Quick Posts 4 - Other News in the Smartphone Bloodbath: Samsung, LG, Sony, Xiaomi

Then lets do some other short news items as the Q1 financial results season is upon us and we'll start to see smartphone Bloodbath results coming in.

Samsung yes the S6 and Edge seem to have had a strong initial reception. But as I warned, there were serious design flaws that will turn away some LOYAL Samsung owners, with abandoning the waterproofing, removable battery and MicroSD in the S6 series that the S5 used to have. Some early news suggest that LG and Sony Xperia are seeing good periods but the S6 has barely started to ship. What we did get, was the first sign of real trouble at the mill. News from South Korea, Samsung's home market report that actual end-user sales are severely below the enthusiastic early orders by retail channels (exactly as I warned). Here is the story as reported by Mobile Burn which reports that actual sales are only 67% of the level of the pre-orders (but the article does not quote any analyst sources for their data). 

Oh, an interesting tidbit from Japan. Samsung the brand is so much seen as a 'discount' brand in Japan, ie inferior to any Japanese domestic brands, that Samsung has now removed the Samsung name from its new Galaxy phones sold in Japan and markets them only as Galaxy. Haha. Interesting. Are the Japanese so gullible they'd think Galaxy is not Korean and somehow think it is Japanese?

LG has teased its flagship the G4 and tellingly, is raising its price above that of the S6. If its a better phone, why not charge a higher price. LG has been profitable past several quarters and getting its mojo back. So yeah, as I've argued on this blog for quite a while, there is plenty of pricing space above the imaginary iCeiling of 600 dollars unsubsidised price. LG is now going there. Good for them. I am expecting a couple of good quarters for the LIfe's Good guys.

Meanwhile the other Galaxy-beater is of course Sony Xperia Z4. Would they abandon waterproofing or microSD card slot as some feared, right as the opportunity arose with Samsung's silly design changes? No. The Xperia Z4 is a very mild, mostly internal specs upgrade vs the Z3 but yes, critically, it keeps waterproofing and the microSD slot. Also - as I suggested they should do - they are raising hte price of their flagship. So next two or three quarters, Sony should see some healthy numbers with their Xperia unit. And if LG and Xperia find growth in Android flagship buyers, that is the market outside of China and the victim will have been .. Galaxy. Mark my words, the S6 decision to abandon waterproofing, removable battery and microSD slot will be seen as an 'obvious' mistake that Samsung will correct soon - they are smart people in Gangnam and nobody reacts as fast as the Koreans. Balli-balli.

Xiaomi sales have now stopped explosive growth (as I predicted, it was a spike of the latest cool thing). It can't grow at those rates abroad as Xiaomi tries to quickly move internationally. Nothing new here to our readers but how many other 'experts' who were so GaGa about Xiaomi only a few months ago, are tellng you this. The biggest smartphone maker is Samsung. Apple is number 2. Lenovo is number 3. Huawei is number 4. Xiaomi is not 'the new Apple' and achieving rocketship level growth. They'll be lucky to retain position number 5 through this year and may well tumble further into the pack.

Then Huawei. They have an aggressive goal to become the third biggest smartphone maker (to pass Lenovo which owns Motorola). That would be plausible yes, except Huawei also said they will now focus on the high premium phone segment and mid-price smartphones and not focus on the lowest-cost smartphones where the big growth is. Well, say goodbye to number 3 aspirations if that is your plan. You can't grow faster than competitors if you don't address the biggest growth area of the industry. I think Huawei just signalled its white flag that it abandons the number 3 race to Lenovo.

Ok, thats whats on my mind today. Lets have the chat by my readers focused on the individual blog which relates to that brand, ok?

Comments

[Catriona]

My guess is Huawei cares less about competing for the low-end and wants a share of the more profitable mid-range and premium segments of the market.

Apple is actually next up with earnings on Monday after the closing bell. It will be interesting to see how well the iPhone sales held up in the quarter just ended. The Galaxy S6 didn't come out until after the quarter, and they certainly got a lot of press toward the end of the quarter with the Watch announcement.

As for the Samsung sales, the analyst quotes no sources, and apparently sales are higher than expected in the rest of the world. We won't get a great sense until July, though, since sales didn't start until the current quarter. iPhone 6 is entering its historic "lull" before the 6S/6S Plus this Fall, so if the S6 and S6 Edge are going to shine, now is the time. I wouldn't be surprised to see Force Touch make its way to the iPhone this year. It's surprisingly good on the MacBook and Apple Watch, and could be a nice little "S" addition like Touch ID was to the iPhone 5S, along with more incremental moves like more RAM and better performance/battery in the A9 chip. But that's 6 months away. Until then, Samsung has the phone with the best camera and fastest processor on the market, and a good looking design, which should help them retain existing customers hitting the upgrade cycle.

[baron99]

I would think any story about Xiaomi and Samsung would include this tidbit: Apple iPhone has become the #1 smartphone in China...above Xioami, and of course, Samsung.

At least we can revel in WP not doing well in China.

NOBODY WANTS A WINDOWS PHONE

[David]

"Huawei also said they will now focus on the high premium phone segment": I think this may be a comunication confusion. It may be Huwai wanted to say they were focusing efforts specially on premium phone, where they are weak, not like other segments where they are strong: you need more effort and focus where you are weak, nor where yoy are strong.

I can´t imagine Huawie droping out low or medium handsets. And if we see its portfolio and Honor brand, it is clear that, at least now, they are not giving up those areas, but the contrary.

Obviusly premium segment is a key segment: it is where you got most imagen, and where you can make more money. It has a lot of sense to invest a lot of effort in this segment, and Huawei has power to pursue that segment.

[Catriona]

@Baron99, we should get more information in a few hours about Apple's sales. I'd be surprised if China passed the U.S. this quarter, since Apple sold twice as many phones in the U.S. as in China in the December quarter, but it's definitely a growing market for Apple. Most analysts are predicting iPhone shipments of about 58 million, which should put it solidly in second behind Samsung for total volume.

[baron99.1]

@Catriona - Last qtr was the big Christmas buying quarter in the US. This qtr is the New Year's gift buying qtr in China. It is very likely that China sales will exceed the US.

It will be interesting if Samsung sells a lot more, or only a little more than Apple this qtr. They gave a 30% profit drop warning, which can't be a great signal for sales volume either.

We should have the official numbers to recognize that the iPhone is the #1 smartphone in China, or close to it. 2 different sources have made the claim now.

The good news is that after today's Apple announcement, we get to have two quarters of bad news for Apple. We have the first full quarter of the Galaxy S6/S6 Edge and the iPhone madness dying down as it enters the mid point of the cycle, and rumors start flying about the next version...making sales fall further.

And of course, terrible news for Msft as

NOBODY WANTS A WINDOWS PHONE

[Catriona]

Well, Apple's data is out. They sold 61.2 million iPhones last quarter. Nice "beat."

[Catriona]

On another note, Americas revenue still tops China, but China is now a bigger market than Europe for Apple.

[baron99.1]

@Catriona - revenue includes all Apple products and services. Awaiting confirmation of the moment that unit sales in China passed the US.

But for sure, NOBODY WANTS A WINDOWS PHONE

[Catriona]

@Baron99.1 given that iPhone is about 75% of Apple's revenue, it's a pretty safe bet that Americas iPhone sales still top Greater China. It might be close for U.S. vs. China, though.

[John F.]

Well, for the bloodbath lovers and the market share followers ...

Apple Q1 2014 57.6 billion revenue
Apple Q1 2015 76.4 Billion revenue

iPhone 68% of revenue

Apple is doomed because growing this brutal amount and making the brutal amount of profits means that according to market share they will be toast soon.

Let's remember. a company that grows yoy and delivers profits yoy and captures the top % of the users worldwide if it doesn't produce cheap phones and gains marketshare in the "make no profit area" is pursing the wrong strategy and will fail next Q ... old proverb since 1997

[Gonzo]

@John F
Let's remember. a company that grows yoy and delivers profits yoy and captures the top % of the users worldwide if it doesn't produce cheap phones and gains marketshare in the "make no profit area" is pursing the wrong strategy and will fail next Q ... old proverb since 1997

That's funny, and so true.

Apple going forward needs to focus on 200 300 million pocket computers (iphones) a year, grow the PC division further ( the only PC growth story out there) and work out toward media in general. Intimacy computing, starting with the watch, in the years to come will deliver as well.

Luxury and aspirational, that's it. They are clever, very very clever and the whole market share thing is not even in their radar as they have built a HUGE presence and a HUGE growth opportunity in the only relevant segment that exist for companies like Apple, LV, Rolex, Porsche, BMW, Tesla, Boss …. Quality, user experience and feel great expending your money.

Let's hear the haters now … after Tomi predicted 1 million apple watch and just in a week end they did 3 million on their way to who knows how many in generation one … -)

YES, no company growth forever and YES there are bumps on the way … but with 200 billion in cash in the bank and having the possibility to buy whomever they want if needed, there is Apple for a LONG, LONG time … apple hater rejoice you have plenty of time to look completely idiotic predicting crazy scenarios, and please do it fast…. I look forward to some good laughs around here.

[Baron99.1]

I love the smell of sheep in the morning

NOBODY WANTS A WINDOWS PHONE

[abdul muis]

LG G4 is launched.... and as Tomi predicted here, LG make a big fuss about having removable battery & SD-Card slot.

I think Tomi will love this phone, as this phone might be having one of the best camera in phone for 2015.

[Catriona]

Samsung missed consensus. According to this article, "local analysts" estimate that Samsung shipped 82 million smartphones in the March quarter, down from 89 million in the same quarter in 2014.

http://www.wsj.com/articles/samsung-profit-falls-on-slowing-smartphone-sales-1430266156?mod=yahoo_hs

[baron99.]

That makes 6 quarters in a row of declining year over year profit. I think Samsung is copying the wrong Apple product in terms of performance...it should go after the iPhone, not the declining iPad.

Samsung has gone from selling twice as many smartphones to only a third more. Samsung is also a staggering 57% less profitable in it's phone division than the same quarter a year ago. What a horrible time for Samsung to go back to it's roots of copying the iPhone. No removable battery, no memory card slot, not water proof, thin for no reason design that only an iSheep could love. Are we truly witnessing the fall of Samsung with the rise of Sony, HTC and LG who have kept those banner, crowd pleasing features?

And what a testament to the ridiculously misguided love affair that iSheep have for Apple's obscene profits. All that money to spend on r&d and what do the iSheep get? 4 year late delivery of large screens and still no physical keyboard model. Oh, and a smart watch...again late to the market where Samsung, LG, Google and others have already proved there just isn't a market to speak of. And a gold version that no Rolex purchaser would ever buy. Foolish.

Apple is going to ride the iSheep foolishness to their irrelevancy (notice I didn't say destruction). Just a niche player for the frivolously wealthy. Apple is it's own Vertu.

Can't wait to see Tomi's predictions come true that the iPhone 6/6+ would only sell well initially due to the iSheep.

And, NOBODY WANTS A WINDOWS PHONE

[RottenApple]

Let's not forget that Samsung was still suffering from the underwhelming Galaxy 5 last quarter
If the 6 also tanks (which it actually might due to its feature regression) - that'd be the time when they are in trouble.

As for Apple, it's now running its course and still riding the waves of their first large screen device release.

The real story will be told once this tidal wave subsides and business returns to normal.

[Lullz]

@RottenApple

"The real story will be told once this tidal wave subsides and business returns to normal."

What if this is normal? You already said earlier that the peak for the big screens is gone. It didn't happen so you simply move it one quarter ahead?

[Maggan]

@Lullz

Yeah, that's the way to do it, move it ahead. Apple will suffer ... tomorrow. Always tomorrow.

Time will tell, but time is always telling us something. At the moment it is telling us the iPhone 5s/6/6+ combo has sustained record sales (for Apple) over six months.

I think the 5s/6/6+ combo won't tank, sales (or market share if you want to put it that way) are too high for it to suddenly just disappear (the famous market share cushion also works for Apple), so the best thing to do now for Apple critics is to move the predictions for failure to the 6s/6s+ launch.

Some day the critics will be right, and they will be happy. Until then, the rest of us should be happy being right in the present.

[Lullz]

@Maggan

"Time will tell, but time is always telling us something. At the moment it is telling us the iPhone 5s/6/6+ combo has sustained record sales (for Apple) over six months."

Even more interesting is how Apple told us that the App Store sales have been growing 100% compared to the last year. Unfortunately we don't have new data about Google Play but I really wonder if Android app sales have been able to grow that fast.

"I think the 5s/6/6+ combo won't tank, sales (or market share if you want to put it that way) are too high for it to suddenly just disappear (the famous market share cushion also works for Apple), so the best thing to do now for Apple critics is to move the predictions for failure to the 6s/6s+ launch."

33% growth compared to the previous 12 month period. That's some serious growth. Has anyone seen any estimations how the market grew in Q22014-Q12015? My January estimation for the iPhone unit sales in Q1 was 63M and gaining market share. Not bad when almost everyone was convinced that Apple will be losing market share. RottenApple was one of those who said that Apple will lose market share.

[RottenApple]

@Lullz:

"What if this is normal? You already said earlier that the peak for the big screens is gone. It didn't happen so you simply move it one quarter ahead?"

I never said the peak would last for just one quarter. But one thing is clear: The pent-up demand for large screen iPhones was huge and that's being satisfied right now. This was the single most important feature Apple users have been waiting for.

It's hard to judge a market where a massive void is in the process of being flooded but considering such a situation 'normal' clearly means a lack of grasp of market dynamics.

So, if you want my take: The iPhone 6 will have halted Apple's market share erosion for a year, but that's the best it can do. Once the situation stabilizes again we will see the same development as in previous years: Some modest growth in sales but decline in market share - and once the replacement cycles expand and/or the premium market segment is saturated, sales will stall or slightly decline.

That's all under the assumption that the market doesn't get disrupted by some forces that take away some factors which work in Apple's favor (like overpriced untransparent subsidized contracts going away.) If such a thing happens all bets will be off. Or that Apple or some other manufacturer makes a mistake that kills their market share - like Samsung did with the Galaxy S5 which only collected a large amount of yawns. Let's not forget that the underwhelming S5 also has a part in Apple's current sales boost.