Tidbits from Smartphone Wars - Carl Zeiss, HTC, Sammy and look out for Huawei vs iPhone next two quarters.

A few interesting tidbits from the smartphone wars that caught my eye. First off, this is awesome great news. HMD has officially confirmed that the Nokia-Carl Zeiss optical camera lens partnership is back and that HMD will create flagship Nokia Android smartphones that will use Zeiss optics. That is fantastic news. Not that an average consumer might even 'notice' the difference of Zeiss glass vs generic plastic on a mobile when shooting pictures - it is the principle of the excellence implied with partnering with an iconic camera lens specialist like Carl Zeiss. That means that Nokia Android based flagships will have great cameras and that HMD will make a focus area in the camera, something that Samsung used to do (Sony Xperia still does) and Apple explicitly does not do. It helps create differentiation for HMD/Nokia and hopefully it also revives the development in camera tech in our pocket. If HMD invests in Zeiss as a partner, they won't then pair that with a rubbish camera sensor or meek other specs. This is great news. The first Zeiss-glass flagship won't necessarily be the most awesome cameraphone ever - although it is likely to be one of the better ones currently - the NEXT gen Zeiss-glass Nokia, a year later - THAT could be a superphone. This is great news.

Then in the area of really bad news for iFans. Samsung is reporting they have had a great quarter. Both their chips unit and their smartphone unit has had strong sales and strong profits. Some analysts are already suggesting that for the quarter, Sammy may report bigger profits overall than.... Apple. That would be a big ouch in iLand. Wot? iCompany is not iNvincible? And lets be clear about this - the Samsung number would be driven by its chips side, but a solid smartphone contribution would help. Apple is facing its 'down cycle' in its annual sales - likely a bit worse this year because for some reason, they didn't bother to release the 'spring iPhone' model that they did last time. So the iPhone sales this quarter overall would be possibly down more than usual. And the other iBusiness? I recall that Macs, iPods, iPads, iWatches - sorry Apple Rubbishes, etc were mostly down already earlier... so we could see a rare 'disappointing' quarter from the iEmpire. If so, that would be bad timing if the Korean boys are having a great quarter..

Hey, talking about bad news for the iBoys. Huawei. I am pretty sure in a few years Huawei will pass Apple to become the second largest smartphone maker. That rank of being third is a tricky place and nothing is certain in this type of race but Huawei is doing pretty well there and has reported a long series of steady growth, globally, not only inside China. So they are not victims of the whims of market success in just one country. If you looked at Huawei growth Q1 2017 vs Q1 2016, they are up by about a quarter units in sales, in a year. Now.. lets move that quarter-sized growth to the next two quarters, this just-ended Q2 and the current quarter Q3. That would put Huawei in the rough scale of 40 million units per quarter (about 33M last year this time). And then guess what iPhone sales levels woudl be like? Last year Q2 April-June quarter, Apple sold 40.4 million iPhones !!!! And in Q1 2017 vs Q1 2016, Apple iPhone was down 1%. The could be smack center at 40M units now. And that is just about where Huawei seems to be headed now also. It will be neck-and-neck for Q2 and Q3. We might see the first single quarter where a rival snatches second place from Apple in smartphones, pushing Apple to third ranking. Of course we know on this blog, that this is temporary, due to the strong cyclical sales pattern of iPhones (down in summer, up for Christmas) so for the full year statistics, Huawei is not (yet) challenging iPhone but this year might be the first 'sign' that Huawei is really coming. For one quarter they might be past. And even if they end up not quite matching Apple, if the numbers are close - expect some opportunistic tech analysts to skew their math just enough, that they can claim Huawei ahead - so they get all the headlines that Apple is falling, Apple is falling... And that would be quite big noise in iTown, wouldn't it. A colossal iCollapse. In particular if that squares with an actual decline in iPhone sales vs last year, plus declining market share in iPhones (expect iPhone market share to be around 11% in Q2 vs 12% same quarter last year); coupled with Samsung's sudden profit bonanza. We could have a summer of iDespair in iCupertino. Some might even dare say, Tim Cook is no Steve Jobs haha..

But hey, we do have other news too. HTC. Remember that company? The company that launched the world's first Windows based smartphones, and the company that was the first 'biggest Android maker' until Samsung bothered to get serious with Android? HTC which once was the world's third largest smartphone maker? (But I thought HTC was dead?) No, they aren't quite dead yet, even though they have been trying real hard. Well? This quarter for once in a very very long while, the Taiwanese smartphone maker is reporting INCREASED sales. Woot? That is amazing news, for a smartphone minnow. They still are outside the Top 10 (outside the Top 20 even) but hey, they are not dead, and they reported growing sales. Good for them!

I will have the Q2 data for you once all the numbers are out, that will be around mid to late August, but many analysts will give Top 5 numbers before that, so we'll start to see how the picture shapes up already in a few weeks when the first of the analysts start with their news. Could it be that Huawei gets temporarily the second place ranking? That would be something...

(PS the blog seemed to have some issue with comments past few days, am sorting it out. We should always be open for comments...)

Comments

[Abdul Muis]

I wonder if the S8/S8+ is the Jesus phone 2.0?

[Abdul Muis]

Xiaomi ends slump as smartphone shipments jump 70% in Q2 thanks to ‘iron-fist’ of quality
https://venturebeat.com/2017/07/07/xiaomi-ends-slump-as-smartphone-shipments-jump-70-in-q2-thanks-to-iron-fist-of-quality/

"At least, according to a letter Xiaomi founder and CEO Lei Jun sent to employees that was helpfully blasted out to reporters around the globe. Jun said the company shipped 23.16 million smartphones in Q2 2017, up 70 percent from Q1 and sets a new record for the company."

Xiaomi -- 23.16 million

[Per "wertigon" Ekström]

@Abdul:

The Jesusphone 2.0 was Meego-powered Nokia N9, so no, it will be the Jesusphone 3.0 at best... ;)

Speaking of which, I'm extremely pleased with my newly acquired Lenovo P2. Lenovo isn't a strong brand, but this one really push my buttons in all the right places. The killer, for me, is the external switch that activates an ultra powersaving mode that gives me about a week worth of battery life, but you can still call and text with it.

Apart from this, I think this phone is the first touch-based smartphone I can give to my grandma, since the ultra-power battery life also simplifies the interface tremendously. It's simpler than Apple by an order of magnitude, but you can easily turn it off for "power mode" should you need it (a.k.a. admin mode).

I wish more phones would follow suit with this... :)

As for Jesusphone 3.0, I think Motorola is onto something with it's snap-on modules, and I wouldn't be surprised if Apple copies that...

[cornelius]

Great news all around. And I enjoyed your making fun of Apple. I came here to the comments section hoping to enjoy the comments of the iSheep defending Apple and I must say I am very disappointed so far. But I'm optimistic, they'll show up eventually.
Speaking of phones with great cameras, how about this Android phone with holographic screen from RED?
https://www.theverge.com/circuitbreaker/2017/7/6/15929212/red-hydrogen-one-smartphone-price-specs-release

[James Glu]

Apparently making components for the iPhone is profitable ;)

Congrats Sammy...may you go on to ever higher profits.

[paul]

Nokia-Carl Zeis is good news! The thing which is even better is that some of Apple's attacks dogs are already attacking Nokia/HMD regarding this move. This basically shows that Apple is getting nervous about it.

[zlutor]

HMD/Carl Zeiss partnership is good. Having access for old Nokia imaging tech - that would make it really great...

let's see...

[Tomi T Ahonen]

Hi Gang

(Sorry about the hassles with comments closed, I just got it sorted out.. we're back to normal again)

Hey, Windows Phone is dead? Well that took us by big surprise haha...

Tomi Ahonen :-)

[Per "wertigon" Ekström]

@Tomi: Regarding Apple skipping releasing two phone a year, I wasn't surprised when they went back to their see-saw pattern. I think you don't quite have figured out how the iPhone business model works, and how the Apple execs think.

The thing is this. Much of the allure to iPhone is it's exclusivity, as well as the focus on profits for Apple.

Now, Apple released the 5SE - A decent mid-range phone, with two fatal flaws. Oh, not fatal for Apple customers, but fatal for their profits. Customers? They loved it.

The first problem, is that by releasing two phones a year, the Apple brand exclusivity is damaged. An iPhone comes out a year, and this is what everyone knows. It's part of the exclusivity deal, that once a year, Apple releases a special new upgrade. By selling a cheaper phone every 6 months, this special event and exclusivity is harmed.

The second problem the 5SE has, is the price. More specificly, the price leads to a lot of cannibalised sales, where a lot of people who would normally buy a more expensive model, buys the cheaper 5SE instead. Because why pay full price when you don't have to? This leads to less profits for the Apple board, and since the focus is on year-after-year of master profits, well...

These two flaws therefore makes the SE line undesirable from a directors point of view. The consumers love it to shreds though. :)

[cornelius]

Nice to see the comment section come back from the dead, so I can express my joy for Window Phone's death. Windows 10 Mobile is still alive though (sort of), commanding a whopping 20% out of Microsoft's 0.3% mobile market share.
And more great news for Microsoft from Gartner. Apparently mobile devices continue to eat PCs' lunch.

https://hardware.slashdot.org/story/17/07/13/1850216/pc-shipments-hit-the-lowest-level-in-a-decade?utm_source=feedly1.0mainlinkanon&utm_medium=feed

Quote: "PC shipments are at the lowest levels since 2007. From a report: Gartner said this week that the PC market declined 4.3 percent during the second quarter. The research company said that shipments were at the "lowest quarter volume since 2007," noting the market dropped for the 11th quarter in a row. The report is in stark contrast to another from IDC in April which said that the PC market grew for the first time in five years. Gartner said HP has the largest global market share with 20.8 percent of the market."

[Tester]

The PC market shrinking is not surprising. I'm still on my 5 year old machine, still going strong. There's simply no need for an upgrade, except for a new graphics card to play newer games.

I guess the same is true nearly everywhere else where PCs are in use. Combine that with some of the more basic users abandoning them entirely and yes, the market will shrink.

That happens if the technological improvements no longer require a new device every two years.

[Abdul Muis]

@Tomi

I thought that baron95 / wayne brady mug you and steal your pasword. LOL.

[Wayne Borean]

LOL. Nokia using Carl Zeiss optics will give Huawei heartburn.

I hope Nokia pushes cameras to the limit. I also hope that Red will be successful wth the new display. We need more innovations in what has seemed like a static market.

[Tomi T Ahonen]

Hi everybody

Abdul - LOL

On PC future. It is again the 'mobile always wins' aspect. The PC market grew for 3 decades and the world passed 1B total PC ownership and several times that signs appeared that the PC market had peaked - it turned out that it hadn't, including the very last time ie the 2003 tech slump. The PC market even returned to growth after that.

Note that this was all before Facebook convinced so many people who had NOT owned a PC ever before, that they wanted Facebook.... And in the USA especially, that still led to more household ie consumer sales of PCs. But...

But compared to more obvious 'work' uses of PCs like the Windows PC Suite of software (Word, Excel, Powerpoint etc) - Facebook DOES work (reasonably well) in a hand-held and the UTILITY of Facebook is vastly enhanced with its immediacy (not unlike email was as a productivity tool, so much more useful with the internet than on earlier smaller local area networks). So Facebook's growth in the last decade had turned out to be the first computer-related massive growth accelerator - that didn't apply to Windows anymore.

Yes, plenty of Europeans and Asians also bought their first PC in the past ten years - because of Facebook - but most of those people found that they could do essentially the same level of Facebook on their tablet or their mobile phone - and hence the traditional PC sales turned into their terminal decline. Killed by the smartphone.

Now, if we add tablet PCs to traditional PC sales, but exclude smartphones - then the PC peak is not obvious (although also visible) because tablet sales cannibalized so much of laptop PC sales and part of desktop PC sales. BUT if you add PC sales (desktop and laptop) to tablet PC sales - and smartphone sales (but exclude dumbphones) then the growth pattern is UNITERRUPTED.

If we accept that a smartphone 'is a computer' even as its a very small and arguably a bit limited - like we argued on this blog about a decade ago and now increasingly the computer industry agrees - and measure THAT market (as this blog has done for the longest) - then we see the 'identical' pattern to digital music players (including musicphones), cameras (including cameraphones), etc. Mobile always wins. If Mobile CAN do it, mobile will. And once mobile does it, the others are squashed. They don't necessarily die off, but they lose the dominant position as mass market devices, and retreat to professional and semi-pro markets like happened in digital cameras (vs consumer cameras now all being the cameraphone market)

I warned that this would happen. Now the evidence is clear that it did happen. Any sane PC executive (Apple, Lenovo, Asus) made the right calls in the past years and transitioned their business into the part that had the growth. Others (HP, Dell) dabbled in the smartphone business light-heartedly and messed it up and abandoned those plans. Idiots. They will express their regrets like Nintendo in games and Nikon in cameras have already done, that they missed the big mobile opportunity. And gosh, has Apple played this brilliantly.

Imagine coming into the car industry, never having made cars but being an established leader in another industry - like say Coca Cola or Ikea - and taking 12% of the total car industry and owning the high-end luxury car segment... That is what Apple achieved, the PC company entering mobile phones (not even with a smartphone at the time - with a dumbphone, a musicphone) and taking the luxury end of it and today one in 8 phones sold in the world is an Apple. In a decade. That is mind-boggling.

This is not Tesla in cars (a total newcomer, that would be like Xiaomi). This is someone from a totally different industry, like say Levi's in clothing or Airbus in airplanes, suddenly making cars and succeeding in taking over so much of that market. This SAME opportunity was indeed there for HP, Dell, Nintendo, Nikon, Canon, etc... Apple succeeded in it, truly brilliantly.

Tomi Ahonen :-)

[Tomi T Ahonen]

PS

Just saw on interwebs... Microsoft has told users of the LinkedIn app on Windows smartphones, to switch to the browser as the support for the app will end.

HAHAHAHAHAHAHAHAHAHAHA

Gosh, that IS something, when your own PARENT stops using your app. Windows OS on smartphones IS dead. If Microsoft - MICROSOFT - cannot afford to keep an app live on Windows, of its own BUSINESS-oriented app? LinkedIn the largest such service in the world - that is the end of Windows OS for smarthpones. Da. End.

In talking of ends, Vertu is shutting down too. Sad.

Tomi Ahonen :-)

[Lullz]

Then again wasn't every iPhone running iPhone OS 2.0 a smartphone? That would make the original iPhone the first ever feature phone to be upgraded to a smartphone.

[James Glu]

Hi Tomi,

Yes it is truly sad/funny that even Msft isn't supporting Windows Phone with apps.

On Apple - I wouldn't say Apple came into a different industry. Particularly if you see smartphones as PC's/computers, then Apple is the oldest personal computer company.

Apple merely came at the convergence of mobile phone + computer from the opposite side. Instead of adding computing power and abilities to a phone, Apple added phone abilities to a computer. Even the first iPhone was built on the same kernel as Mac computers. iOS is the same OS as OS/X with a different interface. Even multitasking was there, just turned off...just as the ability to run apps was turned off at first.

But yes, in terms of the "mobile industry" Apple was a neophyte and their massive success is something to marvel at.

[James Glu]

Another note - Apple's timing. Apple couldn't have delivered the iPhone any sooner, they barely delivered the first iPhone at the time. The pre-iPhone smartphones had very little computing power, really slow data, and much longer battery expectations. The whole idea of the WAP browser was due to these constraints - not some misunderstanding that it was a great user experience.

If Apple had gone into the smartphone business years earlier, it would have been an Apple II type scenario, not a Mac. The iPod team tried to come up with a phone but to no avail.

And, of course, there was the Newton that was too early to market. Apple was a pioneer in the mobile space that became smartphones. ARM processors were a partnership with Apple for the development of the Newton.

[cornelius]

Probably all of you know StatCounter, but here it is anyway: mobile vs. desktop vs. tablets
http://gs.statcounter.com/platform-market-share/desktop-mobile-tablet

Keep in mind that they calculate market share based on usage, and since people tend to spend more time online on desktops/laptops, then the number of mobile devices should be higher than what the graph suggests. So mobile surpassed desktop usage in November last year and is still climbing, now at 53%. Tablets are flat at 4.75%
So mobile and tablets combined make roughly 58% market share. And most of those do not run Windows.

[Tester]

Statcounter hardly tells us anything about market share of device classes, it only tells us about market share of internet usage for its subscribing websites.

And your conclusion there is dead wrong. People indeed tend to spend more time on desktops/laptops, but from personal experience, these being productivity devices, the percentage of time spent on the internet with a stationary computer is a lot lower than for a mobile device.

We also have no precise idea what this actually measures. As I understand it, a website has to subscribe to statcounter in order to register on the statistic. Here's the main problem with that: Most time I spend on the mobile web is on websites that tend to use such services, but most of the time I spend on the desktop in the web browser is on specialty websites that certainly do not use such services. So in reality, I spend 90% of my time on the web on the desktop, but I'm dead certain that due to my usage patterns I still register as 90% mobile/10% desktop.

Let's reiterate: The main reason the PC market is shrinking is the combination of two effects: First, is that it is losing a fringe group of users for which a full fledged desktop/laptop PC was totally overspecced. Of course these won't buy another one and eventually retire their machine. The second reason is thar PCs have mostly entered the same stage as TVs have: Replace the old one when it breaks. There simply isn't any update pressure anymore. Even for gaming it is sufficient to replace the graphics card every 2 or 3 years instead of the entire system.

I still stand by my opinion that it's an utter fallacy to use this to spell doom on the desktop market just because it's in a transitional phase right now where a few use cases are being supplanted by better suited devices and these users are shed.
Yes, I know lots of people who have no use for a real computer and can easily make to with only a mobile phone - but I know even more people who wouldn't even think about abandoning their PC because they actively use it either for producing content, gaming or just for organizational purposes that are hard to do on a smartphone. But like I said above, even those tend to upgrade far less often due to the basic hardware basically being levelled out and not improving much for several years now. Yeah, and guess what: Even those people tend to have a mobile phone to access the internet when not at home!