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November 07, 2014

Comments

sve

"Samsung's premium phones will become less "premium" over time. Quality will suffer. Innovation will slow."

I see no evidence of this. Actually I see the opposite. Samsung is holding huge Apple-style developers conferences in SF which I've never seen them do before. They understand that they need 3rd parties to support their products and are spending money to get them. Don't forget, Samsung still has a lot of profitable businesses and are willing to spend money if they think it will help. They spend the most money on advertising of anyone.

I think it is a real horse race. And the public is the beneficiary. iOS and Android (and maybe WP) will be viable platforms now and in the future. Inevitably, innovation will slow as all the products become good enough. And the competition will move on to the next area that needs innovation - perhaps the living room TV screen. It's happened before. Heck, who even talks about voice call quality anymore? Or camera quality? Or music player quality? The parade moves on.

KPOM

@Leebase, I think the 6S will sport 2GB of RAM and a slightly faster A9 processor. There aren't many "catch up" features left such as NFC or large screens, so it will be a more normal upgrade cycle. But flexible screens are becoming a reality, so they might be able to be a bit creative with the iPhone 7.

PHil W

@Baron95 I just did a trawl of news sites on the Google wallet issue and it turns out it is just one part that it has shut down. Its the ability to pay for goods and services to third party merchants and that's because nobody is using it. Apparently Google had already retired the service that it had intended this API to service before its launch and nobody else has taken it up.

Google wallet can still be used for purchases in the Google play store and for purchases in physical stores using NFC.

So nobody is really affected by this.

Phil W

And Apple are an irrelivancy to 88% (soon to be 92%) of the world's smartphone buying population. They are a complete backwater. That is the reality.

WonTheLottery

@LeeBase
"So, what next? I don't know. I do know this...the carriers are not wanting phones to be so cheap that their customers can just buy them independently and then choose what services to buy from the carrier or have the ability to easily switch carriers."

It seems some carriers do want that, in the UK we now have giffgaff who offer 30 day 'goody-bags' (bundles of calls/texts/data) that better anything you can get on contract but you have no commitment. giffgaff is a Telefonica company the same as O2, in fact if you have a mobile that's carrier-locked to O2 you can stick a giffgaff sim in and it will work. A 500 min/unlimited texts/1GB 4G data monthly package from O2 would set you back £21/m on a 12 month contract, the same goody-bag from giffgaff is £12 for 30 days and you have no contract. Furthermore calls between giffgaff customers are free.

giffgaff is proving very popular and I wouldn't be surprised to see a significant shift towards this model of service rather than subsidised phones on long contracts. I've switched to giffgaff myself, being able to pay a little more for an unlimited data goody-bag when I'm away from home and then switching back to a cheaper package once back is very appealing. In fact my whole family are now on giffgaff, as their contracts have expired so they switched over too.

Without carrier subsidies high-cost smartphones may well see their market shrink. If giffgaff proves so popular other carriers have to follow suit the UK handset landscape could change quite significantly.

WonTheLottery

@LeeBase
"Now it's like there is Apple and everybody else who's selling the same thing with just enough deviation to not get sued."

This is funny seeing as Apple just released the iPhone Galaxy Note, a slavish copy of Samsung's Galaxy Note but with a lower spec and rather less robust.

RottenApple

@Leebase:

"So, what next? I don't know. I do know this...the carriers are not wanting phones to be so cheap that their customers can just buy them independently and then choose what services to buy from the carrier or have the ability to easily switch carriers."

So, how come that precisely that is the standard business model in most regions of the world? Of course you can also buy phones on a financing plan with some contract attached to it that's not in the customer's best interest.

And guess what: I did buy my phone independently. I did choose the cheapest contract available that suits my needs, you can get those in all variations from all German carriers. In fact what I chose were two different prepaid plans, one for home use (where WLAN/WiFi is readily available nearly everywhere) and one for travel where I need mobile internet access, just like WonTheLottery described. As a result my yearly mobile costs come in slightly above €40/year.
But I did NOT have to go in a carrier's store, choose some phone and get stuck with an inflated contract that would cost me more than I actually need.

In other words: Your statement is nonsense.

Daniel Ahmad

Tomi, Your numbers are still wrong for TCL. It should be 10.9m sold in. You added October sales by mistake.

For anyone interested, HTC sold in 4.8m units during Q3 2014.

Phil W

I pay €7 a month for my mobile + internet on Orange France (I'm a Brit living in France). Its not unlimited, but I have never hit the limit.

RottenApple

@Leebase:

" Of course customers want to be free of contracts, free of ties, and free to get by on wifi for data most of the time. It's just not in the carrier's best interest."

So, why is the subsidized model so unpopular in actually working markets then?
The only places where it got some significant traction is the US and Japan and both are textbook examples of a fixed economy to ensure continued high profits by the carriers.

It's also complete garbage that Apple is the sole beneficiary of such a business model. You are again taking US numbers and project them on the worldwide market.

The customers you speak of are a small niche, a minority even among current iPhone users. Yes, they may be highly desirable but ultimately they do not provide sufficient critical mass to keep Apple's ecosystem relevant.

A large part of Apple's current users are regular people who just got the slightly more expensive contract because the difference wasn't large enough. But as mobile telephony gets ever cheaper, more people will pass on these overpriced contracts because at some point the price difference between owning an iPhone and being able to have mobile access just gets too large, because it's not just the overpriced phone but also the overpriced contract. Then we are no longer talking about $500 price difference between a middle-of-the-road smartphone, vintage 2014 and an iPhone but also about the $25 price difference the more expensive contract will set one back each month. And over two years that will amount to another $600.

Also, if your statements were true, there'd be far more advertisement for iPhone based contracts. But from what I see, 80-90% of subsidized contracts are not even about the iPhone but medium range Android phones! Which is a clear indicator that at least here in Germany, the iPhone is no longer a mainstream product, it has thoroughly retracted into the luxury niche by now.

Ultimately this won't change anything about Apple's future. They are on their certain way into that luxury niche with insignificant market share. And eventually there will be the time when relevance has lowered sufficiently not to warrant any prioritization in development at all.

Phil W

I agree wit RottenApple, your scenarios only work in the US where the carriers have power. They never had that kind of power elsewhere, except maybe Japan.

Subsidies in the UK, at least, have never worked the same as in the US. In the UK you buy your handset outright and get a fixed priced data plan or, if you choose to defer the payment of the cost of the phone, you pay a reduced sum up front and then the remaining cost of the phone is spread over eg two years and some additional interest is factered in and then added to the same fixed priced data plan.

So your monthly payments have always reflected the value of the particular phone you choose and it is always cheaper in the long run to buy the phone outright at the start.

Even on a subsidised plan an Iphone will always cost the same as a similar premium Android phone but more than a non-premium priced smartphone. it is essentially a hire purchase agreement.

Winter

@Boron95
"On phones, 86% of Internet usage is now on apps."

Apps have become repackaged, special purpose browsers. What's new?

@Boron95
"Despite Tomi's and the disciples all claiming that apps are a waste, consumers are voting with their fingertips :)"

You just showed them to be right, apps are becoming just single page "browsers".

Phil W

@Baron, nice list of mostly inconsequential nonsense that for most users will be trumped by good enough and price. The nearest Apple store to me is a 5 hour drive away, so a 10 hour round trip and that is going to be true for most of the planet.

fragmentation - who cares?

Integration? most users will have a tablet and phone at most, hardly difficult to make an Android tablet and phone work together.

The rest of your list I couldn't care less about.

Sorry but that's a big fail for me.

And just to illustrate the gulf there is between users expectations in countries other than the US, here is a link to an article from an American who moved from the US to France. It's about costs of internet, phone and mobile and is not about or anti-Apple. http://venturebeat.com/2014/11/12/what-france-has-taught-me-americans-are-suckers-who-have-themselves-to-blame-for-crappy-broadband/

Winter

@Phil W
"And just to illustrate the gulf there is between users expectations in countries other than the US, here is a link to an article from an American who moved from the US to France."

I live in the Netherlands, and our costs are somewhat higher, but in the same range. Our country is smaller so the competition is somewhat less severe.

Phil W

@ Winter, Well I pay €43 a month for ASDL internet + Internet fixed telephone (free unlimited time calls to fixed line phones in 100 countries inc USA and Australia) and mobile with internet access. The mobile internet part is €7 but it's not unlimited and the SIM seems to block anything requiring certificates, so not all encompassing, but it's enough for me. The ASDL is only 2Mb/s so just about OK for streaming TV as long as it is not HD.
ASDL is the only option here. I live in rural Brittany.

Phil W

Just checked the site out. Its €199 with 24 monthly payments of €89.99 or €299 up front and 24 payments of €49.99.

It is quite complicated, but for this you are getting free unlimited calls and SMS/MMS in Europe and internet in Europe.

For comparison an HTC One mini or an LG G3 are both available for €1 plus €89.99 a month for 24 months or €49.99 up front and 24 monthly payments of €49.99. No idea how these two mobiles compare technically I just randomly picked them for comparison.

Phil W

There are lots of other options available with differing inclusions and you can get the monthly payments down quite a bit from those, but you can't get the phone at such a cheap upfront cost in those cases.

I don't fully understand them as although my French is pretty good they use technical words and terms/phrases that I don't fully understand.

Phil W

In answer to your other question. I don't think the Iphone is more or less important to Orange as the monthly tariffs with identical inclusions are the same whatever phone you buy, It's just the upfront cost that is different and as you can see with a lot of phones considerably cheaper it is harder to persuade customers to buy the Iphone.

Basically Orange make no more money out of an Iphone customer than an LG G3 customer.

Phil W

Hogwash!

winter

@boron95
No, Orange have very little leeway for extracting "punitive" payments from their customers. Roaming charges are capped. At 50 euros, they even have to block data traffick. There is too much competition to game tarifs. Also, unlocking phones is legal.

Mobile is a buyers market in Europe.

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