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

[Per "wertigon" Ekström]

Actually, no, I'm going to side with Tester here.

The workstations will never be replaced, since that's what you use to create content with, and it's almost impossible to find a more efficient workflow than keyboard and mouse. So, the professional market is safe for the foreseeable future.

However, I do believe we will start to see more and more convergence.

The Desktop workstation will not disappear. But the Windows PC will. Instead your phone will be your workstation.

But it will be another ten years before mobile technology has matured to the point that it can drive dual 4k screens and the latest 3D bells and whistles. It is close, but not there yet.

I also think Microsoft will do everything it can to get a piece of this action - but Windows is simply too locked down, too stale, to compete with the flexibility of Open Source solutions like Linux and Android. Try running Windows on a Raspberry Pi - you cannot, even though there is a Windows for the Snapdragon 835...

[Baron95]

@PWE
https://developer.microsoft.com/fi-fi/windows/iot/Downloads

[Per "wertigon" Ekström]

@Baron95:

That is not a Windows desktop distribution...

[Tester]

@PWE:

"The Desktop workstation will not disappear. But the Windows PC will. Instead your phone will be your workstation."

While I mostly agree that technology will shrink sufficiently to be put in a smartphone there's still a few drawbacks here that will keep a specialty market for high end hardware alive.

The main issue with a smartphone is the same as with a laptop: If all hardware is so tightly integrated there's little chance to replace isolated parts, if their performance starts to lack or if they break. This is actually the main reason why I still use a large case: In order to upgrade I do not need to replace the entire thing but just isolated parts, which is still cheaper. Two years ago the magnetic hard drive got replaced by an SSD, and next month the graphics card is getting replaced by a more powerful one. I can also upgrade the RAM if needed without throwing out the entire thing.

"But it will be another ten years before mobile technology has matured to the point that it can drive dual 4k screens and the latest 3D bells and whistles. It is close, but not there yet."

That sounds about right. But we still don't know how far graphics performance can be pushed. CPU's seem to have reached an upper barrier where it's hard to get more out, but high end graphics cards are still evolving at an extremely rapid pace. What was a high end card 5 years ago when I bought my current PC may be considered below medium range now and I see no end to this kind of development for the time being.

"I also think Microsoft will do everything it can to get a piece of this action - but Windows is simply too locked down, too stale, to compete with the flexibility of Open Source solutions like Linux and Android. Try running Windows on a Raspberry Pi - you cannot, even though there is a Windows for the Snapdragon 835..."

Microsoft under Steve Ballmer has nearly done everything wrong to move Windows to the future. I have lost count how many technologies they invented to move software development to more current paradigms but they all failed to find acceptance because they all tried to reinvent how software needs to be developed instead of builing on and expanding what has been there before (i.e. there was a profound lack of backwards compatibility and interoperability with old code.) Sadly, on this front there's still nothing happening and for efficient Windows GUI development you are pretty much dependent on third party libraries.
On the other hand - to this day there is still no decent Linux solution that is compatible with the mindset of regular people. No idea if this will change - but too many Linux users appear too wrapped up in arcane conventions that make it very hard to let it become a viable alternative to Windows. MacOs is also out here because Apple's strategy of profit over market share.

[Per "wertigon" Ekström]

@Tester:

"While I mostly agree that technology will shrink sufficiently to be put in a smartphone there's still a few drawbacks here that will keep a specialty market for high end hardware alive."

Alive, maybe. But consider this. In ten years, $200 Android phones will be able to do dual-screen 4k gaming at 60 FPS flawlessly. Meanwhile a decent GPU card will still cost around $200 alone. Memory will cost around $50-$100, motherboards $100-$200, CPUs $100-$200 etcetera - but since demand will be down, you will have a much more limited selection.

At that point, it's cheaper to replace the entire workstation (e.g. your cellphone). Peripherals will still cost about the same, sure.

"That sounds about right. But we still don't know how far graphics performance can be pushed."

Yes, that is true. I'd not be surprised if we see some GPUs switch to a GPU-FPGA hybrid model as well - where the FPGA runs AI and the GPU runs the graphics computations. As long as there is growth in tech, the GPUs will remain in business. But, GPUs are required solely for gaming and 3D modellers - and increasingly, GPUs are good enough now for 99.99% of the tasks thrown at them. And good enough trumps great, if good enough means cheaper.

"Microsoft under Steve Ballmer has nearly done everything wrong to move Windows to the future. I have lost count how many technologies they invented to move software development to more current paradigms but they all failed to find acceptance because they all tried to reinvent how software needs to be developed instead of builing on and expanding what has been there before (i.e. there was a profound lack of backwards compatibility and interoperability with old code.)"

Yes, exactly - and this will be their downfall, unfortunately. The problem with Windows is that the entire ecosystem is built of compiled programs compiled to a specific architecture. Porting stuff to ARM is something only the mayor houses can afford to do at the moment.

Windows cannot conquer ARM, because Snapdragon binaries are not compatible with RPI which are not compatible with Odroid which are not compatible with Pyra which are not...

"On the other hand - to this day there is still no decent Linux solution that is compatible with the mindset of regular people."

I'd say you're fairly wrong there. Ubuntu is slowly starting to get back to what made them great in the first place (the focus on a polished, good GUI), and the whole Wayland/MIR mess is finally getting resolved (as is Unity). Steam Linux has over 10 000 titles these days. Linux is finally starting to come together. In some ways I do not agree with (like systemd), but it's still getting somewhere.

Of course, you still want a command line for most under-the-hood stuff. But I consider the command line the equivalent of popping the hood to your car - sometimes necessary, most of the time not, but always great to have access to. As a programmer the command line is a godsend.

Also the prevalence of programmable editors in Linux is awesome. But that is a discussion for another day. For your average grandma, a Linux computer is not hard to use at all today, given that computer is supported just as much as a Windows computer. Remember, Windows always come preinstalled, so for an Apples-to-Apples comparison, look at Linux sans all hardware related issues.

[Wayne Borean]

Thanks Tomi!

As to the PC marketplace, everyone is missing the most important point - which company has the greatest hardware market share?

Intel of course, and any discussion about how changes in the PC marketplace will play out will be wrong. Especially if you don't understand Intel, and its weaknesses.

I've got a partially finished article on Intel. I'll see if I can get it finished before next weekend, and post a link.

[Tester]

@PWE:

"Yes, that is true. I'd not be surprised if we see some GPUs switch to a GPU-FPGA hybrid model as well - where the FPGA runs AI and the GPU runs the graphics computations. As long as there is growth in tech, the GPUs will remain in business. But, GPUs are required solely for gaming and 3D modellers - and increasingly, GPUs are good enough now for 99.99% of the tasks thrown at them. And good enough trumps great, if good enough means cheaper."

In general you are correct, but I somehow doubt you have ever discussed this with a true hardcore gamer... :D
Even now, the vast majority of PCs is already sold without a dedicated graphics card. For normal tasks you do not need them. But as it just so happens, most high end hardware that isn't sold to professionals is sold to gamers, and those will never ever be satisfied with "good enough", and that's really a market I do not see evaporating on short notice. These are true enthusiasts which will always strive to have the latest and greatest tech at their disposal - and if you think about it, that's actually a good thing because they pave the way for further improvements in the 'good enough' sector.

"I'd say you're fairly wrong there. Ubuntu is slowly starting to get back to what made them great in the first place (the focus on a polished, good GUI), and the whole Wayland/MIR mess is finally getting resolved (as is Unity). Steam Linux has over 10 000 titles these days. Linux is finally starting to come together. In some ways I do not agree with (like systemd), but it's still getting somewhere."

But it's still in the process of "getting there". Right now I simply couldn't recommend Linux to a non-techy person for various reasons, that are not all directly related to how it works.

[Per "wertigon" Ekström]

@Tester:

Sorry, even most gamers settle for good enough. Only a tiny percentage has to have the latest nVidia or AMD cards that costs thousands of dollars. Most opt to buy a 200-300 dollar card, since that's the best bang for your bucks.

Sure, there is an enthusiasts market out there, but it's niche and very tiny. The bread-and-butter are the mid-range cards.

[chithanh]

@PWE
> But it will be another ten years before mobile technology has matured to the point that it can drive dual 4k screens and the latest 3D bells and whistles. It is close, but not there yet.

My 2016 model LeEco Le Max 2 with SD820 which cost me 200 EUR already drives a QHD (1440p) screen fine, including compatibility with cardboard VR.
The Apple A10X chip in the iPad Pro is already outperforming Intel's Core-M ultraportable laptop processors, especially in GPU tasks which is important for driving high-resolution screen.

Once low cost and PC-like performance meet in a smartphone that costs less than an entry-level PC, I think we will see the

If you followed recent development in the PC market, there was AMD's Ryzen processor which Intel ridiculed for reusing the same chip for both desktop and server (in MCM package of up to 4 dies). But it is clear that developing separate chips for PCs and servers is no longer justifiable if you don't have infinite R&D money. Observers expect Intel to follow AMD's lead.

[chithanh]

(oops, hit 'Post' too soon)
> Once low cost and PC-like performance meet in a smartphone that costs less than an entry-level PC, I think we will see the
consumers and non-heavy users start to flee the PC market towards solutions that allow you to connect the smartphone to external monitor/keyboard/mouse.

[Abdul Muis]

It seems the game on mobile will have a makeover sooner than we thought.... And the surprise... China gamer leading the chart.......

https://venturebeat.com/2017/07/20/newzoo-high-fidelity-games-are-taking-over-the-mobile-market/
"Above: Lineage2: Revolution is a huge hit in South Korea.
Image Credit: Netmarble

Mobile games are now the biggest segment in the global games market, but high-fidelity games in particular are coming out on top. A new report from industry analyst Newzoo in a partnership with the chip manufacturer ARM, finds that hi-fi games have shown strong year-over-year growth, and have experienced 40.7 percent growth from 2015 to 2016 in China, North America, and Europe combined.

The report defines hi-fi games as those featuring advanced graphics. The market for these kinds of games is already well developed in China, where hi-fi games make up 42.3 percent of the revenue from top grossing mobile games in 2016. In the 200 top grossing mobile titles in China, 110 of them were hi-fi.

Newzoo reports that 60 percent of mobile revenue come from users in the Asia-Pacific region, though China alone accounts for 32 percent of that. This year, Asia-Pacific is slated to generate $27.6 billion. One of the top games in Asia right now is Lineage2: Revolution from South Korean developer Netmarble Games. In February, it was the top-grossing mobile game in the world and earned $176 million in its first month alone.

The North American market is still catching up, but Newzoo says that it’s growing. In North America, the top grossing mobile games grew 8.5 percent last year whereas hi-fi games grew 15 percent, nearly double.

Big publishers like Square Enix and Electronic Arts have also been active in the mobile space. EA’s Madden NFL is one of the top-grossing titles, and it’s been trying to reproduce that success with popular soccer game FIFA on the mobile platform as well. Warner Bros. Interactive Entertainment also doubled down on mobile titles and recently opened a New York office just to focus on live operations and its mobile games like the superhero-powered Injustice 2."

[Abdul Muis]

BTW...

Here is the detailed report from the above news
https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/

[Per "wertigon" Ekström]

@Chithanh: I believe we are in agreement here. We agree it's a *when*, not an *if*. We disagree on the timing though, but hey, to each to his own.

To reiterate, I think when a $200 cell phone can deliver a solid 60 FPS 4K dual screen resolution, that's when I think a convergence will happen for gamers and professionals. As for consumers, they will not be the first to catch up to this trend. Even if more and more games are going mobile, the mobile market is still separate from the PC market.

Do note, it could very well just be a dock with acceleration capabilities. But someone still have to build and market the "Mobtop" or "Celltop" solution. The technology might very well be ripe today, but more realistically I estimate ten years before enterprise begins catching on in large numbers.

[chithanh]

@PWE
> I think when a $200 cell phone can deliver a solid 60 FPS 4K dual screen resolution, that's when I think a convergence will happen for gamers and professionals

If you look at Steam Hardware Survey, even among PC gamers, 4K screens are a small minority. Dual 4K screens are much less widespread even.

And the data says that 60 fps doesn't matter, 30 fps is enough.
http://www.insomniacgames.com/how-much-does-framerate-matter/

So our timing disagrees by two iterations of Moore's law.

> a dock with acceleration capabilities

Dock with acceleration capabilities won't fly. You would need at least 4 PCIe 3.0 lanes in the mobile chip. PCIe is a major contributor to power consumption in modern CPUs. I expect cloud gaming to fill the performance gap, rather than docks with extra computing resources.

Maybe (and that is a very big Maybe), Apple will produce an iPad Pro with Thunderbolt after Intel curiously opened Thunderbolt licensing to third parties. I imagine that Apple was behind this. But the other manufacturers will just not see any sensible reason for following suit.

Also, enterprises will not switch to mobile. Rather, new businesses will be built around mobile/cloud/browser interfaces while existing ones will often ride out their VBA code until the bitter end.