Are More Deaths Looming in Smartphone Bloodbath? Sony & Blackberry might be sold soon

Originally I wrote this about Sony (hence the long analysis) and before I posted it, I learned about Blackberry. So we have TWO potential deaths in the Bloodbath now pending. Lets do quick analysis of both. First up

SONY LOOKING FOR BUYERS OF ITS XPERIA UNIT

Reuters has an interesting story that Sony is fed up with its losses in the Xperia smartphone business (and in the TV business too) and considering selling the unit or units. They don't have an offer yet but this is apparently an open call for anyone who might like to bid. And yes, it would be yet another classic huge handset maker that would end up dead in the Bloodbath of the smartphone Wars that I've been chronicing o this blog since 2010. Would be a shame. But lets do a bit of thinking of why and perhaps what might it be worth and who might be interested in buying.

So first, obviously, corporate management should be run with science and facts, not emotion and wishful thinking. The SonyEricsson handset business partnership was rarely able to report profits in its ten year existence and since Sony bought Ericsson out of the partnership, its not been a consistent profit engine for Sony either. After a brief climb all the way to 3rd largest smartphone maker and briefly strong profits, last year Sony's Xperia unit went back into losses and some massive ones at that. Sony has cut its sales forecast from 50 million units per year (its fiscal year ends in March) to 43 million and again, to 41 million. Its market share is currently slightly below 3% and Sony is barely hanging onto a Top 10 slot among the world's largest smartphone makers. It has, however, differing from say Samsung and (Nokia)-Microsoft, already completed its transition from dumbphones to smartphones, so Sony is now 100% smartphones. At least that costly transition is over.

THIS IS THE PART I DON'T GET

So yeah. Sony Xperia. This is the part I really don't get. WHY is this business not profitable? There were no 'antennagate' disasters in production. The phones are very well received, extremely advanced designs at the cutting and often bleeding edge. If you look at the iPhone 6 series, those upgrades to the iPhone were all done by Sony years earlier to the Xperia line. Its a super premium brand across all its products from TVs to videogaming consoles to phones. What is wrong with this picture? If Apple with its iPhone, makes the most enormous profits ever seen in the handset industry, and the Sony Xperia line is just about the nearest thing to an iPhone that runs on Android not just on specs but also best in style, best in brand, best in quality, best in 'bling' (compared to anything from HTC or Blackberry or LG or Lumia Samsung's Galaxy etc) - and iPhone is superbly profitable, why is Xperia not 'also profitable'. I recognize Apple sells now 4X more iPhones but still, I can get it that a Huawei or ZTE or TCL is not as sexy or trusted brand as Apple but Sony! Why if the iPhone is the most profitable handset in history, and the Sony Xperia is the nearest thing to an iPhone on every measure, then why is Xperia not also profitable. It should be 'very' profitable if the iPhone is ridiculously profitable, as it is now.

THE iPHONE 6 HAS NEARLY CAUGHT UP TO XPERIA

So lets dig just a bit deeper on this. I am dead-serious. Look at what Apple now did with the iPhone 6 and 6 Plus. Awesome updates, especially the bigger screens. So lets compare side by side:

SPEC . . . . . . . iPHONE 6 . . . . . . . XPERIA Z
Screen . . . . . . . 4.7 inch . . . . . . . . 5 inch
Resolution . . . . 750 x 1335 . . . . . . 1080 x 1950
Main camera . . 8mp . . . . . . . . . . . 13mp
Selfiecam . . . . 1.2mp . . . . . . . . . . 2.2mp
WiFi/GPS/4G . . yes . . . . . . . . . . . yes
NFC/BT . . . . . . yes . . . . . . . . . . . yes
FM radio . . . . . no . . . . . . . . . . . . yes
Java . . . . . . . . no . . . . . . . . . . . . yes
Memory . . . . . 16GB . . . . . . . . . . 16GB
MicroSD . . . . . no . . . . . . . . . . . . 64GB
Waterproof . . . no . . . . . . . . . . . . yes
Fingerprint . . . yes . . . . . . . . . . . no
Price . . . . . . . 700 dollars . . . . . . 600 dollars
Released . . . . Sept 2014 . . . . . . Jan 2013

Come on! Its not even close. The Sony Xperia Z matches or beats the iPhone 6 on all specs except fingerprint scanner, and has tons the iPhone doesn't such as microSD, Java support, FM radio and its waterproof. Come on. Look at the specs, down the line, Xperia is better on just about everything from bigger screen to better screen resolution to better cameras front and back... (PS these phones are nearly identical in size also, one millimeter in difference in height for example)

Then look at the LAUNCH DATE. This is not the current Z. This is not the previous Xperia Z. This is not the one before that. This is the original Z from 18 MONTHS before the new iPhone 6 came out. Sony can very legitimately say that Apple tried to match their old phone, and only came close. Then show the current Z3 and how much more Sony offers today than these '2013 specs' that the iPhone 6 is peddling. And finally the price! Even 18 monts before, the Sony was significantly cheaper than the new iPhone of today. But how about the top dog then? The iPhone 6 Plus with that massive screen? Sure, lets 

SPEC . . . . . . . iPHONE 6 Plus . . . XPERIA Z ULTRA
Screen . . . . . . . 5.5 inch . . . . . . . . 6.4 inch
Resolution . . . . 1080 x 1920 . . . . . 1080 x 1920
Main camera . . 8mp . . . . . . . . . . . 8mp
Selfiecam . . . . 1.2mp . . . . . . . . . . 2.2mp
WiFi/GPS/4G . . yes . . . . . . . . . . . yes
NFC/BT . . . . . . yes . . . . . . . . . . . yes
FM radio . . . . . no . . . . . . . . . . . . yes
Java . . . . . . . . no . . . . . . . . . . . . yes
Memory . . . . . 16GB . . . . . . . . . . 16GB
MicroSD . . . . . no . . . . . . . . . . . . 64GB
Waterproof . . . no . . . . . . . . . . . . yes
Fingerprint . . . yes . . . . . . . . . . . no
Price . . . . . . . 750 dollars . . . . . . 550 dollars
Released . . . . Sept 2014 . . . . . . Jun 2013

Seriously! Seriously folks. This is ridiculous. Again, you gan get the smartphone from Sony brand, that has an even bigger screen than the King Kong iPhone 6 Plus, that matches or beats every spec except it doesn't have fingerprint sensor. A much larger screen (one could say gargantuan) plus better front camera, FM radio, support of Java, a microSD card slot and its waterproof. And its FAR cheaper than the iPhone and it was released 15 months earlier. 

And if you don't want something quite that big, there is still the mid-range product from Sony the current Xperia Z3 has a 5.2 inch screen but blows most specs out of the field such as a 20mp main camera and 5mp selfiecam and still costs far less than the iPhone 6 Plus. (oh, random American readers - the prices we talk about here are the real prices you actually pay ie the so-called 'unsubsidised price' so yeah, your iPhone 6 did not cost you 199 dollars you actually are now paying the missing 501 dollars more via your 24 month contract with your carrier - plus they charge you interest. So you're paying more than most of the people around the world who only pay the 700 dollar cost upfront without hidden monthly payment plans and bogus interest on a device we call can afford to buy straight up. A smartphone is not a car or house we would need to put on a payments plan)

So. TWO YEARS AGO Sony engineers had completed designs that far far exceeded the latest iPhone 5 products and were so far ahead of Apple, that when Apple did - fully knowing what is out there from Sony - when Apple made its upgrades to its 6 Series, those iPhone 6 models still fell short of the Sony Xperias that were sold two years ago. How much does this underline the brilliance of Sony engineering? This is amazing tech.

SO WHAT WAS WRONG WITH SONY

The product is not bad. There were no manufacturing defects or costly recalls or sales boycotts. Sony has a global footprint so distribution is not the issue. The phones get very high reviews and scores in the tech press, just now for example GSM Arena ranks the latest Xperia Z3 Compact as their best of class choice above the current iPhone 6 (and ahead of Samsung's Galaxy Alpha in that sub-compact under 5 inch screen flagship class).

The brand is excellent. Sony is not a newcomer to the handset industry either who has to establish a credibility. Globally, across all its products Sony stands for premium and has a global range of Sony stores so they have an exceptional retail presense just like Apple. 

Style-wise the Xperia range is not cheap and plasticky like the Galaxy Series or a weird form factor like Blackberry or running on a hopeless OS platform like Lumia. And obviously its not a cheap Chinese brand like Huawei or ZTE and not a cheap domestic brand like say Karbonn and Micromaxx. Since the Xperia range was introduced, the Sony smartphone range has been the nearest thing to the iPhone series that existed on Android. The closest rival. Sony a bit better in tech, Apple of course, being Apple. But Xperia didn't suffer from 'lesser Korean' quality perceptions that say an LG would have. Or the lost brand perception of Motorola. And Sony only sold smartphones and they were all in the premium price brackets, not extending to 100 dollar supercheap smartphones, just like Apple. The nearest thing to the iPhone series on the Android side has been Sony with its Xperia range.

So why is Apple selling the iPhone at obscene profits and Sony making a loss with the Xperia. This makes no sense to me. Absolutely bizarre. Which brings us to the only possible culprit. Price. Why was Sony selling those premium spec phones at such low prices in 2013 arleady (and the latest Xperias also in the 600 dollar price bracket, not in the 700 dollar-plus bracket where the iPhone 6 series now is)? Why? Because they were run by accountants or their marketing were morons (or possibly both). I bought an Xperia Z1 and loved it. I felt it was the best flagship phone I'd owned since beloved Nokia N-series flagships of the past. It was lovely. And it was premium. And even now, while i love my Samsung Galaxy K Zoom - for its camera - the rest of the phone is 'cheap' plasticky and pedestrian. The Xperia Z1 was cool, sexy, slick. A fabulous device to behold and to hold. I am seriously considering another Xperia purchase again soon.

But here's the point. I paid about 600 dollars in Hong Kong money of course for my Xperia Z1. I said at the time, I thought it was so great value for all the awesome tech it had (20mp camera, waterproof etc) that I would have happily paid more for it. Yes, I would not have blinked at paying 700 dollars for it last year. But why was it priced at 600 dollars? Because the marketing heads at Sony are nincompoops who had fallen into the trap that there is no air above the iPhone. That there is some imaginary price ceiling and you can't sell premium phones that cost more than 600 dollars (because that was what the base price of the then-current iPhone 5 cost at the time). Idiots!

I had been arguing on this blog for YEARS that there is plenty of room above that iPhone price ceiling. That clever smartphone makers should explore the prices towards the $1,000 dollar level. And i argued Apple itself should also abandon the 600 dollar point and move both above it and below it (as Apple now has done thankfully). I now even have on my blog the latest price pyramid that clearly illustrates there is a pricing anomaly, totally bizarre, that clearly suggests there is plenty of customer acceptance of premium smartphones into the 'above iPhone' price level from 600 to at least 1,000 dollar unsubsidised price level.

And was I right? That is EXACTLY what Apple now did with the iPhone 6. It went for a higher price and is reaping a massive profit windffall with that smart pricing move. But listen, my dear readers. Apple went from 4 inch smartphones to 5 inch smartphones in 2014, and jumped from 600 dollar price levels to 700 dollar price levels with that change. When did Sony makes this jump in its smartphone screen sizes (and the other specs)? A year earlier. THAT is when Sony should have jumped its prices ABOVE THOSE OF APPLE.

If instead of my Sony Xperia Z1 costing 600 dollars, it would have cost 700 dollars, would have there been less sales, yes. Some people would see it as too much. But clearly - CLEARLY - Apple has shown there is a market for 700 dollar phones if you show them value for it. The specs of the Xperia range matched or EXCEEDED the iPhone 6 series already the previous year. Sony should have raised its prices. If it sold the Xperia top flagship for 700 dollars or even just 650 dollars rather than 600 dollars, the Xperia unit would be profitable today. Would it cost a bit of market share, yeah. Would it help Sony establish or strengthen its brand perception if its FLAGSHIP costs more than an iPhone? Gosh, Marketing 101, OF COURSE. And look at those specs. The Xperia of 2013 is a better phone than the iPhone 6 today. The current Xperia series wipes the floor with the iPhone. But when you are CLEARLY superior to the uber-desirable iPhone and you ALSO price yourself above it, suddenly there is more DEMAND for your product. What was the phone that is better than an iPhone?

And you know what. There are always customers (not necessarily many) who will walk into a store, talk to the sales rep and ask 'whats your most expensive (whatever)'. So. Whats the most expensive phone? If Xperia costs 700 dollars when the iPhone cost 600, the sales rep of course pulls proudly out the Xperia from the shelf and says this Sony. Then the customer asks why is it more expensive than the iPhone (or whatever brand they know). This is the FAVORITE question for any sales rep on commission. He will have memorized every detail of course of the most expensive model and happily show every aspect of where the current flagship Xperia is better than the iPhone or Galaxy or Lumia or whatever that customer happened to mention. Whatever slight market share would have been lost by raising the price to the 'outrageous' level slightly above the iPhone - would then have been MORE THAN GAINED BACK if this is the favorite phone of most sales reps in phone stores to sell - because for exactly the same sales effort that sales rep earns a bigger commission on the more expensive product - and legitimately the Xperia IS a better phone than the iPhone (on specs, that the sales rep can easily demonstrate, I am not now concerned about which is better to use, etc, so for a customer who is not already locked into iPhones and iLust). So the sales rep has LEGITIMATE issues - and a bucketload of them - to show WHY this phone is simply the best. And costs only slightly more haha... Win the soul of the sales rep and you can't lose. How can Sony not see this?

So today as the iPhone 6 series cost 700 and 750 dollars, the top Xperias should cost 800 and 850 dollars. Obviously now, January 2015, Sony can't suddenly jump the existing model prices but when they release the next models, jump up the prices. Not by 250 dollars but in increments of maybe 50 dollars at a time. And conveniently for Sony, their release cycle of Xperia flagships is not one per year like Apple. Sony do it twice per year. So this time next year the flagship should cost 700 dollars and summer of next year 750, and after that they are off with the races to test how far above the iPhone can the price of Xperia rise. Of course this means they also do have to have some clearly better tech specs than the current iPhone line but currently they have that in spades, so thats no problem. This is basics of marketing. But what is Sony doing? We just learned that they LOWERED the prices across all Xperia for example in India. Exactly the wrong answer when their product line is deeply in the red. There are idiots in charge.

This is not a problem in engineering. The product is great. This is incompetence in marketing. This is bad management. Sony handset unit was run by some accountant not a marketing man. The reason Sony is making a loss with Xperia is not because of bad phones, not because of a bad brand, not because of bad customer experiences, not because of a bad OS. The phones are brilliant. They are consistently rated among the best. They easily justfify the price they have but they could have commanded a significantly higher price because on the exact specs, there is no competitor. So if you are not doing a rival of identical specs, why are you limiting your prices to the inferior rival then? BAD MARKETING. Idiots in charge.

So, as just a bit of advice to Sony City in Tokyo: Before you sell the Xperia, this has the makings of the next best profit engine on the planet after the iPhone if you keep it in the Sony family. Why not fire the morons who got the unit into this MARKETING mess. The devices are beautiful and they beat the iPhone hands down. Go hire an aggressive marketing boss from a really competitive consumer giant like say Coca Cola or something and give the Xperia unit the marketing management it deserves.

SO LETS SELL XPERIA UNIT

So ok, maybe they don't read CDB blog regularly at Sony HQ (haha, you'd be surprised to see what all companies visit this blog on a nearly religious basis). What if we sell it. What could Sony's Xperia unit be worth? Well, we have two good case studies from very recently. The loss-making Nokia handset business was sold for 7.2 Billion dollars. Nokia's smartphones had a market share of 3% when it was sold (but it also included the dumbphones business, and Nokia did not extinguish its hold of the Nokia brand, only rented out a time-limited exclusive use of Nokia brand to sell phones). Then there is the Motorola deal, Google selling, Lenovo buying, another loss-making smartphone business. That included the full Moto brand and Lenovo paid 3 Billion for it. Motorola's market share was about 2% in smartphones at the time. So if we just consider the market share as a metric (this is very highly simplified) then in Nokia's case one point of market share cost 2.4 Billion dollars while in Motorola's case 667 million dollars. If we take their average, we get a number of 1.5 Billion dollars per point of market share. Currently Sony has just under 3% market share so we could guess that a ballpark price for the Xperia unit could be in the 4.5 Billion dollar range, give or take say a Billion.

So its not cheap by any means but hey, if Lenovo paid 3 Billion to buy 2 points more of market share in the smartphone wars to leapfrog Huawei and Xiaomi to 3rd ranking, why wouldn't a rival now pay 4.5 Billion to jump back ahead of Lenovo to third ranking. So if a Huawei or LG or ZTE or Xiaomi for example wanted to take a short-cut up the rankings from the midfield up ahead, and pick up a premium brand as well, then buying Sony's Xperia business would be a rare opportunity now. Buying Blackberry or HTC would not give any meaningful gain in market share, so this is a rather rare opportunity. And differing from Motorola and Nokia/Lumia, the Xperia unit has been profitable about a year ago, not many years ago like the others. Arguably, Sony's handset business is not as sick as those others were.

LOOKING FOR BUYERS

Who would be interested? Well, who wouldn't. If you're in the Top 10 and it is a rough battle in the midfield, then this is how you can escape the daily grind and get ebough scale to have a bit of a size cushion to the next ones down the rankings. So Samsung wouldn't think of buying it. Apple has no use for it. But the next tier all would or should consider it. Huawei to leapfrog Lenovo again. Xiaomi to at least climb back on parity with Lenovo. Lenovo itself to put more distance between itself and the mid-field. Or any others in the Top 10 like Coolpad, LG, ZTE. Or even just outside it, like HTC. I joked on Twitter that if Ballmer was still in charge at Microbrains, he'd buy Xperia now to 'boost' the Windows Phone ecosystem, force Xperia to run on WP, and then that would ruin whats left of Xperia just like how Windows Phone ruined Lumia. But yeah, Nadella is a smart dude, he wont' throw good money after bad as the Lumia unit is bleeding money and 1 in 3 Lumia smartphones that was ever manufactured and shipped to retail, was never even activated.

Equally any smaller or local brand that has deep-pocketed owners and aspired to take over the world, could use this purchase to achieve that. So the Micromax and Karbonn and MiFone and Solo and all the other local brands we see. Most have nowhere the money to do this, but a few do have rich owners who may have gotten quite badly the handset bug and now could fulfill that dream of becoming a Top 10 player. Then however they wanted, use the local brand and global brand in some mix like say Jaguar was bought by Tata Motors of India and now surprisingly, Jaguar is hiring more employees in Britain. Or Geely out of China becomes the first Chinese car maker to export cars to the USA. You don't want a Geely branded car? Don't worry it won't be. They are the guys who bought the Volvo brand. So you'll see Volvos sold in America (but now the brand comes from China and is owned by Geely). Sony's Xperia unit is exactly this kind of premium brand option for a local brand. If say Micromax wanted to sell its own brand as the discount brand and (Sony) Xperia as the premium brand. And use its own India distribution to boost Xperia success in India and at the same time piggyback on the Sony Xperia sales distribution network to bring Micromax low-end smartphones to the world either as Micromax branded or perhaps as discount Xperia models.

What of possible others? We have seen Intel pine about the phone business from time to time. They could buy Xperia. Some former phone making tech giants may have had a change of heart, say Dell or HP for example, return via Xperia. Amazon fell flat with its Fire as did Facebook with that HTC phone. They wanted into phones, have money to invest. Now they could do it properly and with the missing link, global distribution, that ruined their previous plans. Could be the way back in.

Or brands that missed the smartphone opportunity could now find a backdoor in, like say Nikon or Nintendo. Take Nikon. Their CEO has said Nikon made a mistake not taking the cameraphones seriously. He clearly wishes they'd made a move earlier (and may be launching a smartphone soon). Well, Sony Xperia phones have some of the best cameras going. That would be a perfect launch pad for Nikon to bring its camera competence to the phones market and be a serious player. Or what of Nintendo, another tech giant that has recently admitted they didn't enter the smartphone industry in time. This is their chance to catch up on the missed opportunity. Sony Xperia phones are some of the best that currently exist for gaming. Toss in Wii gaming compatibility for now, then add the proper 'true' gaming phones later next year. Easy-peasy.

Two rich guys might be interested. World's richest man Carlos Slim is now forced to sell parts of his Telmex/America Movil empire (largest carrier group of Latin America far bigger than AT&T or Verizon) but he got to be richest man through mobile. If he can't have as many toys in the carrier space, he could take some of his vast fortune and buy the Xperia unit almost with spare change he has laying around the house haha. And then he could buy those MIcrosoft-Nokia factories in Mexico that are idling, and switch the Xperia production to Mexico where the labor costs are very low and massive markets sit next door who would love to see bigger push of Sony Xperia smartphones at 'better than iPhone' specs haha. With a real businessman in charge... It could be a better investment than say buying pieces of European carriers like he's been doing a bit recently.

Then there is Hong Kong's richest man Li Ka-Shing. He has been building his fortune in many fields but was very wise early to mobile and has bought and sold many operators and stlil controls much of the Hutchison ie Three operator family internationally. What not many know, is that Three also launched its own handsets that sold in modest quantities. So he's already dabbled in the handset space. I am pretty sure he's looked at the iPhone many many times and thought how he'd be able to also make profits if a good handset opportunity came along with the scale it would need. Well, here is the Xperia, nearest thign to the iPhone on Android and a lost child who just needed a rich daddy to help it onto its feet. Li Ka-Shing has often bought underperforming telecoms assets, turned them around, and not been afraid to sell them on too. Could be a buyer candidate haha..

WEIRD BUT PLAUSIBLE

So then what of Nokia itself? They've already expressed their desire to re-enter the handset space with their first tablet already announced, and it runs on Android. I wrote on this blog of the Hollywood ending to the Lumia saga, if Nokia bought back the remnants of the ruined Microsoft business. But that was before anyone said Xperia was available. Now, why not Nokia? They were a phone maker, they want to come back but on Android. Xperia is already fully on Android. Nokia was in the process of attempting to migrate its handset business from dumbphones to smartphones but now Xperia is already finished with that journey. Nokia has a long history fo taking loss-making telecoms businesses and turning them around into profitable businesses, like Siemens and Motorola networking units.

So think about it. Many who would want to buy Sony Xperia unit would really want also the Sony brand for a long period as their premium brand, so any Huawei or ZTE or Micromaxx or Xiaomi, just like how Lenovo uses Motorola as their premium brand and TCL just bought Palm. Similar to how Toyota uses Lexus, Volkswagen uses Audi etc. But Nokia will get to return to using its own brand from next year. Nokia doesn't need the Sony brand at all, it could just buy the Xperia brand now, run that for the remains of this year, and slap on a Nokia badge on the phones from January 2016. Voila, premium smartphone slabs like any other Android flagship but at honestly N-Series style superb specs, that have a 3% market share and are actually larger than Lumia sales according to the latest numbers we had from Q3 of 2014 haha (lets see if that holds now for Q4). And Nokia was paid 7.2 Billion dollars by Microsoft to take the handset business when Nokia had 3% market share. Now it could probably buy Sony's Xperia business for 4.5 Billion dollars and still have 3% market share. Compared with an organic growth from zero starting to sell smartphones again next year, this is a massive jump back into the game, and as a Top 10 manufacturer.

I am sure, that if Nokia was given one brand to pick among all smartphone makers in the world other than Samsung or Microsoft (for their scale), the one they would most like to buy would be Sony. It was always (all the way back through the SonyEricsson years) the nearest thing to the N-Series there ever was in the market. Very often customers were making their last choice among say Symbian phone options in the 2000s decade, between a Nokia and a SonyEricsson whatever the exact price point and specs were. So this would not be a huge change from the types of (top-end) phones that Nokia used to make especially in its N-Series unit. And look at the MeeGo based N9 and its sisters, again, very similar to what the first Xperia Z was two years later. And with Xperia, Nokia would regain a global sales footprint and a premium sales and marketing process, so that would not be vastly different from what they'd do if they built it all again. And NOKIA - yes Nokia - would not make the marketing mistakes that Sony did. This unit would be profitable in a year, easily with Nokia running it. Then if Nokia wanted to return to the global stage 'only as a premium' phone brand, in the style of the iPhone rather than as a mass market brand this would be the fastest way to that. Or if they wanted to expand back to a global mass market juggernaut, its way way easier to do that from 3% and a global retail presence than from zero. And if you married Nokia brand with Xperia this would seem very appealing in very very many markets. Not to mention, the one brand the carrier community would most welcome back to handsets is the 'old' Nokia.

And the Reuters article says Sony is interested in either selling the unit or finding a partner. Well, that sounds a lot like SonyEricsson partnership that really didn't go that well. But you know what, Nokia was the nearest thing to Ericsson - except for the Japanese, Finns are FAR more like the Japanese than Swedes are, it would be less painful haha. And what about Nokia? They set up the joint venture NokiaSiemens Networks that existed for nearly a decade until Nokia bought Siemens out of that partnership. So Nokia - and specifically this 'Networking side' of Nokia that is left (as opposed to the Microsoftian handset side that was sold) is exactly the kind of entity that happily does joint ventures if that is the way forward. I would be surprised if both Sony and Nokia aren't exploring this possibility because the fit is that good. But considering how much Nokia wants to return to handsets, they would be quite happy to buy the Sony unit outright if Sony is seriously willing to sell. And no, the Sony brand would not be needed for one day...

Which would set up a really hilarious scenario. Microsoft selling fake Nokias as Lumia without Nokia branding. Nokia selling pretend-Nokias as the Xperia without Nokia branding. And Microsoft would still sell real Nokia dumbphones with the Nokia branding. How weird would that be this year...

And here's my open pledge. I love the Sony Xperia line. If anyone buys the unit, I will deliver one full day of my consulting for free any time between the deal announced officially, and one month after the deal has closed. As to Sony management, no, I can't give you that deal but I'll do a near equivalent. You guys can get 2 days of my consulting for the price of 1 day (its almost the same as 1 day for free haha) if you want to revive the unit. That offer stands up to the date that you announce the unit has been sold. And seriously Sony. This could be your iPhone, it should be your iPhone. Look at those specs and observe that Apple copied you and failed to match you. Why are you not creating the world's second biggest profits in handsets? Shame on you! You can do much better than this! Please do fix the proud decades-old Sony handset division, don't sell it now. That engineering is so good, why let the accountants ruin this opportunity. Put a real marketing person in charge. Go hire some American haha..

SAMSUNG WANTS TO BUY BLACKBERRY

So then the other bombshell. This I did not see coming at all. Yes, we knew Blackberry had been looking for buyers for quite a while, and thinking of maybe splitting itself up and sell a part or whatever. Now out of the blue, Samsung is in the news, according to Reuters, has already made an offer of 7.5B dollars to buy Blackberry. No, Sammy does not need 0.7% market share of a troubled QWERTY smartphone maker and yet another OS to manage Blackberry OS in addition to phones on Android and Tizen (and possibly even the return to Windows Phone haha). No. The reason Sammy wants BeeBee is the patents portfolio according to Reuters. And this is because of the ongoing legal fights with Apple that clearly show no sign of subsiding.

This is far further along than than the Sony rumor as there are both a buyer and seller and there is a price on the table. What do I think of this? First, the patents obviously make sense. They would be worth something like that level yes. And as BB has such a trivial market share, nobody would complain about this merger whereas if Samsung tried to buy some major player they might run into regulatory problems.

What would they do? Blackberry is not far from being profitable. Samsung would now offer synergies out of scale in sourcing, manufacturing, distribution and marketing. That alone should bring BB safely back into the black. And then Sammy has its semiconductor business that would further boost BB profitability. Samsung would gain its 'E Series' clone haha on that old 'lets follow Nokia strategy' strategy. Yes its on a different OS but over time Sammy would merge the BB OS project into Tizen. If Blackberry was wary of attempting a slider/folder Blackberry with both full-size touch screen and full wide QWERTY rather than the BB compromises we've seen, Samsung would have no fear to try that on a Blackberry flagship and this I've been writing for a long time, would be a big hit phone as old Nokia E7s and simliar phones are on their last legs now. So Sammy could actually revive the BB market share into something like 2% or so,

In the mobile services industry there would be a bonus. BBM .Blackberry Messenger was at one point the planet's biggest messaging OTT service and its still today a big anchor for Blackberry loyalty (but used on increasingly ancient phones). If Samsung bought Blackberry, they would also gain BBM. Imagine this as a competitive advantage. 365 million phones shipping per year with BBM on it. In two years BBM has 700 million active users which is Whatsapp's size today. And here is potentially a big loyalty key that would differentiate all Samsung devices on Android from rival brands and build Samsung loyalty. 7.5 Billion is a high price for such a tiny player but yeah, the patents portfolio is rich and worth it. And few in the 'West' know that Samsung actually sells 'Blackberry clones' with QWERTY keyboards (in modest numbers) similar to how Nokia had its E Series. So even that synergy is not as bizarre as it may seem on first sight. But now Samsung would gain a separate brand for its QWERTY line.

And then consider North America. Imagine a hybrid of the best of Galaxy with the best of Blackberry, running Android and including BBM and of course a physical QWERTY keyboard in a couple of form factors. Its kind of what we hoped Blackberry's 10 series would be but wasn't. And on Android the full Android apps portfolio rather than the modest BB offering. And brand it Blackberry. Blackberry on Android and manufactured by Samsung. But with top cameras like Sammys etc. This could be a big comeback vehicle for North America where once the very word smartphone was synonymous with Blackberry. This is not the need for Samsung which already is far larger in the US than BB, but for BB it could be a recovery that alone they cannot achieve with their modest resources. Yes I like this development and for Blackberry they would get the rich owner they deserve to have a revival. Alone they are now too small to ever be able to do it. And a Blackberry running on Android but still including BBM? That anyone would love to see,

(BTW shortly after I posted this, there is news that both Blackberry and Samsung have denied this news story. Pretty solid if both sides immediately deny it haha but still, the meeting might have happened and regardless of whether it did happen, this deal could happen eventually)

Yes its a different era now in the Bloodbath, the survival of the fittest stage, when companies start to exit and die and be sold and bought and merge. And when I wrote my year 2015 Smartphone Bloodbath preview on 2 January, I did say about both Sony and Blackberry that they may well be sold this year. Well, so far nothing has been announced, its only rumors at this stage but don't be surprised if there are mergers and acquisitions this year. The Bloodbath has entered that phase. So. Whose next? HTC? LG?

Comments

[TDC123]

"Why not fire the morons who got the unit into this MARKETING mess. The devices are beautiful and they beat the iPhone hands down. Go hire an aggressive marketing boss from a really competitive consumer giant like say Coca Cola or something and give the Xperia unit the marketing management it deserves."

If marketing is the problem, will good marketing fix the problems SONY has ? perhaps a good comparison would be to compare ti with other Android handset makers. How does Samsung handles its marketing? from data it seems they spend a huge amount of money. Does SONY have that money? How about in comparison to LG they have recently been doing better what did they change? In terms of specs SONY I suppose is better than them.

I think lastly how are SONY's carrier relations? Are they on the same pedestal as Samsung ? Samsung can probably pay enough to get their own shelf space in a carrier store, plus provide marketing commissions to sales staff. What can SONY do to improve this other than pay the price required?

[Tomi T Ahonen]

LeeBase

Stop that! You're not bringing that bullshit in. Not here, not ANYWHERE on the blog. You know perfectly well the actual facts about the disaster and despair that apps are. They make money for Apple and Google for their iTax and gTax. There is no economy beyond games. If you feel like re-arguing some apps matters, you know which blog entry welcomes that discussion. You WILL NOT POLLUTE this blog with that BULLSHIT here elsewhere. Do I make myself clear? Stop it right now. Feel free to mention word 'apps' even once and I'll delete the last 10 comments you have entered. For every time you mention the word I delete another 10. If I find two separate COMMENTS from you with the word App in it anywhere else than the Apps Economy blog from you from now on, I delete all of your comments ever posted here on CDB blog, from the beginning of time. Test me LeeBase. Test me. So help me I am mad about this. You are a better man than this.

Tomi Ahonen

[Tomi T Ahonen]

Hi TDC123 and Baron95

TDC123 - Samsung has spent masses of marketing money promoting Galaxy but achieved only modest success for their marketing dollar. I've discussed that before on this blog, you probably didn't read that. But I would not hold Samsung as the model for how it should be done. I think it is CLEAR by the facts, that if the specs of the iPhone 6 models can command 700 dollar and above prices, and Sony sold premium smartphones on those specs (actually exceeding them) on very large screen smartphones 2 years earlier, then Sony made a MASSIVE marketing blunder by not discovering that price level until Apple came and showed it to them. Bad marketing, pure and simple. Of the retail support and distribution, yeah Samsung has worked hard at it and spends a lot of money on it too. That is part of what you can do when you are biggest. But here I would contrast Sony to the next tier, players ranked from 3rd to 12th biggest - the Lenovos and Huaweis and LGs and HTCs. These are all in the same boat as Sony and Sony's carrier relations and global reach in distribution is on par or slightly better. Here is where Sony's strong brand and very strong tech specs and consistent endorsements by reviewers should give Sony a solid if modest profitability edge over that field. The second tier players not so much Samsung or Apple.

Baron95 - I think you misunderstood me or maybe I wasn't clear. I didn't for one moment mean to suggest that the Xperia line can steal customers from Apple. Nobody can do that. Once you go i, you stay i forever. No, I meant among the Android mob. There are plenty of players in Android who are profitable from Samsung to Huawei. Why is Sony not. You love the iPhone. Now, if you were not allowed to buy an iPhone and had to pick one Android phone, would you not look very seriously at one of the Xperias? At least as one of your finalists? And can you see that in a store among 'normal' consumers who aren't very well into the details of this industry, just on an in-store 5 minute sales comparison, the Xperia line is the closest rival to the iPhone ie if you want an Android phone but love Apple, the Xperia is the nearest thing to it. That was my point. Not that Xperia would steal iFans. That ain't gonna happen. But Sony should be the king of the Premium end of Android. Sony in Android should be what iPhone is to the whole industry. THAT is my point. Don't you agree Xperia is the best looking, best tech specs, best total brand, best build quality of the major global phone brands at the premium end.

Tomi Ahonen :-)

Ok

[Vikram]

Tomi still doesn't get that specs don't mean as much as he thinks. An example is that Apple's processors perform better even with fewer cores and less clock speed but the "specs" have higher numbers on the octacore Samsung exynos processors which perform worse and less reliably.

...or that the iPhone camera that Tomi previously called "Garbage" is considered the best overall even though it is only 8MP when there are phones with 15-20 megapixels and yet take worse photos because the processing software is not good.

...or that iOS has a much better ecosystem than Android and is a generally more stable and secure OS and they are now in the enterprise in a big way and in a way that Android is not - at least in western markets. So bespoke enterprise apps running iOS are becoming more and more common.

...or that people with money are going to buy Apple because they feel that it is a more premium brand.

Other than the few goofy people who buy Vertu phones - NO ONE is going to buy phones more expensive than iPhones in any meaningful volume. Certainly not running Android.

If I had to pick an Android phone I may pick Sony (or Moto). I would have jumped on a Nokia running Android in a second.

The mistake that Tomi makes is thinking that there is a large premium Android market when generally speaking Android isn't attractive for that end of the market when you now have iPhones with big screens. Most people will buy iPhones over Android at similar prices when the screens are the same size and you have a choice.

But no one is going to spend money on Android phones that cost more than the iPhone in meaningful volumes that Sony would like - when an iPhone is available. Not happening.

Sony is getting killed because there are now good looking phones on Android for $3-400 that run the same OS with 90% the build quality of Sony. Also the fact that Sony's marketing is crap hasn't helped matters.

[Tomi T Ahonen]

Hi Vikram

And how nice it is to talk to someone who clearly identifies themselves as a delusional iSheep. So nobody would ever pay for an Android phone more than an iPhone. Yeah. We could stop right here.

But lets take the issues you raise as you clearly do believe in them and some at least can be proven to be true or proven not to win the issue.

So specs about how many cores. I have NEVER listed the number of CPU cores as a 'competitive advantage' for any brand. Yes that is a specs issue and for most consumers it is totally irrelevant but Vikram, you brought it up, I never did. Sorry. You lose. You cannot accuse me of counting cores and claiming specs victories when NOWHERE on this blog can you find that claim. I understand you have a severe inferiority complex as your iPhone is deficient in its CPU, I know I know, its a regular pain point for Apple users all the way to the dawn of the Macintosh PC but sorry, I never once mentioned it. I agree with you, thats an utterly silly spec to mention but engineers love their specs and to talk about them. I never did.

You say the iPhone 8mp camera is better than some cameras that have 20mp sensors. That is definitely true. The megapixel count alone does not guarantee best pictures. Apple has most definitely the best 8mp camera of any smartphone with an 8mp sensor CURRENTLY but thats because the top camera brands in mobile have put their best effort of course to their flagships. And Apple definitely several times has beaten flagships with bigger camera sensors including Samsung's Galaxy. But sorry. Your main point is totally untrue that the 8mp camera on iPhone 6 is currently the best camera on a phone. Except at some Mac and Apple-oriented sites (and I can forgive you if those were the only ones you might have read haha), there are no tech reviewers of phones who claim the iPhone has the best camera currently. The Lumia 1020 and Xperia Z3 are regularly listed as better for their cameras, and where there are reviews of it, the Galaxy K Zoom totally wipes the floor with the iPhone 6. No, you are simply mistaken in your belief.

iOS ecosystem and apps, I totally agree with you that this is better on iPhones than Androids. Sure, you win this one. Go ahead and smile. It also means, for app developers the Nazi mentality at Apple of totally arbitrary rules of what gets and what doesn't get approved and all sorts of limitations that the free-er Android Play Store doesn't have but yes, you win. For the end-user, the iOS app store and ecosystem functions better. Not dramatically better and the average consumer will barely notice it but yes, we geeks, we notice it very well and I give this to you. It will not decide any non-Apple user to go one way or the other. It is not as dramatic as say Windows Phone vs iOS or Blackberry vs iOS. Android is now good enough so unless you are already indoctrinated to iReligion, the minor differences that iOS has over Android would only be noticed over time if someone used both, and the random new buyer today who isn't invested in either, will not think about this matter.

But then you mention enterprise apps. Sorry. Thats pure bullshit propaganda from Apple what you listed. The math totally does not work out and neither do any press or info. The facts are, that yes, iPhones are used in many large corporations for enterprise customers. But almost none of them are 'pure' iPhone users. The iPhones tend to be ONLY used in the marketing department which are of course all iSheep. The rest of the organization uses proper business phones like Blackberries. And as to the market. Its tiny. Who cares. In 2013 the total global enterprise market was 61 million phones according to IDC. That number is shrinking because of BYOD policies. Wanna grab all of that to the iPhone haha, be my guest. Its only 4% of the market this year. Who cares. Enterprise customers demand lots of specialized software support, and demand bulk discounts on the handsets. You want to dilute Apple profits by going after Blackberry's market, be my guest. No, the growth is in the consumer market and the SAME handsets sold to consumers generate bigger profits than to enterprises. I yield this market happily to you, but I can also promise you, the sales cycles are long and tedious and there is no way Apple gets 50% of that market in the next 5 years for iPhone. Thats not how enterprises buy their IT. The best phone is utterly irrelevant to that decision when legacy IT systems are concerned and the IT bosses start to count costs of adding a new system. Aint' happening. But I did not once mention ENTERPRISE markets for Xperia in this blog. Why would we care? For Sony to attempt enterprise for Xperia, a pure consumer phone, would be madness especially now that Sony has sold its Vaio PC unit. Madness.

On Apple more premium brand yes. You are totally correct on that. 18 years ago Apple was months from bankruptcy and Sony was the world's most valuable tech brand. Things change rather fast in this industry. Just because Apple is now valued, is no guarantee it still is 5 years from now and SONY has never been on the brink of bankruptcy. Its still today one of the most valued tech brands.

Then the silly argument 'nobody will buy phone more expensive than iPhone in meaningful numbers' Yeah. I hear you. I fully understand you somehow believe this. It is a mathematical certainty in a market of 2 billion phones sold per year that this will happen in the coming years sooner or later, that someone sells in the millions a phone that is more expensive than the iPhone. Its like looking at the Rolls Royce and saying nobody can sell cars more expensive than that haha. It is not only 'possible' it is CERTAIN that it will happen and that phone will run on Android. So Vikram, I know you were sincere in your comment and I know you read this blog often and comment frequently. Please trust me on this just enough - that I know we will cross this bridge soon. Maybe not this year but before 2020. Lets just 'park' this issue and return to it then when it happens and I promise you, if by 2020 it didn't happen, you may point me to this comment and ask me to admit you were right. If one of the brands, any one, sells a million or more phones at a price above the iPhone, then I am proven right and you are proven wrong, isn't it so. So lets just wait this one out. Currently I cannot prove it is possible because the last times it happened were with Symbian phones from Nokia haha and that is hardly a 'valid' current example.

On your confession you'd pick between Sony or Moto on Android, that is my ONLY point and you agree with it. I never said Xperia has any chance of capturing Apple customers. But think, Vikram. If for whatever reason you don't can't get an iPhone but you must buy an Android - lets say your wife works for Google and she insists. Or your employer allows BYOD phones on any OS except iOS because of some weird IT decision, or whatever, your carrier doesn't support that device or what. IF you can't have an iPhone and must buy Android - then yes, Sony Xperia currently is the nearest thing to the iPhone. We agree on this.

Then think about this. Apple iPhone makes MASSIVE profits. Samsung Galaxy makes modest profits. LG makes modest profits. Huawei makes modest profits. Xperia is on Android as is Galaxy, LG and Huawei. Why is Sony not MORE profitable than Galaxy, LG and Huawei (per handset, obviously, not in total profit where Samsung sells many more units). If Apple is the ultimate most desirable phone and thus most profitable. Shouldn't it then be 'child's play' for the NEAREST THING to an iPhone to be the next most profitable phone, even though, of COURSE far less profitable than Apple. This is the point. We agree Xperia is nearest thing to an iPhone at Android, and for any iPhone user, if forced to pick an Android, they'd take the Xperia. If that is the case, and Apple gets the biggest profit of any phone, then Xperia should - SHOULD - get the biggest profit among the ANDROID manufacturers. Isn't this so?

That is why I am so critical of Sony. They have fucked this up. They are a Ferrari-maker, nearest thing to a Porsche (ie iPhone). But as Porsche commands huge profits, and Ferrari sells in the same price bracket a car of similar performance, why would Ferrari report continuous losses. If the cars are good (haha and we could argue Ferraris have not always been good) then they should also be profitable. And clearly the Xperia series has had no antennagates or bendiegates or other recent problems. The phones are good.

As to Android rivals matching 90% of the Xperia. Yeah. Thats utterly true. That is also true of cars, the Skoda is the same car, almost, as the Volkswagen, as the Audi, from the same owners. But MARKETING has convinced us to pay more for VW and most for the Audi. Almost same car. But of course there are subtle technical distinctions and the brand. Come on, Huawei vs Sony which is the better brand. And the specs do give that 10% boost for Sony. They have been piss-poor at differentiating themselves IN THE MARKETING where in reality their engineers did a great job on the phones themselves. Even you admit its the phone you'd buy as long as Nokia isn't making proper Android phones haha. (same for me, except obviously the iPhone is not in the frame for me haha).

But yeah, we agree Sony marketing has been crap. If the phone is great but the marketing is crap, then shouldn't Sony CEO at least attemp to hire a competent VP to run Xperia with proper marketing (and pricing is part of marketing) rather than sell the unit..

Tomi Ahonen :-)

[John F.]

@Tomi

THIS IS THE PART I DON'T GET

Tomi, I understand your frustration with this issue, but it is an issue of years past, 90% of people care about functionality, convenience, durability and reliability. Assume 50% of the users of high end are women, 99% are not interested in tech.
Why people not interested in pro photography would need more than the camera found in the iPhone 6 or Samsung S5 ? i have seen the videos and photos on display, more than enough for the largest majority, in fact way too much already.

Asking yourself THIS IS THE PART I DON'T GET ... is your own answer, forget the specs! it is a thing of the past, apple sells you a life style that last you over 2 years and an ecosystem that delivers 99% of what you need, yes, if you have an audi 5 or a Lamborghini you better throw away your car and buy one compatible with Apple, but a large majority just don't care about specs, you know well that there is more than megapixels and cores.

Why the PC industry with a constant specs war, I give triple for half the price declined? because most people don't really care, thats why apple sell a lot of notebooks and desktops and became a top 5, most people want simplicity and an easy solution that works and needs no hands in to replace stuff or configure complicated stuff

Remember the timer in VCRs?

I can go on, and I know that some will rant that shit apple with lower specs will die in 2 quarters and people who prefer a mackbook are retards .. but it's becoming a bit like the auto industry, most people buy a car due to brand, trust, functionality, reliability, service, YES i know a person who was interested in the injectors and the accumulator performance but that is the 1%

Maybe is time that you factor buyer behavior into the equation, there are fantastics text out there.

[Maggan]

@Tomi

I think that for you to be able to have at least a chance of understanding Apple and the iPhone, and why people buy them, you have to put the "delusional isheep" analysis on pause.

No company becomes as big as Apple, with so many satisfied customers, due to the customers being "delusional isheep".

That moniker is only a shortcut for critics who don't understand, or even don't want to understand, what is going on. Drop that and approach the conundrum as if iPhone customers are just like any other customers, probably exactly the same as Android customers.

And "the Nazi mentality at Apple"? Really?

/Maggan

[Huber]

@All Apple fanatics:

Please understand that the MAC's market share in 2000 was miniscule. Only after the success of the iPod and iPhone, people started to buy more MACs, too.

_THIS_ is why Apple can make huge profits with their entire product line - all relies on the success of the iPhone.

This is not necessarily a bad thing for Apple, but they must be aware that the iPhone is the product which drives their other products.

[Huber]

In my opinion Sony has made one huge mistake:

Every business area has to consider Sony's other areas:

- TVs were equiped with Sony's displays only. This means when Sony's displays were not competitive, their TVs were not competitive, too.

- Sony Music and movies: Sony's DVD players and Blueray players are the worst at playing illegal copies of content. Perhaps Sony thinks that this way they make more money with their content, but ion the real life it just means selling less players

- You need a Sony phone/ tablet to connect to the Playstation. You get SOny's Walkman app only on Sony devices. Why don't they release their apps for all Android devices? Do they really think they sell more phones/ tablets this way?

Samsung has a completely different approach: Every business unit is independent.

This means that Samsung can release smartphones with Qualcom SoCs, even though Samsung has their own Exynos-SoC.

If Samsung e.g. is behind in display technology, Samsung's TVs and Smartphones can be shipped with displays from a competitor.

This way, if one business unit falls behind it does not affect other business units.

I think that this is a much more sensible approach Sony _HAS_ to take over if they want to stay in business.

Simply let the Playstation guys make Android apps which run on all devices. The same goes for Sony Music and movies. Release Blueray players which support all existing formats.

And the most important point was already adressed by Tomi: Fire your marketing department!

I own the Sony Xperia Z2 tablet, it is a fantastic device. It is even developer-friendly, so you can install what you want on it, even a different OS (I am using CM12, which is Android 5.0-based).

But I bought this tablet because it was exactly what I was looking for. I have never seen any marketing efforts from Sony to push this product (apart from sponsoring the soccer world championship, which is not enough).

So I never would have considered the Sony tablet if I wouldn't have searched for such a tablet myself - when you enter a store here in Germany, you see mostly iPads and Samsung tablets. Sony is just "one of the other brands".

This is clearly a failure in marketing.

[Maggan]

@Huber

Again, "Apple fanatics". Sigh.

Even so, the Mac resurgence is indeed tied to the success of other Apple products. Most Apple observers are very much aware of that. But it really started with the iMac, and then sped up with the iPod.

For a long time, the iPod was the driver of the Mac growth. Now, the iPhone, and to some extent the iPad, has taken that role.

And even though the Mac has gained market share, I would argue that it still is miniscule. At a healthy level for Apple, but still very small.

/Maggan

[Tomi T Ahonen]

LeeBase

It took me one click. Do you really want to fuck with me on MY blog? If you post ONE comment that is to my mind the slightest bit nasty in any way, you will be the next person forever blocked from my life including this blog, my TW feed and all other ways removed. This is your last warning. Go ahead make my day. Nobody fucks with me on my blog.

I suggest LeeBase you stay away for 24 hours and don't pester me. Then think VERY carefully how you post comments in the near future. You know what the rules are. If I warn someone, I am ALWAYS serious, you've seen a handful visitors forever banned from this blog and my life. I'm way too old for that shit that you just pulled.

Shame about the comments. Are you still in the mood to test me. Me? On MY blog where I've answered you patiently for so long.

Tomi

[Huber]

@Maggan:

The Mac's market share has not only grown the last 10 years, but the iPod/ iPhone also lead to _CONSUMERS_ buying Macs. 10 years ago Macs were bought mostly by _PROFESSIONALS_ (for music, DTP etc.).

I worked at an outlet in 1999, where the iMac promoters whined that almost nobody wants to buy their stuff because of the software situation.

So no, without the iPod/ iPhone things would be _VERY_ different today.

And Apple is on its way to its niche again - just the day before yesterday I talked to a neigbour (she is also an Apple fanatic). She has interest in the iPhone 6, but once she saw that the 16GB version costs €700 and the 64GB version cannot be bought for less than €1000, she stayed away for the time being.

Because even as a die-hard Apple fan she thinks that a €700 device with 16GB is a joke as well as the 64GB version for €1000.

Note that she recently left her subsidized contract and uses a non-subsidized SIM card for €10/month now - this gives her 300 minutes of phone calls or 300 SMS and 300MB data traffic, which is enough for her.

And I can tell you first hand that suddenly the Moto G for €180 looks much more attractive to her.

[Maggan]

@Huber

The software situation in 1999 (I'm a Mac user since 1986, both as a professional and as a consumer, worked at a retailer in 1994) is one of the reasons there is so much focus on the app store catalog from Apple today, I think. At the time, one of the most common reason for not buying a Mac was that Windows had so much more software.

To me, it seems the iMac was the start of the change. That and the Internet. Without the Internet, the Mac would not have gained a new lease of life, even with Steve Jobs at the helm.

And you will note if you reread my comment, that I said that iPod drove Mac growth. And now iPhone. But the iMac was the time it started to turn around. It still took a long while, but the iMac established Apple as a relevant player again. From that, Apple was able to build further with the iPod and now the iPhone.

/Maggan

[Eccella]

Talking with Sony Marketing over 12 years ago, I asked the question why they did not leverage their enormous content catalogue and Walkman sub brand with their phones. The answer came back that they were separate divisions and therefore not relevant to Sony or Sony Ericsson. If ever Tomi stated a true fact, it is that Sony Marketing department should be "re-deployed" it's that. Sony with their content in 2003 had all the cards, well before Mr Jobs realised that he needed content and an eco-system to build a successful business. I still believe that it was an accident that i-Tunes was such success. The content owners , including Sony, simply thought that they could manage this niche Personal Computer vendor. Tails wagging dog , indeed tail becoming massive snake and devouring Dog!

[Tomi T Ahonen]

Hi John F and Maggan

John F - first off. Answer me this. If you could not have an iPhone and had to pick an Android phone instead, which would you pick today. If its not the Xperia, would the Xperia be among your finalists.

Second on the specs argument. I am not suggesting that everyone behaves like that. I am not suggesting that the majority behave like that. I am not suggesting that the iPhone is not the most desirable phone. I am not suggesting that the issues you listed are not important or perhaps, more important. BUT. Listen to me. ALL recent consumer surveys that have been published of what people want when buying a new phone have listed the screen size as among the top if not first choice and all have listed the camera among top issues. ALL OF THEM. People are not like you or me. Normal people, they do want a better screen than on their last phone. And instead of the 5mp or 3mp camera on their older phone, they now want an 8mp or 13mp or 20mp or more. Not all will then end up buying the 'best' on that criterion if other things matter more or the overall package trumps it, but that is what consumer surveys CONSISTENTLY tell us. And the app stores and number of apps and the OS that is in the phone comes always behind screen size, and often behind camera.

I am not at all disagreeing, that many customers have fallen in love with the iWay of doing tech, and good for Apple they did revolutionize the user interface - as I promised they would when they would enter the phone biz even before the iPhone was even announced - but that is not all people. That is not even the majority of smartphone buyers. Now. I am not arguing that Sony should create a new radical phone on some 'obsolete' idea. I am arguing that on these issues like screen size and camera - issues that truly decide purchase behavior more than OS or app stores or usability - on these issues SONY on its XPERIA flagships had managed to leapfrog Apple iPhone and do the EXACT right thing, that Apple later copied (better screens, better cameras) and do it BEFORE Apple iPhone did. Since this is a fact, that has been done, NOW the issue becomes why is Sony selling at a loss and Apple still selling at phenomenal profits. This is not a bad design matter. This is not a bad customer research matter. The Sony designers were brilliantly anticipating exactly what Apple too would soon do, except Sony did it earlier and better. Why can Apple make a huge profit on THESE changes to the iPhone (the usability did not radically improve from iPhone 5 to iPhone 6 etc) and meanwhile Sony can't produce the best profits out of the Android family. This is what is a marketing mistake, not a bad design or undesirable brand or bad analysis of why consumers buy phones. Androids outsell iPhones and by an INCREASING margin. So more people are willing to pay for Android phones that are so inferior, than iPhones. So the best of the Androids, ahead of iPhone on specs, why is Apple profitable, Samsung profitable, LG profitable, Huawei profitable but Sony several quarters now unprofitable. That is not bad phones, that is bad marketing. Do you get my point?

And John like I wrote to Vikram earlier, I am not suggesting that Sony Xperia can convert iPhone users to Android. That aint happenin. I am saying of the Android family, Sony Xperia should be best profits because it is nearest to the iPhone. If Android is the same for all, Sony has better brand, better design, better specs, better looks, better materials, better build quality etc. Among the Android family, the Xperia is the nearest thing to an iPhone, not Galaxy or Huawei or HTC or Lenovo...

Maggan - haha yeah, that was fair. But also, I am not the only one talking of iSheep and of arbitrary rules at the App Store and the reality distortion field of Apple. I didn't invent these concepts. But the moment someone like Vikram earlier suggested it is impossible for an Android device to achieve price levels above iPhone and sell in volume, that is of course a delusional position. Its as silly as saying that Porsche can never make a car faster than a Ferrari. Except in his argument's case its more like all car makers in the world cannot make a car faster than Ferrari as essentially all other smarthpone makers are now on Android. So I had to tease Vikram a little bit and we know he's a loyal Apple fan and he's been here for a long time, and I did answer his comment also fully.

I think you've been here long enough that you know I greatly admire Apple and keep reminding their customer loyalty is by far the best and its essentially impossible to ween iCustomers away from iReligion, not just on iPhones but any iGadgets from iPads to iPods to Mac PCs. And as long as Apple continues to keep those loyal Apple fans and customers satisfied, doing things with the user convenience and simpicity at the top of all products designs and services, they will retain the loyalty and can command a huge profit premium on the Apple brand. But again, I am not the first to call the Apple fanatics a cult-like tribe. Its bordering on religious fanaticism. And then if its a cult, the facts start to become osbcurred. And the facts are, that the iPhone has no leadership issues for this industry whatsoever since the multi-touch touch screen of the original iPhone featurephones of 2007. Not one item of real innovation or leadership. Apple is a follower and iPhones are slow adapters of tech that others have pioneered and figured out will it work or not. Some like that. Not everyone. And many who own iPhones think they are the best phones in the world because they have no modern frame of reference. Especially the best market for Apple, the USA. There smarthpones appeared late, were mostly enterprise-oriented like Blackberries and Palms, and none of the world-leading flagships bothered to launch in America early and Americans were blissfully unaware of the top phones. So American consumers have acquired a totally unrealistic image of some supposed Apple leadership in mobile. It makes sense to them because they have witnessed it in their own market, there were no real rivals and their domestic press was in love with Steve Jobs and drank in all that cool-aid.

Now, some people love a fully automatic car, automatic transmission etc. Others want more control of their cars and want a manual transmission or one that has manual override over the automatic. Guess which country has the highest preference for automatics? Yeah, the so-called 'lazy' Americans. The iPhone is automatic transmission for phones. The easiest simplest to use but limited in so many ways from what essentially all others do (or used to do). Like no support of Java (worlds largest installed base for apps) or no support of Flash (was one of the largest standards for video) or no support of microSD cards etc. The app store is the most restrictive. Apple then does all those nasty things like suddenly without warning installing music to everybody's phones (U2) or removing without warning and permission music files suddenly, etc. Some people love it when everything is automatic and it always works. Fine. I get it. A 3 year old who hasn't learned to read can use an iPhone. A 103 year old whose eyes are too weak to read can still use an iPhone. Neither would ever have a chance with 2007 era smartphones from Nokia or SonyEricsson or Motorola or Samsung. Apple is excellent at that, making things easy - and simple - and removing the ability for consumers to do their own modifications - and preventing industry-standard tech from being used.

There are PLENTY of smart people who hate that. This is the exact same philosophy that the Macintosh had from its beginning. And the Mac which now is 30 years of age, has never managed to breach 10% market share of the PC industry. Some people love the Apple Way. They will become - sorry - iSheep - and they will be supremely happy and would hate Windows or Android or Blackberry or Tizen or whatnot. All Apple products are not just intuitive, its the 'same' logic across them all. Once you learn the Apple way, you want it in all you tech. So if an iPhone user has a Galaxy Gear smartwatch today and finds utility out of it, that person can't wait for the Apple Watch to be released. Just like how iPod and Mac users drooled waiting for the first iPhone.

I get it, I really do. And I love Apple and I admire them and I wish them all the best. But I am not delusional and I live by the facts. The love of Apple can cross over to delusion. That is when I make my points very strongly. It is a fact that of all the changes Apple did going from iPhone 5 to iPhone 6, all those changes were done by Sony on the Xperia, every single one of them, before Apple did it, and done as well or BETTER before the iPhone 6 series came out. Who is the leader, who is the follower? I deal with the facts. Then of course, Apple being Apple, they managed to hoodwink the global handset buying public that it was now Apple brilliance that should be celebrated, years after this tech had already been introduced by others. That is stretching the truth - Apple has to do it, they would see their share price fall hard if the illusion of Apple leadership were to vanish. I am not here to help prop up Apple's share price. I am here to tell the truth as I see it, about this industry. At some point the reality will set in, just like with the Mac, that no, iPhones are 'never' bleeding edge tech, other brands are the trailblazers - but Apple will argue, that is a good thing as Apple users will get only the tech that is worthwhile, and when it is mature enough. This is the mantra at Apple, to make things easy. The first iteration of new tech is not always easy. It can be very messy.

So Apple take their time. And the loyal Apple customers will always PREFER that. Please Apple, we love you, do not ever change, make sure every generation every product is the best in its class - for usability. That is what Steve Jobs taught Apple management before he died. As long as they do that, they will retain their loyal core. But the silly denial of reality, that is like Fox News and that will change. When the reality really sets in, that Samsungs and Sonys and several other brands have more advanced tech then those customers who were tricked into buying Apple because they thought they were buying the best, they will leave. But they weren't the core that Apple wanted anyway. That will happen in the US market the hardest because Apple's market share is the best there. So there are many current iPhone owners who are in that category, thinking they had bought the top-of-the-line and will become disillusioned. The Samsung comparison ad campaign is partly targeting those customers of Apple. Did you know that iPhone 6 Plus is a meek copy of Galaxy Note from years ago.. that stings if you are not at Apple because its the easiest to use, but you were there because you thought that Apple made the best smartphone or that Apple was the industry leader (as in leader in introducing the latest tech).

Haha that was quite a rant.. But yeah, do remind me when I go overboard on the iSheep etc stuff. But yeah. I don't think its a bad thing, not for Apple, not for the consumers who love the Apple Way and not for the industry. I also know that the type of customer is a small minority of all consumers who can either afford the Apple premiums or who would want it that way. So as you've seen me write many times, the natural market share for iPhone will settle into the high single digits or maybe hit 10%. Not much more than that when all phones are smartphones from year 2019. What Apple has to hope and pray, is that nobody else muscles in on their action - best user interfaces and easiest phones to use. That could be catastrophic. And who was best at UI before the iPhone? Nokia. What was the only smartphone up to now often rated better than its contemporary iPhone rival? Nokia N9. Who is coming back to smartphones next year? Nokia. If there was one handset maker who could challenge Apple on this, the only one is Nokia. And you betcha they are itching to give it another try after how brilliant the N9 on Meego was, but idiot Elop didn't let that project fly.

Tomi Ahonen :-)

[Vikram]

Tomi, I'm up for that bet! But 1M phones on a model that sells at a higher price than iPhones may be too small a number to be considered "meaningful" in a market of over 2B handsets a year by 2020.

I would say it has to be over 10M since Apple sells over over 180M iPhones a year now. If it sells more than 10M then I lose. If it sells less than 1M then you lose.

And if it sells between 1-10M then we argue about who was right ;)

Call me an iSheep if you'd like (am not, have Android phones too but iPhones and iOS are better) but the facts will bear me proven right in the next few years. Just like with Macs, Apple sells over 90% of the over $1000 consumer PC's (in the US - don't have worldwide numbers), Apple will sell an even higher percent of the premium phones. The PC market is an apt comparison because it became a race to the bottom in price. Few people are buying the expensive Samsung S9's (which is why Samsung got out of the PC market in Europe) or upper tier Vaio's (which is why Sony is facing the same issue). If you want a premium PC and you have a choice - you buy a Mac.(Not everybody - some people have no choice, a few prefer Windows, and gamers with high performance rigs will choose a custom Windows PC). But you will look for a lower price PC vs a higher price PC because they both run Windows. You may want slightly more ram, thinner profile etc... but a medium priced PC will do 90+% of what a more expensive one will do. Same with phones.

You may find it hard to believe this, but people won't buy expensive Android phones on a price at par or higher with the iPhone now that it has a big screen. People will buy Android phones because they are cheaper. There will always be a few people who buy the highest end Android phones but they are very few people - mostly a few people who like the complete flexibility of Android and like to tinker with the platform. Most people with money who can buy an iPhone will do so over Android. This is already happening in the wealthier countries where people have money like the US, Australia, UK and Canada and wealthier parts of Europe now that the big screen iPhones are coming out. The only space for Android in these countries will be for cheaper phones.
And an important factor isn't just the app ecosystem but the Apple ecosystem - iPads, Macs, and the new Apple TV that will also help run your house that will come soon. Add in Apple Pay, which the banks are advertising on Apple's behalf as they are fighting for customers, and it clearly ties you into Apple's ecosystem - for those that have money. Add in the upcoming Apple Watch which will blow away Android smart-watches and it is clear that the iPhone is strengthened because of all of these Apple ecosystem factors which Android doesn't have - except in parts and in a generally inferior way.

As an aside for Android watches that some of the premium watchmakers are looking to develop, they will be dead on arrival since you generally need to pair them with a smartphone to make them properly useful and integrated (I know that things like the Samsung Gear doesn't have to technically be paired but it is much better when it is for many reasons) and people who buy such a watch, say from Tag Heuer won't be buying Android phones to make them work. Those people buy iPhones. Again, there are exceptions to every rule, and many of them may work at Google ;) or be like Tomi but they are a very small minority.

I think that you and I generally agree on Sony. Their problem was that they don't have any cheap phones and are competing against all the other top phones for Android with a worse marketing effort. Also I only have really liked their Xperia line since the last year. Before that I haven't been that interested but now they have beautiful phones. The problem is that HTC makes nice phones, Xiaomi makes nice phones and so does Samsung (I can't stand them but they do have good specs) and Moto X is also a great phone - as well as LG's phone etc...

Having said that Sony's are more beautiful for sure but I really don't see them anywhere so there is some sort of marketing and distribution problem.

[Huber]

@Vikram:

"You may find it hard to believe this, but people won't buy expensive Android phones on a price at par or higher with the iPhone now that it has a big screen."

This is wrong. I personally bought devices which were _MORE_ expensive than Apple's offers, e.g. the original Samsung Galaxy Tab in 2010.

And I do know many people who act this way. This is because Apple ignores industry standards and want to force you to buy _EVERYTHING_ from Apple, along with their stupid functional restrictions.

There are a lot of customers who don't buy Apple because of this. If you honestly believe that everybody who has the money buys Apple is delusional.

[tuuve]

"No company becomes as big as Apple, with so many satisfied customers, due to the customers being "delusional isheep"."

This is very true. Talking about iSheep or similar things simply means the same as "I don't understand why people choose Apple over some other brand" and nothing else. It's sad to see how people don't get this.

"Drop that and approach the conundrum as if iPhone customers are just like any other customers, probably exactly the same as Android customers."

This is also very true. People paying for Apple branded products expect quality and value for the money. Brands are important because people will know what to expect when they buy a product manufactured by a familiar brand. The brand loyalty Apple gets is coming from there. The product doesn't have to be absolutely best if it's good enough and the risks of changing brands are not present.

People hate to take that kind of risk if they want to get a tool they need and the tool they already know is good enough. Why would someone use time and effort into comparing several competing brands if it's not really needed?

[Tomi T Ahonen]

Vikram

Haha fair point about the scale, but then its an unfair challenge on another level. 10 million is 1% of all smartphones today. For one brand to find that many customers at that price point and milk that segment before rivals come in, that is unlikely. Would you give me this - if there is a family of Android phones that total 10 million across multiple brands - and their price is above the current base price of the top price iPhone - then I win. Almost no current Android manufacturer except Samsung could afford to take that production risk to introduce a new phone at the top of the price pyramid and commit to a volume of 10 million units. The bottom tier of Top 10 smartphone makers are selling only a bit above the 40 million level.

Now to your main argument, that now that iPhone 6 has solved the large screen issue, most won't buy top-end Androids. I think you are confusing market shift with market decline. So Android is growing faster than iPhone (has been from the start). There are more new buyers of Androids per year than there are new buyers of iPhones. The gap between the two is expanding in Android's favor. That growth is happening at the bottom of the price pyramid in the below $100 phone price level. So if you look at the mix of total Android phones sold and say two years ago 1/3 was a premium price phone, today 1/5 is that, or something like that. If the market had not grown in size, then yes, premium segment in Android was shrinking. But as Android has grown, the premium segment has stayed about the same size while the bottom of the price pyramid has grown very strongly. Meanwhile, while iPhone has not grown as fast as the industry, it is growing FASTER than the other premium phone rivals. But here the mix is something like 60/40 in Apple's favor now when it was about 50/50 two years ago. Not a collapse of other brands but Apple keeps gaining there.

At the very least, your argument doesn't have evidence yet. Ok, you said after iPhone 6 release so maybe we'll see it next year. Here is a counter-argument. The world's most expensive (mass market ie not jewelry) phones were made by Nokia. They sold phones more expensive than the current top iPhones up to Elop's reign. Nokia vastly outsold the iPhone and Nokia did this profitably and the gap between iPhone and Nokia's lead was expanding ie Nokia was pulling away not Apple catching Nokia. At that time it was not unusual to find premium phones like Nokia E90 Communicator costing about 1,000 dollars vs 600 dollars for the iPhone - and the E90 was far superior to the iPhone on just about every aspect including larger screen. Nokia was not afraid to offer very many varied form factors to suit different customer needs and segments and regional preferences. Similar to what Samsung is doing now, but Nokia did this far more and also at the top-end flagships, like the E7 'Communicator' the last phone that Elop didn't mess with, launched January 2011 and costing 700 dollars.

The other phone maker known for its own iconic styling was Blackberry. Blackberry sold more smartphones in 2010 than the iPhone. At that time it was not a big risk to attempt different form factors and price points because so many existed and the iPhone wasn't anywhere near the most expensive phone being sold. Then came Elop with his iPhone-envy, who made the Lumia series a clone of the iPhone, only slab form factors and forbidding any deviations from that form factor even as Nokia engineers produced other design concepts. And Elop priced the first Lumias below the iPhone price (with deliberately modest specs, below those of the past Nokia flagship). Then as he Osborned the Symbian line and MeeGo line, those smartphones saw their prices collapse. Nokia - who had offered phones far more expensive than iPhones and phones of varying designs, suddenly quit doing that. Not because market research suggested there was no market. Because the CEO was a moron. But now nobody was 'pointing the way' that there EXISTED a market of real size at prices above the iPhone. And the new Nokia CEO in his idiotic Burning Platforms memo sang the praises of a supposed iPhone leadership, and then his Lumia phones are all iPhone clones with modest specs. All in the indsutry were spooked - why - because EVERYBODY knew that Nokia had the industry's best consumer research and insights. Nokia had to know something that the others hadn't yet found out. So SonyEricsson and Motorola - the two high-price brand rivals - also stopped selling phones at high prices.

And everybody was mimicking now Nokia mimicking iPhone. All flagships start to resemble each other. Then Blackberry tanked. Suddenly the last remaining alternate form factor for flagship phones almost died. Now nobody dares to release QWERTY based flagships either. Yes, there is clearly a demand for QWERTY phones but they only satisfy that demand at low-end (often feature)phones.

We have arrived quite accidentially to a point, where all manufacturers are making near-identical flagships not because this is the only way people want phones, but because Nokia and Blackberry (BB 10) steered the industry to this point. This is as if every car maker suddenly decides that the only luxury car ('flagship') can be an SUV. Yes you'll get sedans in midrange and cheap cars, yes you can get sportscars in mid and cheap prices but if you want a luxury car, only SUV form factors will be available. From Rolls Royce and Mercedes and Cadillac and Ferrari and Porsche and Lamborghini and .. you get my point. Humans are not like that. Some will want a sports car, looking like an Aston Martin or Ferrari, and someone will suddenly be brave and test that theory (again, because it was like that once). Someone else doesn't want the tall form of an SUV, they want a low-limousine like normal Mercedes and BMW and Audi might sell today, and again, one manufacturer trials it and has a huge hit car, and then most of the others will rapidly return to offering luxury cars in several form factors, not just SUV's.

This happened by the way in the car industry in the 1980s. The oil crisis of 1979 caused long lines at petrol pumps around the world and fuel economy became the burning desire, and the Volkswagen Golf was the best mileage car and everybody rushed to make clones of the Golf. For a while the whole car industry seemed to only make Golf-clones. This lasted for a couple of years, then a few brave car makers tested old concepts, I wonder if there is a market for convertibles. Saab did the 900 convertible and it was a smash hit. Chrysler tested the concept of the minivan and it was a roaring success. Audi introduced the 'jellybean' rounded edge car the Audi 100 (in the USA sold as the Audi 5000) and suddenly you could do large limousines again with reasonable fuel economy. All these cars were instantly copied by rivals and the car industry returned to diversity.

I am convinced we are at that kind of moment now. Every time that I post about a slider/folder 'Communicator' style flagship phone with a 5 inch touch screen and full QWERTY physical keyboard slider like the Nokia E7 and Nokia N950 - I get a big enthusiastic response at Twitter from random followers who say they'd buy it in an instant. I am not suggesting such a form factor would outsell the iPhone or that it would outsell pure touch-screens. I do mean, that there is a big unmet demand of a proven design concept, that used to sell in umpteen millions per year, that Nokia idiotically stopped making and would be an instant hit again. Someone will try that theory sooner or later because so many people talk so fondly of those phones. That handset maker will have a 'retro' hit in the way as the Saab 900 Covertible, the Chrysler Minivan and the Audi 100 were bestseller prodcuts and pushed their brands to huge profits for years riding those design concepts that were only rehashes of the past.

Now the same thing will happen with the price points. If every flagship phone looks like the iPhone and is priced about the same and has roughly similar specs, then consumers feel there is not much differentiation and at that price they will then want the best brand (Apple). But Apple cannot afford to do 5 flagshhips per year or 10. So if Samsung, Sony, Lenovo, HTC and Xiaomi each goes into a DIFFERENT direction, then Apple can't match all. This is again basic marketing. Today because of the sheep mentality of panic that hit the industry when NOKIA suddenly produces iPhone-clones only - and Nokia had to know something the rest did not - for a while yes, all followed. That is supremely silly. So someone will test the waters. And they will discover that yes, there is plenty of 'air' to explore above the 750 dollar price level of the iPhone 6 Plus. This is not the core mass market premium customer. It will initially definitely be a geeky segment. But there is plenty of opporuntity here. Take battery life. We all hate that the battery runs out so fast. When will one major brand release its flagship with a distincitive look, not the thinnest phone made but a proper flagship (5.5 inch screen, 20mp camera etc) with a battery that lasts for 2 days watching video 24 hours a day haha... And then price it at 900 dollars. It will sell. Will it sell 500,000 units or 1 million or 5 million, who knows, but it will sell and now the price ceiling is busted. Or someone does the next super cameraphone like the Galaxy K Zoom or the Lumia 1020 before it or the 808 Pureview before that. But 808PV was on the dead Symbian OS. L1020 is Windows Phone and on retail boycott. K Zoom is by whatever bizarre lunacy-logic by Samsung NOT SOLD in most markets. Someone will do the next best cameraphone and do it on Android and sell it globally. It will win all cameraphone comparisons and as best cameraphone flagship it will easily match the 4 million per quarter (16M per year) level that Nokia's N8 did as the last cameraphone-flagship that wasn't crippled by market conditions around it. This could be an Xperia or Galaxy or perhaps the rumored Nikon smartphone. It will sell huge. And if that smartphone maker is smart, knowing there IS NO competition, they will price it at 999 dollars. Would I have paid 999 dollars for the K Zoom last year? Yes I would have. Wanna know what it cost? 450 dollars only (vs contemporary iPhone and Galaxy S at 600 dollars). There is absolutely no rival to the K Zoom that is flagship specs all around but by far the best camera ever on a phone. Why wasn't it priced at 999 dollars and sold in every market? Samsung are clueless about marketing.

Which brings me to my summary. The current 600 dollar / 750 dollar supposed price ceiling is a total illusion that was the result of a coincidence of 2 of the 3 largest smartphone makers suddenly collapsing and the industry picking up the wrong lesson about why. If there was a real 600 dollar price barrier then the iPhone 6 Plus would not see any sales at 750 dollars. And obviously now the rival brands will rush to bring out 750 dollar 'super' flagships of their own. And the myth will have been busted. Some will be brave to go beyond 750 dollars and that is when the dam breaks. And then with far more price-revenue expected of those phones, the costs of the components can go up too, allowing radical tech to be incorporated further pushing those brands into differentiation from Apple. Like Audi 100 or Saab 900 convertible is a radical departure from Volkswagen Golf and at far higher prices and profits.

I know in my bones this will happen. I have no proof of it. I will be reporting when it happens and I know you'll be around to read that blog haha.. Lets discuss the issue again then.

A few quick commments. Yes, Apple is very good at tying people ever more deeply into their ecosystem, the wallet is just the latest example. You know where they got all that from? NTT DoCoMo of Japan did that 10 years before. Almost everything on the services side that Apple has done starting from the App Store is copied from NTT DoCoMo but in a far more greedy way (Apple takes 30% of every dollar; NTT DoCoMo only takes 9 cents out of every dollar).

Now the last point, you see HTC, Xiaomi, Samsung, Moto and LG making very similar phones to Xperia but you admit Xperia is very desirable and you seem to prefer Sony over the others even if its very close. That is my point. All run on Android. If so, and if Xperia is the closest thing to an iPhone on the Android side of the fence, then why can't Sony make bigger profits per phone than LG or Samsung or HTC? Its a problem in marketing! As is the fact that you aren't seeing Xperias where you are (distribution problems).

Tomi Ahonen :-)

[Vikram]

Tomi, I'll agree to multiple brands if you use 1% of smartphones as the standard in any given year because 10M maybe 1% now, by 2020 it will be maybe .5% of all smartphones.

So if you can show that by 2020 there will be more than 1% of all smartphones that sell at a higher baseline price than the baseline highest priced iPhone (in this year the iPhone 6+ at $750 USD), then you win the bet. But the territory pricing should be basically equivalent, ie. comparing crazy Brazilian or Russian pricing to the US pricing.

Combining all brands gives you an advantage but I think that I will be right still ;)

Having said that, I will stipulate that you are the best forecaster of numbers in the business (I just disagree with some of your commentary - especially about Nokia ;) )

I think that you make a good point about battery life. Maybe someone will come out with a beast of a phone with crazy battery and a amazing camera that doesn't care about weight or thickness and that may impress a certain segment of the population. That would differentiate from the iPhone and I am sure that there maybe people who buy it. But the issue is software- image processing, photo-capture speed, etc... where the iPhone has the advantages. That is where Android fails in comparison. There is a reason why most of the top photographers use iPhones if they are taking cameraphone pictures. This doesn't include the reason of certain very good specialty photo apps that are exclusive to iOS.

But battery is a great point and maybe a true DSLR camera would separate it from an iPhone. I don't know, I'd have to see it. The K Zoom's problem is that it is interesting but super ugly in my opinion. That's always been the issue with Samsung's design.

It's possible that someone will come out with a 6-6.5 inch phone with an incredible screen, 3 day battery life and a true DSLR camera and there are enough brands that sell similar phones that sell in the right volume...

...we'll check back in 2020 ;)