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« There Are Some Early AR Numbers - All Looking VERY Good for Augmented Reality | Main | Apple Results Q4 - Wow this was far worse than I thought... »

January 23, 2014

Comments

E.Casais

It is too early to tell what is really going on in the market -- we have only two points now (admittedly from important players, Samsung and Nokia).

Not before we have seen how Apple, HTC, Sony, LG have fared, how well or poorly the battalions of Chinese firms have performed, and looked at the shifts between low/mid/high price devices, feature/smartphones/phablets/tablets, and things like total number of devices sold and ASP, can we really endeavor a conclusive analysis.

What is sure is that Jolla and Firefox had an infinitesimal impact on the mobile market in 2013.

"If ever there was a house of cards it's Apple, a < £100 Android blows their featurephone out of the water. "

What does this mean? There must be a typo?

@indian

It is very difficult to make somebody apprehend how differently a market operates if he has never experienced it personally. In a sense it is quite a normal situation.

WonTheLottery

@E.Casais
It's not a typo, even a very cheap Android offers more functionality than an iPhone.

@LeeBase
The better Samsung's budget devices get the harder it is for them to sell their higher price brethren, it's a conundrum for them. In 2014 Samsung will come under more pressure, not from Apple but from Huawei. Huawei's devices are extremely good and very keenly priced.

Apple are a distraction - antennaegate, hopelessly inaccurate maps that navigate people across active runways, the white screen of death,... their fanbois will tolerate any failure and still pay massively over the odds for more. It's unfathomable to any rational person and probably impossible to replicate. Samsung need to focus on the real competition and not obsess over Apple lest they be tempted to do something absurdly stupid like Nokia did.

AndThisWillBeToo

"Samsung need to focus on the real competition and not obsess over Apple"

Indeed. Leave 60% of industry profits for Apple and go fight the others on how you split the remaining 40%.

RottenApple

@Leebase:

" Rather than insulting Apple's customers, you might want to reflect on what Apple must be doing right to maintain such loyalty."

Judging from most of the Apple users I know it's fully sufficient to make them believe that any Apple product is superior to any competition by default - and they won't even be persuaded by facts. Discussion not possible.

I call that iSheep.

On the other hand, from more levelheaded Apple users I hear increasing criticism that they got more Microsoftian ever since Steve Jobs died.

I personally can't see the appeal in Apple products. There's just nothing inherently better in them compared to various Android UIs I have seen. In fact, I think most Apple users have never tried any competing products (because, hey, they can't be as good as Apple, right?) and/or have been so throroughly locked (or to be more precise: have been made to believe they got locked) into the 'ecosystem' prison that it's hard to get out again.

Baron--9-5

So Nokia sales decline 8% sequentially from Q3 to Q4 and Tomi calls that an disaster.

Samsung today announced that their mobile devices sales declined 9% - NINE% - sequentially from Q3 to Q4.

So, again, Nokia outperforms Samsung!!!! Lumia/Windows probably gained share from Samsung/Android!!!

What was the only bright spot in Samsung's announcement today? They sales of components increase due to immense demand from Apple.

So, Tomi, are we calling peak Samsung? Read the other threads - that is what I have been saying. Samsung face huge challenges.

Lets wait for Apple's results. I think 55M iPhones is what we will see. But that is unimportant. In Q1 iPhone is being distributed in 2,200 China Mobile stores and hundreds of Reliance stores in India. Will be fun to watch.

But, on average, Nokia dropping only 8% is excellent results. Of course not matching Apple, but besting Samsung. That Elop guy knows a thing or two, he?

Baron--9-5

Tomi, for all I know, may have been a good analyst for the ETSI-GSM-buble era of SMS phones.

But he has absolutely no comprehension of the parker for mobile Internet computers. And that is the era we are now.

Apple sells one in 19 PCs, 1 in 8 smartphones, 3 in 4 smart music players, 1 in 2 tablets. It has 1 out of 2 credit card backed internet content consumption accounts in the world, it has 4 in 5 high net digital retail brand stores, its products post 2 out 3 Instagram pictures.

And it does ALL THAT while having gross margins that are 3 to 100 times that of the competition.

How is that possible? iSheep, reality distortion, operator subsidy? Really?

It is superbly designed, delightfully easy to use and consume, well rounded, integrated, supported, with a great retail experience for all its products and services.

They are unique. There are no equal.

Yes, Samsung stepped up to the plate, sold to operators who could not get the iPhone, invested $20B in marketing in 5 years, invented giant phones with giant batteries to mask a deficiency, leverage their component business, copied Apple's patents, and made space for themselves. That too is quite a feat.

However, Samsung has no more cards to play.

In September, Apple will launch large screen phones. This year China Mobile and probably one more Indian and one large Brazilian operator will cave to the iPhone. By Q4/2014, I predict the Chinese non-Google OEM phones will branch out of China in a determined way.

Samsung is in for a HUGE. I mean MASSIVE squeeze.

Yes, it is a great company (see my CES report). It will continue to do well. It is leading the way (with LG) in TVs, appliances, etc. But don't be mistaken. It will be squeezed in the mobile Internet computer game.

Maybe even Microsoft will contribute to the squeeze (in a small way of course)

z1george

Samsung peaked, period.They make their sale numbers through carrier agreements.
Their low and mid end products will be killed by the Chinese OEM's in a year from now.They will be selling 150$ unlocked phones on the SGS3 level, good enough for 95% of users on the planet. They will be paying 80c per phone to be Google-certified , clean 4.4 KitKat.
High end Samsungs? Those 800$ Galaxy S5s will be a hard sell: 1.Knox security invalidates warranty if you try to delete those S-apps bloat (nobody uses) thats slows phone, eats memory.2. Their updates make phones incompatible with 3rd party cases (chargers are next BTW).

RottenApple

@Baron95:

"How is that possible? iSheep, reality distortion, operator subsidy? Really?"

Really. But you live in America which means you get exposed to Apple's reality distortion field in a much more severe manner than those on the other side of the Atlantic Ocean. Apple's propaganda doesn't get here with full force so Europeans by default have a clearer mind about things. And behold: Apple's market share here is a lot lower than in the US or Japan - another very special market because as Koreans Samsung stands no chance there.


"It is superbly designed, delightfully easy to use and consume, well rounded, integrated, supported, with a great retail experience for all its products and services."

Putting this as an undisputable fact is utter nonsense, right out of an advertising flyer. It's highly subjective and there's many users who don't agree. I, for example do not think that the Apple experience is great. All their products, ranging from iPod to Mac tend to annoy me endlessly with their stupid limitations.

Just take music as an example. I have to use iTunes to synchronise, always running the danger of inadvertently deleting stuff, especially when doing it from friends' computers. On my Android phone I just need to plug in the USB-port, configure the phones to have the SD-card available as an external drive and copy everything onto it. No additional software, it just works without effort. With the right player software I don't even need to create playlists.


"They are unique. There are no equal."

Right! Reality distortion field again, huh? Let's be blunt: Apple's genius is dead. He was replaced by a bureaucrat and wanna bet that they have peaked in terms of innovation and are on the slow road back to a 'normal' company?

Re. Samsung:

I think their biggest problem in the future is their bloatware infestation. So far they had no real competition because other companies' bloatware was just as bad, if not worse. But I guess this will change with the Chinese.

Among all the Android UI's the native one is still the best, yet all the major manufacturers insist on replacing it with something worse.
For work I got one of those Chinese smartphones rebranded for a local reseller, using stock Android interface and performance issues aside (it's a relatively cheap midrange devices after all) it feels much nicer than all those bloatware UIs I have seen so far.


Winter

@Boron95
As usual, the movie must end when the American gets the girl. That is the only kind of story an American can accept.

@LeeBase
The EU is a market of 400M people and an economie that is as large as the US, or larger. Europe as a whole has a population of ~750M. I understand you are not interested in competitive markets with slim margins. But in the end even the Smartphone mobile market will mature. And then, competition will drive down profits.

Anyhow, there is no reason to assume that the Chinese are eager to fill the coffers of Apple. They will find a way to keep these profits in China.

KPOM

@RottenApple, Apple's success in Japan and the UK belies your euro-centric view that Apple appeals only to Americans. Their devices have fashion appeal, which other manufacturers are only now starting to grasp. So while they have some leading and some lagging tech specs, they do have an advantage there. Hiring Angela Ahrendts, who reinvigorated a well-known international fashion brand, only adds to that. She hasn't even started yet, so we'll see what happens over the next year or two and what she does to reinvigorate the Apple Store image.

It is true that to maintain the success of the past few years they need to enter into a new category. But they still have some cards left to play with smartphones and tablets. As others have pointed out, they can and probably will release larger devices. They can also get serious about mobile payments and either sign on to an existing platform, or (more likely) pour some money into a new platform. I'm being US-centric here, but the recent hacking of credit cards at Target has people worried, and the chip-and-pin technology used in the rest of the world, while somewhat stronger than a magnetic strip, isn't foolproof either. There's an opportunity here for someone (and Google and Apple both know it).

People forget that even under John Sculley Apple enjoyed almost a decade of success after Steve Jobs. Apple didn't hit rock bottom until Spindler and Amelio cheapened the brand. Had Sculley not made the bad business decision of giving Microsoft a too-inclusive license (which directly resulted in Microsoft winning the lawsuit with Apple over Windows as the court ruled that "look and feel," the only part that Apple hadn't licensed, couldn't be copyrighted), history might have been significantly different and Mac might be a much larger part of the market today. Tim Cook doesn't seem like the type of CEO likely to make the same kind of mistake. So even an Apple that is coasting is likely to be influential well into the next decade.

RottenApple

@KPOM:

Please don't twist words. I already named the reason why Apple is doing do well in Japan.

UK is another matter. If I remember correctly it was the first European country where Apple sold and they still profit from that. But their market share has been declining lately there.

As for the rest of what you say, it doesn't matter. Apple is what it is because it's still perceived as the master innovator, despite not having innovated anything for several years now. The 'cool' factor is a major selling point for them, so once they get locket into the usual more-of-the-same business model the less cool they will be perceived. For a company like Apple this could be a problem.

@Leebase:

"2/3rds of iPhone sales are outside the US. "

The last numbers I saw said 40-46% in the US. Let's add Japan to that as the second strong market for them and where are we? Yes, more than 50% in only two markets - and precisely the two markets best geared to their business model.


AndThisWillBeToo

@all above
Trying to follow the discussion I'm curious:
people (Winter, RottenApple, etc.) seem to think that Apple should have addressed some other market segment than what they are after.
Others (Baron, Leebase,...) are against the idea.

So assuming it is true that 40% of iPhone sales come from US and at same time assuming that Apple still at that point gathers more of the industry profits than all others combined, I'm lost:

Why should Appke have done anything differently in the past? How much money do they have in bank so far? Are you implying they should not have profited like they did?
Especially: If market would change tomorrow so that only those who sell cheap phones can win, couldn't Apple just buy mobile business of LG, Lenovo AND Huawei with the cash they have, stick Apple sticker on back of those phones and happily own 20% more of the market?

E.Casais


"couldn't Apple just buy mobile business of LG, Lenovo AND Huawei
with the cash they have, stick Apple
sticker on back of those phones and
happily own 20% more of the market?"

Competition authorities. Culture clash. Corporate fiefdoms. Porting iOS to other hardware platforms, possibly unfeasible directly. In short, British Leyland in mobile.

E.Casais

"Europe is becoming a wasteland of
profit less smartphones used like
feature phones. Apple will get
around to solving the issue when
there is money to be made."

The usage of smartphones in Europe is not much different than in other parts of the world at equivalent purchasing power levels.

And why is Europe becoming a wasteland? It was not one before, then what happened? Why was Apple incapable of keeping it a blooming paradise for smartphones?

Apple is already making money there, the real issue to solve are hard macroeconomic problems, which are beyond the purview of a single firm.

"the UK and Germany are the only two
countries to bother with"

Indeed, let us ignore all those high-income, profitable markets like the Netherlands, Austria or Scandinavia. And why ignore France? Because competition there is too hard?

By the way, which is the true iPhone country in the Western world, with a market share exceeding that in the USA, and close to 53% of all smartphones in 2012, figures for 2013 not yet available?

Switzerland.

It is a very high income country. In Spain, the market share of iPhone is 10 times smaller. Macroeconomics trump whatever magic one may invoke. The same will apply in those supposed eldorados like China or India.

E.Casais

"Samsung has no more cards to play"

Again a shade of that underlying deprecatory attitude that Asians can only copy, not innovate.

In 2011 Samsung was widely accused of copying Apple unashamedly, from the design of the its phones to the details of TouchWiz. Of being incapable of competing with its own strengths, only by mocking Apple customers in its advertisements. Of being a simple Android rider without innovations of its own.

In the same year, Samsung brought a novel form factor with the Galaxy Note, and rejuvenated the use of the stylus. In the USA, everybody was disparaging this oversized device. It became very popular in Asia, then in the rest of the world. Now everybody is producing phablets. Even Apple is rumored to follow suit.

About 8 months after Siri, and before Google Now, Samsung released S Voice in its Galaxy line.

Samsung can innovate, and does have a number of cards to play. NFC is one. Remember that contactless payments are bigger in Asia than in Western countries. Camera is probably the likeliest. Samsung has excellent camera technology, but has not yet been integrating it properly in its higher-end devices.

Samsung has space to surprise us, especially in these are areas, where Apple is demonstrably weaker than the competition.

So Vatar

It is too bad that I cannot find a platform anymore where a good discussion without silly undertones can be had. On this blog B95 and LeeBase and a few others take over and the conversation always goes into the same predictable direction (Afro phone, housewives, Silicon Valle boys, etc). I had a quick look at MyNokiaBlog and -omg - the "conversation" there is not even worth to spend 3 minutes to follow (Janne, RandomRandom, etc).

I for my part would like to see a thoughtful discussion to where Microsoft WP will go, now that the Nokia's handset story is about over.

It seems to be clear by now that WP neither will have any significant share of the phone market in any foreseeable time, nor does it or is likely that it will make any significant profits for Microsoft. It seems to be conventional wisdom that Microsoft will keep WP on life support because it is a strategic necessity for them.

But is this really what will happen? As I understand it the acquisition of the Nokia handset business does not really integrate well with a Software company. Fine, I read about Ballmer's vision to become a devices company, but he is on his way out.

Also, Microsoft seems to have troubles to decide who will be Ballmer's successor. Maybe this is an indication that the board has questions which strategy they wanna pursue, and until they know that it is hard for them to decide on the right CEO?

What about Flop's role? I have not heard him anything say about the abysmal results of "his" Nokia handset business. At least formally he is still managing the device business at Nokia. He seems to be still in the running to become MS CEO, but what are his chances? One can see it from different perspectives: IF Microsoft thinks that WP is strategic to its future, then Flop could be a candidate because he at least has experience in the handset business. Or he is no candidate exactly because of the experience with him running the Nokia handset business. IF WP / mobile devices is not strategic for MS' future, then Flop should not be a candidate to be taken seriously IMHO.

Microsoft's latest earnings seem to suggest that there is a lot of money they can make with business software and cloud services. Microsoft anyway cannot afford to ignore mobile devices running iOS or Android, so they need to be open and allow connections. If this is true, how important are WP and the Nokia assets for Microsoft after Ballmer anyway?

Does MS need to be a player in mobile otherwise they will lose their future? Samsung for the first time shows weaknesses in its mobile business. Are handsets already such commodities that it does not matter for Microsoft who controls the devices and the software running on it, as long as these devices can be connected somehow to other Microsoft products?

I would not be surprised if Microsoft chooses a strategy where mobile is not important enough to Microsft to do it on their own. WP and mobile handsets are becoming redundant then, no need to invest, kept only if it makes money, and in case it makes too much head aches sell it off or shut it down.

I guess the first time we will see a little bit more about MS' mobile intentions is when the name of the new CEO is announced. So after Nokia is finished, will WP be finished next?


AndThisWillBeToo

@So Vatar
Good points.
Even if Microsoft would ignore phones, they cannot ignore tablets. Tablet sales are eating PC sales and they made whole "modern UI" so they could get into tablets (and hybrids) space. But when it comes to apps and services, tablet alone is not good enough. Of course Microsoft can port its services to Android and iOS (see Xbox music) but there will always be the problem in form of: "my tablet runs OS N, I think I'll buy a phone running same OS" and vice versa. With Android you can. With iOS you can. Microsoft will probably want to have option in there.

Add in their problem to get Modern UI apps for their tablets and the better app offering of WP8 than Windows 8 RT. They need those developers who bothered to do WP app to do RT app too.

As long as Microsoft plans to sell OS for any of the three (PC, tablets, phones) they will probably invest to all three or lose their future ground.

If the next CEO thinks future is in cloud services and Office, he/she could just as well axe WP and RT and let Windows the PC OS fade away as PC business shrinks.

RottenApple

If Microsoft was smart they'd allow desktop apps to run on the next version of RT.

I think it was the dumbest move they could make to first build RT on a fully working Windows version and then locking it all out - including the endless amount of third party software that could have been ported to ARM just by recompiling it once. It was equally stupid to make Metro/Modern completely incompatible with the existing Win32 API. Had they truly integrated their touchscreen stuff into the system instead of making it an isolated subsystem, forcing developers to do either desktop OR Metro instead of allowing hybrid apps I think their mobile platforms would have fared a lot better than they did.

Instead they chose to fight an uphill battle with Metro/Modern, having to sponsor software development.

And, if app stores are such a good idea, why is Microsoft's limited to toy apps, instead of allowing developers to sell REAL software there?

Winter

I think MS are in a difficult position. Their business model is completely based on monopoly rent, the ~80% margin on Windows and Office/Sharepoint.

But in the competitive mobile market, MS' margins are negative. They make huge losses on anything mobile. The traditional customers will switch to the much cheaper mobile appstore model the moment they can. Therefore, MS have to erect chinese walls between their monopoly business markets and the hyper competition in their mobile markets.

Hence, all their mobile offerings are castrated.

Huber

@So Vatar: On this blog B95 and LeeBase and a few others take over and the conversation always goes into the same predictable direction

This is because these guys commit three 'crimes':

1.) They confuse subjective opinion with objective facts

Like stating that iOS has the 'best UI': When I look at an iOS device, the UI looks fugly and has no options whatsoever. For me it looks like it has been designed for people too stupid to use a real computer.

Or like stating that an iPhone is a status symbol - like anybody could impress me with a €900 phone! I could straight away buy one if I wanted.
If you want to impress me with your status symbol, show me your Maserati or Porsche Carrera Turbo, then you'll get a 'WOW!' from me.

2.) They don't see the writings on the wall:

People who spend e.g. €900 on a iPhone 5s 64GB without contract are widely laughed at. This was different a few years ago, people applauded back then.

Also, e.g. in Europe subsidized contracts are retreating. The TV is full of commercials with cheap flatrates (usually about €20 per month). You can then e.g. pay €25 more per month for 2 years to get your beloved iPhone.

This is a situation when people start doing the math: Do I really want to pay an additional €600? Or do I rather buy this Nexus 5 or Moto X or Huawei phone instead for half of the money or less? Heck, even a Lumia 520 becomes attractive for some people, then.

This was different when _ALL_ contracts came with a phone included - of course people take this iPhone 5S or that SGS4, then. And of course people choose a new phone very 24 months when they have to pay for it anyways. And of course you won't choose a cheap phone for the same proce, then.

3.) They deny that the market changes with more mature technology

More and more people keep their phones longer. There are literally millions of people who are satisfied with their iPhone 4S or SGS2.
Instead of getting a new phone, they get a new cheap contract without a subsidized phone.

And why shouldn't they? What can a iPhone 5S do a 5 can't? Fingerprint? Come on!

The same is valid for Samsung: What can you do with an SGS4 you can't do with an SGS3 LTE? Not much at all - OK, 3D games are looking much better, but this is a use case for a minority only.

This all has to add up. And all this does not look good for highend phones in the near future.

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