade innovation support for OEMs, software engineering assistance for software outsourcing companies and innovative design references for hardware manufacturers.
  • Foster talents in a large scale: Over the next five years, Microsoft will hire more talent in China to better serve and support its partners in China, foster talents for the Chinese software industry and improve the skills of Chinese youths.

China to Overtake United States in Smartphone Shipments in 2012, According to IDC [IDC press release, Aug 30, 2012]

Top Five Smartphone Markets and Market Share for 2011, 2012, and 2016 (based on shipments)

Country 2011 Market Share 2012 Market Share 2016 Market Share 2011 – 2016 CAGR
PRC 18.3% 26.5% 23.0% 26.2%
USA 21.3% 17.8% 14.5% 11.6%
India 2.2% 2.5% 8.5% 57.5%
Brazil 1.8% 2.3% 4.4% 44.0%
United Kingdom 5.3% 4.5% 3.6% 11.5%
Rest of World 51.1% 46.4% 46.0% 18.1%
Total 100.0% 100.0% 100.0% 20.5%

Source: IDC Worldwide Mobile Phone Tracker, 2012 Q2 Forecast Release, August 30 2012

Strong end-user demand and an appetite for lower-priced smartphones will make China (PRC) the largest market for smartphones this year, overtaking the United States as the global leader in smartphone shipments. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, China will account for 26.5% of all smartphone shipments in 2012, compared to 17.8% for the United States.
“Looking ahead, the PRC smartphone market will continue to be lifted by the sub-US$200 Android segment,” said Wong Teck-Zhung, senior market analyst, Client Devices, IDC Asia/Pacific. “Near-term prices in the low-end segment will come down to US$100 and below as competition for market share intensifies among smartphone vendors. Carrier-subsidized and customized handsets from domestic vendors will further support the migration to smartphones and boost shipments. Looking ahead to the later years in the forecast, the move to 4G networks will be another growth catalyst.”
“Regionally, we expect smartphone demand to flow down to lower-tier cities,” added James Yan, senior market analyst for Computing Systems Research at IDC China. “After going through a period of sustained high growth, top-tier cities are likely to see decelerating smartphone growth rates. In contrast, secondary cities are expected to experience accelerated smartphone growth, with strong demand for low-cost models as well as high-end models, which are desired as status symbols.”
“The fact that China will overtake the United States in smartphone shipments does not mean that the U.S. smartphone market is grinding to a halt,” said Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends program. “Now that smartphones represent the majority of mobile phone shipments, growth is expected to continue, but at a slower pace. There is still a market for first-time users as well as thriving upgrade opportunities.”
“In addition to China and the United States, several other countries will emerge as key markets for smartphone shipment volume over the next five years,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker program. “High-growth countries such as Brazil and Russia will become some of the most hotly contested markets as vendors seek to capture new customers and market share.”
Top Five Markets for Smartphone Shipments
As it becomes the leading country for smartphone shipments this year, the PRC smartphone market will continue to grow, primarily on demand for lower-cost handsets. While this bodes well from a volume perspective, it also means lower average sales values (ASVs), thinner margins, and increased competition from all players. Over the course of the forecast, China’s share of the global smartphone market will decline somewhat as smartphone adoption accelerates in other emerging markets.
Smartphone shipments into the United States will increase as users upgrade their devices and feature-phone users switch over to smartphones. Furthermore, a combination of lower-priced models, expansion of 4G networks, and the proliferation of shared data plans will encourage continued smartphone adoption. Smartphones are already the device of choice at the major carriers, and regional and prepaid carriers are following suit and competing with alternative service plans.
With smartphone penetration in India currently among the lowest in Asia/Pacific, the market has tremendous untapped growth potential. Low-end smartphones offering dual-SIM capability and local apps and priced around US$100 will rapidly bring this market to life. Although 3G data plans are currently too expensive for the majority of consumers in India, IDC expects the popularization of 3G, and in later years 4G, to drive smartphone uptake as operators roll out more affordable data plans and generous subsidies while expanding offerings to tier 2 and tier 3 cities. The affordability of service plans will be another important key to smartphone adoption in India.
Smartphone growth in Brazil will be bolstered by strategic investments by mobile operators, smartphone vendors, and regulators. Operators’ focus on increasing ARPU will drive greater demand for smartphones while smartphone vendors will look to reap greater profitability from offering such devices. The Brazilian government, meanwhile, will offer tax exemptions for smartphones and protect local manufacturing against foreign vendors. These factors, combined with solid end-user demand, will drive smartphone volumes in the coming years.
The United Kingdom has been one of the fastest growing smartphone markets in Western Europe, driven by the high operator subsidies and long-term post-paid contracts. Over the forecast period, smartphone shipments will continue to increase due to the introduction of LTE and a new range of services that will appeal to heavy smartphone users. In addition, price erosion on HSPA devices will also attract feature phones users. Growth rates will slow in the later years of the forecast as penetration plateaus and operators seek out alternative subsidy models.