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August 23, 2017

Comments

Nokipoika

@Tomi
Any estimates on Nokia/HMD sales? Your take on new Nokia 8 flagship?

Tomi T Ahonen

Hi Nokipoika

Not yet haha, they ONLY just started to sell devices at the end of Q2. This quarter (Q3 ie July-Sept) will be first quarter where HMD has essentially a full period of sales of smartphones - but not full sales of all 3 handsets in all major markets (that roll-out is still ongoing). Q4 of this year (October-December) would be first proper 'full quarter' of sales, but we hopefully get SOME signs of quarterly sales levels of HMD Android Nokia smartphones (and perhaps also their 'dumbphone' numbers too, would be interesting) somewhere towards the end of this period.

As to Nokia 8, I think that is a 'placeholder' device, not the best HMD can do, which will be the successor to the Nokia 8, ie the Nokia 9 - THAT is their first 'proper' flagship, I think... :-)

Tomi Ahonen :-)

Tomi T Ahonen

PS to all other readers of the blog..

Nice nickname by 'Nokipoika' - it means 'little chimney-sweep (boy)' as in a Finnish children's song.

..Pieni nokipoika vaan, uunin piippuun kaa-too-aa... :-)

I remember singing that song as a kid

Tomi Ahonen :-)

Jim Glue

Any numbers for Google Pixel? I will be interested in the "new entrant" race for flagships: Pixel, Essential Phone, and Nokia 8.

How is HTC doing...other than terrible. Any predictions on when they will leave the market or be acquired? How about Alactel built Blackberry's?

The Chinese have certainly closed the gap on Apple. Use to be that Apple had more than the top 3 Chinese combined. Now Huawei is looking at being able to pass the iPhone during it's annual "lowest quarter".

Jim Glue

Looking forward to next quarter and HMD - do you see them cracking the top 10? You aren't as excited about the Nokia 8 as I thought you would be with the first Premium Nokia branded handset after the Elop dark years. Do you think they priced it appropriately for the features vs what the competition at that price level are offering?

What do you think of the "Both-y" as a marquee feature for the Nokia 8? Am I merely a jaded iPhone fanboy for not thinking it's "all that" as an innovation?

When do you think HMD will come back with something stunning and innovative in the camera?

E.Casais

"I will be interested in the "new entrant" race for flagships: Pixel, Essential Phone, and Nokia 8."

Honestly, why bother?

Pixel is a confidential player, Essential Phones are not even available yet (it has been "any time now" for months), and the HMD devices will remain a bit player till the end of the year. Besides, they are just rehashes of existing flagship features without anything genuinely innovative. There is objectively nothing to be excited about them for now.

More generally, the real battle for mobile phones is not taking place at the high-end, but in the entry-level to mid-range. This is where the hundreds of millions/billions of new customers are to be gained, and where I expect genuinely mass-market services and innovative devices to appear.

The marginal players targeting the topmost layer of the 1st world markets in a bid to grab crumbs from Apple are irrelevant from that perspective, and just detract from what potentially much more powerful and important new entrants (from India and China) are doing.

Jim Glue

Hi E,

Why? Because I am interested in the companies behind them. It's interesting that Google is competing directly against Samsung (not to mention everyone else) with the Pixel. Samsung was able to force Google to divest from Motorola, and now Google is back at it? I believe Google is going "whole Apple" with the Pixel line. Over time. More and more of what Apple is doing with the iPhone, Google is going to be doing with the Pixel.

Essential phone is from the new venture from the Guy who invented Android. And of course, HMD is the rise of Nokia from the dead.

No, I don't personally think any of them are going to sell enough to matter when compared to the iPhone let alone the market as a whole. However, I am interested in the direct competitors to the iPhone, that's where the cutting edge innovation in mobile is.

From a "who's winning the market share race", of course the mid and low ranges are much more relevant. But the phones aren't interesting. They are merely "interesting for the price".

E.Casais

"I am interested in the direct competitors to the iPhone, that's where the cutting edge innovation in mobile is."

That is where we disagree. I do not see much cutting edge innovation in HMD, Pixel or Essential Phone. In fact, I see none at all. Those devices look like iPhone wannabes without any proper USP. In other words, utterly forgettable products. (For that matter, where is the innovation in the just announced Galaxy Note 8? A larger display with a _smaller_ battery???)

As for the entry-level to mid-range phones not being "interesting", I disagree strongly as well.

This is the market segment where the best price/feature device combinations are popping up, where genuine _mass market_ services (genuinely cheap ones, that do not require expensive operators' price plans, selective associated financial services, or costly peripheral equipment -- Macs, docking stations, etc) will take ground (forget Apple pay, think M-Pesa).

I suspect that this is also where extensive OS innovation will be forced to occur, for the current crop of major software platforms either require high-end hardware (iOS), or cannot manage the hardware diversity and security satisfactorily (Android). Besides, in those segments people barely use apps (the apps market is extremely skewed, something like 10% of high-end users generating 90% of all app downloads and payouts). Something in the OS will have to be recast (perhaps through modularization) to cater properly for those basic "smartphones" that are actually replacing, and being used as "feature phones". Finally, this is the market that HMD (which I do not consider appropriate to qualify as "Nokia rising from the dead")
is squarely targeting. So far 75% of its smartphone lineup is in that segment; this is where HMD will break out or fail -- not in the Apple-turf.

That perspective on the entry-level/mid-range has been my position for quite a while, so I remain consistent. And following Tomi's statistics, this is the place where the really significant new entrants have appeared -- such as Huawei.

Jim Glue

New entrants with nothing new in their offerings. But to each his own...if you get excited about the latest Me too ZTE or Coolpad phone with a Mediatek processor running 4 yr old version of Android, who am I to tell you otherwise?

Tomi has been somewhat excited about AR. Apple just debuted the most exciting mass market AR platform this past June. I'm very interested in what the developers will put ARkit to use for. The demo's that have already came out have whet my appetite. And of course, AR on the phone is going to lead right back to AR glasses. But yes, nothing about AR has anything to do with the folks using MPesa in Africa. Again, to each their own.

E.Casais

Please no red herrings.

Those contenders trying to nab at Apple's heels are the genuine "Me Too" -- not the cheap devices you disparage, which are intended for a completely different market segment. You consistently refused to address that point.

Again, where are the innovations in those Essential Phones or Nokia 8? The Pixels do not even have Google Tango on them! And we should find those high-end "Me Too" particularly interesting? Sorry, but no. I see the point of going for an iPhone, there is none to go for those other supposedly premium devices.

The fact that those marginal (infinitesimal) players attempt fighting in Apple's segment does not automatically make them interesting. But your view of mobile is quite Apple-centric: if it does not deal with the same market segment as Apple, or the same technologies implemented in Apple products, then it is not worth bothering about. You should widen your horizon a bit.

AR is interesting -- and has been deployed on mobile devices for quite some years now. AR platforms have been existing for a while (e.g. Layar), others have been introduced more recently by big players (e.g. Baidu/DuSee).

What Apple is launching is fundamentally based on the technology it got by acquiring small companies (like Metaio/Junaio). It is quite certain that Apple has learned from all AR innovating pioneers to build a well-rounded offering. It is intriguing and I look forward to see what will be done with it. Hopefully something more original than tourism or game apps -- we have already seen plenty of those.

Finally, calling people "the folks" (or "the blokes") when one belongs to a completely separate social circle has a looking-down-upon tinge to it, but perhaps it is a European linguistic idiosyncrasy.

Jim Glue

Ok...we have a moving target. I am interested in the Pixel, Essential Phone and Nokia 8 for the reasons I listed. None of which was "these are the most innovative phones". Although the Essential phone has some interesting innovations (it's add ons)...and I believe we'll see more innovation in the future with the Pixel...like Google's own custom chips. Time will tell. But no, the Nokia 8 hasn't yet brought anything besides this "Both-y" of note and I think it's a stupid feature. But it's Nokia...or the Nokia brand. I'm interested in seeing this vaunted brand power of Nokia.

But yes, the premium segment of the smartphone is where most all the innovation is going on. It's certainly not going on to anything close to the same degree at the cheap and mid range segments.

My view really isn't Apple centric although I understand why it might appear so. I am simply most interested in the computer part of the smartphone, and the camera. Apple is simply the company knocking it out the most with the phone-as-pocket-computer.

You are imagining the "looking down" part. Or perhaps it's cultural as you suggest.

It's funny though - there is no right answer for what is or isn't interesting. That's entirely subjective.

Per "wertigon" Ekström

So, might as well post an update for my linear toy model for Apple:

Predictions Q2:

Apple: 41.75 M units
World: 363.7 M units
MAMSA*: 14.19%

Actual numbers:

Apple: 41.03 M units
World: 356.1 M units
MAMSA: 14.27 %

So yeah, was a couple of percentages off in my predictions. New predictions:

Apple Q3: 45.75 M units
World Q3: 385.50 M units
Apple 2017: 212.8 M units
World 2017: 1 548.63 M units
MAMSA 2017: 13.74 %

So the trend is pretty clear, it's another down for Apple, and the downward spiral continues. Onward to next time!

* Moving Average Market Share Apple

John A

I think the Essential phone is interesting. They got a US carrier Sprint and according to some sources Amazon have invested in that company. So I suppose in time they can be a strong player in the "flagship" segment.

For Sony I see not a lot of hope, all new models looks old with huge bezels. And the new one for the IFA event will look basicly exactly like the previous generation. They seems to be unable to make a new form factor.

HMD Global/Nokia probably will reach top ten at some point, maybe when they got more models Nokia 2, Nokia 7 and 9. But it will probably be some time before that happends. I guess not until maybe six months to a year or so.

So no one can challenge Samsung, iPhone, Huawei in the top.

Then we got the smaller Chinese brands Elephone, Doogee, Vernee and so on. Will some of those be able to be a serious player in time? We will see.

NobodyMakesMoneyWithAndroid

But where is iPhone mini?

LongAAPL1997

You might want to revisit your numbers.

"“Apple. Huawei. Samsung,” Jonny Evans writes for Apple Must. “These three firms are the only ones making any money from smartphone sales, according to the latest Gartner data – but the iPhone replacement cycle could blow the rest of the industry apart with Cannacord Genuity predicting 32.4% of existing owners will upgrade [in C2018 from roughly 28.0% in C2016 and C2017].”
“‘Our analysis indicates Apple, Samsung, and Huawei continue to consolidate industry profits, while many OEMs struggle to generate profits in the mature smartphone industry. We believe these OEMs will likely further consolidate market share and share of industry profits given their scale advantages. However, we believe Apple will grow its share of industry profits with its strong customer base and growing share of the premium tier market,’ noted Cannacord Genuity analyst’s in a separate report provided to me,” Evans writes. “The latter report also points out the biggest difference between all three top tier makers – the average selling price of each device:”

Smartphohe ASPs

• Apple: $606
• Samsung: $235
• Huawei: $243"

Let´s take the most important part again...
"Cannacord Genuity predicting 32.4% of existing owners will upgrade [in C2018 from roughly 28.0% in C2016 and C2017].”

Up from 28.0% to 32.4% so this SUPER cycle will be far better than the previous. If installed base is 593 million then it makes 192 millioni alone. Then you ad the new customers and the switchers coming from the Android phones.

About the installed base they have a different number predicting this year...

"Supercycle
“We believe the iPhone installed base will exceed 635M exiting C2017, and this impressive installed base should drive strong iPhone replacement sales and earnings, as well as cash flow generation to fund strong long-term capital returns. We anticipate a stronger upgrade cycle in C2018 with the 10-year anniversary iPhone 8, as our surveys indicate strong consumer interest in and anticipation for new iPhones anticipated to launch in September,” they said.

“We believe there is a large group of iPhone 6 consumers positioned to upgrade to the new iPhone products, and therefore we are modelling the percent of iPhone users to upgrade to a new iPhone to increase to 32.4% in C2018 from roughly 28.0% in C2016 and C2017.”"

Some repetition here but let that sink in.

LongAAPL1997

It is also amazing that the Apple can resist the Osborne effect...

"Apple iPhone sales are steady ahead of new iPhones expected next month

“Sales of Apple’s iPhones appear to have been ‘resilient’ and sell through share appears steady last month, even as many consumers seem to be waiting for the new iPhone release in September, Canaccord Genuity analysts said Wednesday,” Caitlin Huston reports for MarketWatch.
“They estimate that Apple Inc. brought in 64% of industry profits in July, helped by carrier promotions, but down from 84% in its March quarter,” Huston reports. “Canaccord Genuity analysts see Apple’s new cycle of iPhones in September bringing Apple to 46.5 million iPhone units sold and leading Apple to increase its market share in calendar year 2018.”

Huston reports, “In addition to strong sales of Apple’s iPhone 8, they expect strong sales of 7S Plus models.”"

LongAAPL1997

"AR is interesting -- and has been deployed on mobile devices for quite some years now."

Yes. The iPhone 4(2010) was the first phone to have 3-axis gyroscope that made AR possible. My favorite AR app for fun is the Flightradar24.

LongAAPL1997

BTW...

Breaking news...

"A court in South Korea has sentenced Samsung's billionaire heir-apparent Lee Jae-yong to five years in prison for corruption."

Jim Glue

Hi Long,

While that prediction of sales is nice...it's just a prediction. 192M iPhones doesn't even represent an increase in sales. "Plus new sales" - which will tell the tale. Also at play - how many iPhone can Apple make? Will the alleged short supply of the new Super iPhone depress sales as people hold off until they can get that one? Last year I waited more than two months to get my "Piano Black" iPhone 7+ even though I ordered the first day. Apple has to sell more than 230M to have a sales increase. To have a 10% increase Apple will have to sell north of 250M units. They can, but it's not "baked in" the way the "Super Cycle Theory" suggests.

Last year Samsung exploded their own Christmas selling season and STILL Apple barely moved the needle up. This year Samsung has, yet again, a really competitive device. If it doesn't explode, then Apple will have a challenge on their hands enticing switchers.

I think the real wild card is whether or not a developer or two can present some amazing "Blow Your Mind" AR app to show off at the iPhone announcement. I don't think "thin bezels" and "face unlock" are going to be compelling features on their own in light of the competition already meeting that bar. Same with OLED. The selling to the iPhone base is assured. I'm looking for what will drive potential Galaxy Note 8 customers to choose the iPhone instead.

LongAAP1997

@Jim

Yes the manufacturing is the bottle neck. Producing this amount of premium phones is much harder than throwing out cheapo plastic 50 dollar phones with Android 2.0

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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