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Prepping for Q4 and Full Year Smartphone Stats. Some things to look out for

I'm waiting for the final numbers to come out, so we can do the full year 2017 smartphone numbers and the numbers for Q4. Before we have our final numbers, a lot of individual news stories are expected.

First, expect the story that 'Apple sells more than Samsung' smartphones. This is the Q4 measurement (calendar Quarter, so October-to-December, not fiscal quarter) and it looks like Apple will have outsold Sammy in Q4. That does NOT mean that Apple is in any way ahead in the race. On the contrary, Apple is FALLING FURTHER BEHIND Samsung. How can that be? It is the LAUNCH CYCLE for Apple's new model. Every Christmas Apple has its best quarter, then does ever worse the next three quarters. So the real measure is the FULL YEAR sales. For full year sales, Samsung held even in market share at 21%, while Apple is far behind, at 14% and Apple yes, fell one point in market share from 15% in 2016. So the gap between Samsung and Apple is INCREASING, Apple is FALLING FURTHER behind. But that is reality. Expect many silly business & tech writers, in the USA in particular, to fall for the story, that Apple is ahead of Samsung. Any honest reporting will tell readers that for full year sales, Samsung is safely ahead of Apple. Any 'fake news' reporting will only talk about Q4 numbers and leave the reader with the impression that Samsung has fallen.

Secondly, learn about the smartphone manufacturer company from China called BBK. We know that company for its smartphone brands Vivo, Oppo & OnePlus. I have counted those brands separately into our Top 10 in the past, but that is not fair, as we count Motorola brand sales into Lenovo sales, etc, so as a manufacturer, yes, BBK has to be counted where its individual brands are added together. A year ago, using that method, BBK was the world's third largest smartphone maker in year 2016, behind Apple and ahead of Huawei. Now, for 2017, BBK has passed Apple. There will be a separate story, that Apple has FALLEN TO THIRD.

So simultaneously we will hear stories that Apple is larger than Samsung, and that Apple has fallen from second rank to third rank in the smartphone races. Haha. And both are technically true statements.

But yes, expect to learn a lot more about BBK. And yes, it is the world's second-largest smartphone manufacturing conglomerate, behind only Samsung and ahead of Apple, Huawei, LG, Xiaomi and the others that we so much love to follow on this blog. And if you want to know more about who is this BBK and how did they 'suddenly' appear onto the scene, here is a great synopsis of the company, its founder and the history from DVD players and videogaming consoles to smartphones today, via Android Authority. Very good (and short) read.

Now on the individual brand races, where is the race? Samsung is flat for the year, keeping its 21% from the year before. Far above Apple who falls from 15% to 14% this past year. And who is rushing up to fight against Apple brand? It is Huawei, who again added a point of market share, and now globally sells 10% of all smartphones (vs 9% a year ago). Apple has lost one point every year last 3 years, while Huawei has gained a point each of the last 3 years. This trends suggests that next year (2019) we will see the iPhone at 12% and Huawei at 12% and the two big global smartphone makers will be literally neck-to-neck. By year 2020 Huawei will have passed Apple.

(and behind those two brands, we find the 3 BBK brands, Vivo, Oppo and OnePlus, of course, who combined are larger than either Apple or Huawei. And this year, BBK will start to approach Samsung for the title of top dog...)

Now a mathematical curiosity. It looks like we have a perfect symmetry in the top 3 (brand) race in smarthphones globally (annual numbers, of course). Samsung is 45% larger than number 2, Apple. And Apple is 45% larger than number 3 (Huawei). Haha .Nice symmetry there. But that won't last long. Samsung is holding steady at 21% market share. Apple is bleeding market share one point per year, and Huawei is catching up to Apple one point per year in market share. So in one year it will be more like Samsung ahead of Apple by 56% and Apple ahead of Huawei only by 21%.

BTW of the top 3 brands, we know Samsung's rough semi-official full year number, it is 320 million total smartphones sold (plus another 40 million dumbphones). And for Huawei, we know their official full year 2017 number at 153 million. Apple will end up somewhere near 220 million, maybe a bit under. BBK will be well above 250 million across their three brands.

Then in milestones to come. MASSIVE number is upon us, this Spring. I have Samsung cumulative shipments of smartphones lifetime at 1.9 Billion. We're passing 2.0 Billion cumulative Samsung brand smartphones shipped, sometime this Spring, probably this first quarter. I hope Samsung celebrates that 2 Billionth smartphone in some way. (for comparison, Apple at 1.3 Billion cumulative iPhones since 2007, Nokia next at 600 million smartphones lifetime, and Huawei is next, past 500 million already)

Meanwhile in the kiddie table. Where is Nokia's comeback? I am hoping some analysts will give some numbers on Nokia. For the full year they are well below half a percent as they only started to sell their smartphones to a broad market in the summer. But for Q4, they may well be above 1% market share already. I'd love to see some analyst quote a Nokia HMD smartphone unit count number so we'll have some visibility to that scale. I was expecting Nokia HMD to sell about 5.4 million. Hopefully we'll see some numbers too about that. Ok, with all that, lets await the various numbers.

Are We Going To See The “$10 iPhone” in 2020? No, the clone of 2010 superphones will probably cost around $20 in 2020

If you remember my famous forecast from year 2010, that if Moore’s Law holds, then someone can clone any superphone of year 2010, and match those specs by year 2020, for the cost of $10. Superphones of year 2010 included the original iPhone 4, Samsung Galaxy, Nokia N8, Blackberry’s Bold, etc. And a superphone back then cost $600 without handset subsidy (ie clean, without contract). Excepting for local taxes and import duties, that price was also pretty well ‘universal’ globally. In year 2010, you’d be expected to pay $600 for a top-line smartphone by a major brand.

To be clear, right from the start, I emphasized, that Apple will not sell us a $10 iPhone in year 2020. I said it would be a clone-phone-maker, probably running Android or possibly one of the low-cost smartphone OS systems that were then in development. But 8 years ago, in year 2010, if you went into a mobile phone shop anywhere, and picked the top model, you’d get roughly the same specs, which were:

3G

Smartphone

Touch Screen

3.5 inch size screen

WiFi

Camera of 5mp

With LED flash

GPS

That was my spec list. If you did that phone today, you are essentially matching an iPhone 4 from year 2010. And that phone was considered a ‘superphone’ back then. A powerful internet-phone on both 3G and WiFi, a ‘real’ camera that was able to capture reasonably good images. A flash that let you take pictures in the dark. GPS for mapping.  And yes, touch-screen obviously. And back in year 2010, a phone screen of 3.5 inches was considered ‘massive’ in its size. Today it is considered ‘tiny’.

MOORE’S LAW

So I applied Moore’s Law to the tech specs of the iPhone 4, in year 2010. And that law said that computer processing power doubles every 18 months. The corollary to Moore’s Law is that the same performance computer tech will cost half, in 18 months. And then I just ran 18-month cycles and cut the price of the ‘iPhone clone’ into half every 18 months.

This said that the price pattern for a new smartphone, matching 2010 flagship smartphones by spec, which cost $600 in year 2010, should cost as follows:

Summer 2010: cost $600 (starting point)

Winter 2011: cost $300 (was achieved)
Summer 2013: cost $150 (was achieved)

Winter 2014: cost $75 (was achieved)

Summer 2016: cost $38 (was achieved)

Winter 2017: cost $19 (is now due)
Summer 2019: cost $10 

And based on this pattern, I boldly forecasted a $10 dollar price for a new smartphone, when sold in year 2020, that (roughly) matched the specs of what once was a superphone, in year 2010. Fair enough. And nicely, this gave us milestones, to see how this forecast was doing. I showed this slide since 2010, with always the latest period highlighted, as we followed how this forecast was turning out:




That forecast held through 2011, 2013, 2014, and even up to Summer 2016. I was able to find a new smartphone in the summer of 2016, that matched (or exceeded) the specs required, in India, for the local price of 2,443 India Rupees which was $36 US dollars. We were 2 dollars BELOW the target price for the forecast. The forecast looked good.

FORECAST NO LONGER HOLDS

Now I have some bad news. The forecast no longer holds. I have searched a dozen countries and phones of hundreds of brands, and cannot find a smartphone that matches those specs, at a price around $19. The nearest I’ve gotten is again in India. A smartphone by the name of Microkey, model E12, (new phone from Nov 2017) is nearly the specs we want. 4.5 inch (larger than required) touch screen Android smartphone, 8 mp camera (better), with LED flash, 3G and WiFi. But this phone does not have GPS. And it is available locally for $1,799 India Rupees. That is $28 dollars, not $19. We have now failed to match the predicted price path. We are 50% above where it should be.

This means, first off, that it is nearly certain, that by year 2020, we will not see anyone (yet) selling a new smartphone that matches the 2010 iPhone 4 in specs, and costing only $10. It looks like we’ll fall short from that amazing price point, BUT we ARE on track for a smartphone year 2020, that costs about $20. And considering the collapse in price from $600, then whether it is $20 or $10 doesn’t really matter. We will have achieved a computer into essentially every pocket, even in the Emerging World.

Note, that the price decline now is proceeding at a slower rate than it has been before. Part of that is the inevitable end to Moore’s Law which some say is upon us, others say will shortly arrive. But in this case, new smartphones costing under $30, we do have the issue of the non-digital elements to the cost of a phone. The plastic casing for the phone is not experiencing a Moore’s Law. Plastic does not become cheaper by half every 18 months. Similarly the battery. Batteries are getting cheaper but nowhere near as fast as Moore’s Law is lowering costs of computing. Also labor costs do not fall by Moore’s Law. The shipping and marketing costs do not fall by the rate of Moore’s Law. So the final non-subsidised non-contract price of a new smartphone model right now, if the bottom end is at $28, only a small part of that price is the electronics of the ‘smart’ and ‘phone’ part. The other elements that do not live by Moore’s Law are now a far larger proportion of this cheap smartphone, than were parts of the original iPhone 4 back in year 2010.

NEW PRICE PREDICTION FOR NEXT 5 YEARS

It WAS a wild ride, for 6 years. We DID match, exactly the predicted price path, up to the summer of 2016. Now that ride has ended. Smartphones are STILL becoming cheaper, but now the price shrinks more slowly. It literally was cut in half every 18 months since 2010, now it seems to be cut by one quarter, every 18 months (ie the price drop rate has fallen into half). This suggests, that going forward, we could expect this type of price pattern at the very lowest end of smartphone prices:

2017 Winter cheapest new smartphone $28

2019 Summer cheapest new smartphone $21

2020 Winter cheapest new smartphone $16
2022 Summer cheapest new smartphone $12
2023 Winter cheapest new smartphone $9

We should prepare for this pattern and now it is likely in year 2020 we won’t find $10 clones of the 2010 iPhone (by tech specs) and instead, that year we’ll find the first phone at $20, roughly matching the specs of our 2010 iPhone. And if this slower rate of price drop continues, then expect the first new $10 smartphone to be upon us around year 2023.

PS obviously we ignore the nonsense fake phone deals that never materialized. Secondly, these will not be ‘as good’ smartphones as what the original iPhone 4 or Nokia N8 or Blackberry Bold etc were in year 2010. The cheap clone ‘superphone’ will be very cheap plastic and may have all sorts of quality etc issues. But I am not considering discounted old models sold at prices to get rid of inventory. I mean it has to be a new model that year, that is sold at a fair price in its market. And while we won’t see the $10 smartphone yet in year 2020 we seem to be getting gosh-darned close to that, at $20. And that the $10 smartphone is likely postponed to year 2023. Still, only 5 years from now....

Even when a precise forecast isn’t coming perfectly to form, I am so happy to be able to revisit old forecasts to see how they are doing. And this one, once again, was a remarkably useful forecast in year 2010, when there were no smartphones really below the $200 level. To be able to give guidance to the industry, that prepare - in a decade, smartphones will cost a tiny fraction of what they were costing back then...

So for the record. I am now shifting my forecast. No $10 iPhone-clones in year 2020 (yet) but the new target is $20. And the $10 iPhone-clone is likely to arrive around year 2023.

Nokia HMD Comeback? First national numbers for December are out. In Taiwan Nokia HMD ranked 7th with 3.2% Market Share

So we're monitoring the Nokia HMD comeback. Hopefully this period (next 7 weeks or so) will bring more numbers. But ONE country has already released national market share numbers that are VERY positive for HMD Nokia's first reasonably-complete quarter of a portfolio of smartphone sales. It is Taiwan. A rich Asian country, of only about 20 million total population (half the size of South Korea or Malaysia for example) but still - that is almost as much population as Sweden, Finland, Norway and Denmark - combined.

What is the verdict? Taiwan domestic December (one month only) market share has Apple first, Samsung second, Asustek third and... in seventh ranking is HMD Nokia with 3.2% market share. This is VERY VERY good news for Nokia/HMD smartphone comeback story. It is so far the only December number we have. But if Nokia and HMD can get near 3% in many Asian countries and many rich world countries in some ways similar to Taiwan - then Nokia HMD could be around 3% for December, then or perhaps closer to 2% for the full Quarter in market share across all such countries. If so... Nokia could well be somewhere near 2% global market share (as its BRAND is far stronger in the Emerging World markets which are not very similar to Taiwan, like say Nigeria, Egypt, Pakistan, Brazil and etc).

BTW there is gossip that Nokia HMD might innovate in cameraphones again. A 'penta lens' camera setup may be shown at Barcelona, and may be released for late 2018 into the market (possibly for Christmas sales period of this year 2018). Lets see.

Meanwhile, GREAT news HMD !!! Great news Nokia !!! We hope for MANY more markets where your first full quarter of a significant portfolio of smartphones, gets you to around 2% market share... gosh that is good news.

(NOTE an early version of this article mistakenly said fourth quarter, when the data was only for the month of December)

US Politics: Year 1 of President Trump aka Record Chaos: the Early Years. Oh and a Shutdown (Updated)

UPDATE MONDAY

The shutdown is already over (lasted only 3 days). My blog was written on the premise of the recent pattern of prolonged shutdowns. I did write in the blog, that if the Republicans are smart, they will end this shutdown immediately, as it was THEIR mistake. And they did. The shutdown is over. Note that my analysis was assuming a long drama. As it is over, no real sense in reading that long article 'of what might have been'. I will leave it of course here onto the blog, if anyone is interested in that analysis but the drama is over. I'd call it a draw. It depends on the aftermath, if there is some marginal gain or loss on either side. I'll return with more politics later when relevant, and continue now with tech/mobile/media items for the time being. You can read the full article below: