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Seeing First Nokia Smartphone HMD Numbers - What does this all mean? A first stab at the big picture for Nokia return to smartphones (Updated 3x)

There are some HMD Nokia numbers and we can attempt some analysis. We have a very active and loyal readership at this blog (thank you to all) and one of the beauties of the comments section, is that you can learn a lot just from reading the comments - I certainly do. And now in the past few days, there were several sudden early numbers that came relating to HMD's performance with the Nokia brand, particularly around smartphones (where our interest lies, not so much the featurephone ie dumbphone side). Lets first take just the data points, vague as they mostly are, and see what we have.


UPDATES 18, 19 & 24 October 2017 (see bottom, we have a preliminary sampling of some countries where Nokia Android phones are marketed, courtesy of comments via readers to this blog)


First off, we have a quoted but vague number via HMD's Pekka Rantala, who gave an interview at the Italian Nokioteca. It starts in Italian, but switches to English. If you want to go to the point where Pekka talks about the sales numbers (that is in English) it starts at 07:45. Pekka said on Sept 2, 2017, that for phones that started to sell in June and covering the first four smartphone models, HMD/Nokia has sold 'millions' of smartphones and for dumbphones (5 models) they had sold 'tens of millions'. Pekka said several times that demand is exceeding supply. Also Pekka explained that the initial strategy has smartphones sold in only a few distribution outlets per country (like one chain of stores in Italy) and this was done for the reason of attempting to keep phones available in the few distributors, rather than putting effort into securing a wide distribution (where then most resellers would have nothing to sell). Pekka further explained that the marketing has not been yet using paid marketing because the initial demand is so strong, but a paid advertising campaign for the Nokia 8 flagship would be coming to major markets for the Christmas season including Italy. Very intersting interview, I recommend you watch it. And thank you to our regular blog reader 'Winter' for finding the interview.

So Pekka Rantala Chief Marketing Officer of HMD said Nokia smartphones had already sold millions by the start of September. And we know its not into the 'tens' of millions, because he mentioned that number, as the scale of the featurephone side, like the 3310. This gives us a scale of cumulative sales June to August, 3 months, of over 2.0 million and under 9.9 million.

Second we have also via link found by our reader Winter, that measured the scale. It is an indirect measure, but most who would buy a Nokia branded Android smarthphone, would then go and get the Android app from HMD for that smartphone. Nokia Power User website had reported on the statistics for the HMD Nokia Android app, and that as of October 8, 2017, those were in the scale band of between 1 million and 5 million downloads. Certainly there are at least 1 million HMD Nokia Android smartphones that are not just sold and in use, but have been activated on the Google Play Store for Android apps. Note that not all who buy a smartphone will download apps to it, and as the article points out, and our blog reader 'Phil W' also reiterates to our readers, those Play Store numbers do not include China which is where HMD started its sales, where the Nokia 6 went first on sale. So the 'upside' for the cumulative sales could be above 5 million. I'll do my math in a moment but lets take the third number before that.

Finally we have an analyst house, giving their count. This is perhaps the 'best number' and it is certainly the most precise. IDC is one of the big analyst houses that report every quarter on the smartphone market, and one of the 'best' that we have used on this blog in our average of leading analyst houses, when we arrive at the quarterly total market size number. IDC has given their number to the Finnish newspaper Ilta-Sanomat, on 11 October, 2017. This story was picked up by our blog reader 'Paul'. IDC reports that the Nokia brand is already ranked number 5 in Finland, number 11 across Europe and has 0.4% global market share. As of the first half of 2017 (ie ending June) IDC had counted total cumulative HMD Nokia smartphone sales at 1.5 million. This is all in a Finnish-language article interviewnig IDC's Research Director Francisco Jeronimo.

So we have scales of numbers, one says 2M to 9.9M cumulatively up to end of August, on global level. Another says 1M to 4.9M cumulatively to early October, but ignoring China sales. And a third says 1.5M cumulatively up to end of June with 0.4% global market share. Let's try to make some sense out of these numbers, are they telling a consistent story?

What is currently missing from that, which can help give us guidance? First market size. What does 0.4% global market share mean? IDC has not reported the Q3 numbers (July-Sept) so the 0.4% global market share is very likely the measured number for Q2 (April-June). And IDC counted the total market to be 341.6 million smartphones sold globally in the quarter. 0.4% would be sales of 1.4 million in Q2 and allowing for 0.1M sold in just China in Q1. That sounds reasonable.

Now what is the China market size? The TomiAhonen Phone Book tells us total handset sales in China last year was 412 million so about 22% of all mobile phones sold, are sold in China. As China is somewhat near middle in terms of global smartphone migration rate, we can use that percent also for the smaller smartphone market size, as a rough rule of thumb. Meanwhile as HMD is pursuing a global footprint, that would give a reasonable number as the percentage we might see China smartphones as a percent of all HMD Nokia smartphones sold (before we have any better regional data). So to adjust the scale of the Nokia Power User numbers, when China is factored in, the actual 'activated Android Nokia phones' cumulatively by early October would be between 1.3 million and 6.4 million. I would warn that not all who buy a new phone will download an app to it, but among the most eager Nokia buyers, that ratio is likely to be significantly lower than normal. Lets give it a factor of 1 in 5 doesn't download apps at all, and add that missing 20% to the shipments of HMD Nokia Android smartphones to the above. We arrive at 1.6 million low end and 8.0 million high end for the Nokia Power User measured indirect number, and what it suggests.

Can we fit this onto any sort of reasonable graph? Here we have serious issues of just 'gut' guesstimates. Will the Nokia sales have a one-time huge surge, those who missed Nokia rushes to the stores, bought the first devices, and then never returned? That was somewhat the pattern with Lumia, which had severe disappointments and the sales patterns in following periods never matched the early excitement. How satisfied are the buyers with their first Android based HMD Nokia smartphones? We don't have stories of 101 faults or exploding phones with antennagates or broken screens. But it is early going. If this was the pattern, we could have 1.4 million sales in Q2, and then say 1.2 million sales in Q3 and 0.8 million by Q4. Another rival theory is, that the sales are solid, and are constrained by retail availability (demand exceeding supply). Certainly this is what Pekka Rantala talked about in his interview. In that case, if HMD sold 1.4 million in one month (June) then you could multiply that number by three for the next quarter (Q3, July to September) and get 4.2 million quarterly sales. A good sign is that HMD is expanding its product line, releasing two new Android phones for Christmas (Nokia 9 and Nokia 2). And that their overall phone business seems to be on very solid ground with 5 dumbphones selling in 'tens of millions' cumulatively, and for example the 3310 classic model now upgraded to include 3G so it can be sold in some of the more advanced markets where 2G networks have been shut down or are being shut down.

Now its a gut check time. What can I tell you? I do think that there is genuine growth happening. The data is consistent with this type of pattern:

FIRST ROUGH ESTIMATE OF HMD NOKIA QUARTERLY ANDROID SMARTPHONE SALES
Q1 (China only) sales . . . . . . . . . . . . . . . . . . . . . . . 0.1 million (IDC, calculated)
Q2 (June only) world launch . . . . . . . . . . . . . . . . . . 1.4 million (IDC, calculated)
Q3 (world 3 months) about . . . . . . . . . . . . . . . . . . . 2.5 million (TomiAhonen Consulting estimate)
Q4 (2 new models added, Christmas Qtr) about . . 3.5 million (TomiAhonen Consulting, preliminary forecast)

Source: TomiAhonen Consulting estimates and preliminary forecast based on IDC, Nokia Power User data, and HMD statement, 13 October 2017
This table may be freely shared


That would mean that 'today' mid October in real calendar time but say end of September end of Q3 in unit measurement time we'd have a cumulative Nokia Android sales level of 4.0 million HMD smartphones sold so far. It would be totally consistent with Pekka Rantala saying 'we sold millions' by September and not 'tens of millions' (yet). It is totally consistent with Nokia Power User measuring between 1 million and 5 million activated Nokia Android devices downloading at Play Store, which suggests global base of Nokia HMD smartphones in use of between 1.6 million and 8.0 million. 

Another way to look at it, is just to take the mid-points of the more vague measurements. The HMD CMO number between 'millions' (2.0m) and under 'tens of millions' (9.9m) is 5.95 million. Meanwhile the number via Nokia Power User measurement of between 1.6 million and 8.0 million gives an average of 4.8 million. If we average those two averages, we'd arrive at 5.4 million cumulative shipments so far. My number is therefore perhaps slighly conservative, being 26% below those strict averages.

A third way is to take the IDC number for one month, and simply multiply it for 3 months to get the Q3 number estimate. That would be 4.2 million (per quarter, not cumulatively). That would mean cumulative number of 5.7 million by now.

I want to strongly caution about these numbers, I am taking the view that Nokia HMD sales are GROWING from the initial excitement of the re-launch of the Nokia brand. It is by no means a guarantee that this is going on. Hopefully we will find more data points to see if this is in fact happening. But I am confident to give my best guess, that the current sales level of HMD Nokia is about 2.5 million units per quarter (Q3) and looking solid for roughly 3.5 million global quarterly sales for Q4 Christmas period. That means that as of today (end of September) the cumulative Nokia HMD sales would be about 4.0 million so far.

One last point, also brought out by readers to this blog. The key to HMD's success is not how good the phones are. This market is wholly dependent on how good the carrier support will be. And that remains to be seen, but the first sign is out, that HMD seems to be doing well on that front. Our blog's long-time loyal reader 'Asko' reported on October 6 that he had seen the first carrier-advertising for HMD's Nokia. It was in Finland, no surprise that it would start there. But carrier support is the VITAL piece if HMD is ever to re-enter the Top 10 or if it would be only a curiosity forgotten old brand like say Palm or Alcatel or Motorola selling in tiny numbers. The carrier support is absolutely critical. And the first sign is seen, in one country, one carrier, has started to advertise Nokia HMD smartphones. Yes, this is Finland, but inevitably, Finland, as the birthplace of the Nokia brand - was always going to be the first country where this happened, anyway. And it has now happened. We need to monitor this space and see, does HMD win more carriers to start to promote the brand. Only then can the real return happen.


UPDATES 18, 19 & 24 October 2017: Several of our readers have submitted comments that discuss countries where the marketing has started. I am now adding (on 18 October) an early preliminary sampling of countries that have thus been 'reported' to already have HMD Nokia Android phone advertising and what other data we have of those countries. I am posting in chronological order by countries that were discussed by people commenting. As of 24 Oct we have 25 countries reported:

China (one retail channel, source HMD)
Italy (one retail channel. advertising of Nokia 8 coming for Christmas, source HMD)
Finland (advertising by 1 of 3 carriers, source reader 'Asko'; also market share of HMD Nokia in Finland currently ranked 5th, source IDC)
Hong Kong (1 carrier CSL plus 3 local retailers advertising Nokia 8, according to my observations)
India (1 carrier Vodafone marketing 3, 4 & 6 says iGadgetWoman; plus manufacturing locally, source reader 'John A')
Indonesia (biggest retailer and 1 carrier Indosat advertising Nokia 3 & 6, source reader 'Abdul Muis' with local manufacturing, source reader 'John A')
Turkey (1 carrier, Vodafone, running ads for Nokia, source reader 'John A')
Sweden (2 of 4 carriers Telia and Telenor selling Nokia source reader 'John A')
Poland (3 out of 4 carriers selling Nokia, heavily advertised. Source reader 'Mike')
Netherlands (Nokia 8 is on Dutch networks, source reader 'Winter')
Spain (3 of 4 carriers are advertising Nokia 3, source reader 'Luis Calvo')
Hungary (3 carriers Telenor, Vodafone & T-Mobile are all advertising Nokia, source reader 'zlutor')
Switzerland (all major carriers offering Nokia including among their 'brand list' feature, source reader 'Joe Fish')
Malaysia (1 carrier Digi advertising Nokia 3 & 6, source reader 'Abdul Muis')
UAE (1 carrier Etisalat has 3 Nokia models, source reader 'Abdul Muis')
Portugal (2 of 3 carriers NOS & Vodafone have Nokia 3, 5 & 8 models, source reader 'Pedro')
Bulgaria (3 of 3 carriers advertise Nokia, also demand is exceeding supply, source reader 'Vlad')
Germany (2 carriers offer some Nokias: T-Mobile has 2 and O2 has 3 models, source reader 'Huber')
Nigeria (1 carrier 9mobile is advertising Nokia 8, via Twitter follower 'Mister Mobility' aka @moverick)
Mexico (1 carrier Movistar is advertising Nokia 6, via reader 'Rigoberto Calleja') 

NOTE - other countries mentioned in various press releases and articles. I have so far found UK, New Zealand, Australia, Croatia, Serbia.
 

THIS LISTING MAY BE FREELY SHARED; Please indicate 'data crowd-sources via readers of Communities Dominate blog' if you post the listing.

I need to point out that the USA is a good example of where Nokia has not yet managed to get any carrier support. Reader 'Jim Glue' provides info that only Amazon sells the Nokia 6 in the US.

My deepest thanks to the readers who contributed these insights! I hope to add more to the list if we get more such data. But at least 12 countries have a Nokia HMD retail presence and some level of support advertising or marketing including some very big countries overall (China, India, Indonesia) and major Nokia strongholds in Europe like Italy, Turkey, Spain and Poland. Plus the obligatory Finland and Sweden haha..

One last note. Reader 'Paul' noticed the print edition of Finnish tech mag 'Mikrobitti' which compared smartphones in the 300 Euro price bracket and the Finnish mag selected the Nokia 5 as better than the iPhone SE. Yes its from Finland, probably home bias but still.. shows considerable promise for the return if some are willing to go to print calling Nokia better than Apple's iPhone....

For context. Some may look at 80 million Samsung smartphones sold every quarter and say this is peanuts. I would remind them about the only other comparable recent entry into the smartphone races that turned to be a success. A tech company named Apple launched itself into the handset market in 2007. It set as its public target to sell 10 million iPhones in the first year. Now lets ignore the China numbers for Q1, and count four quarters from Q2 of this year by my rough early estimate. Let's say Q1 of next year will be 'down' as the after-Christmas quarters mostly are, and HMD 'only' sell 3.0M in the January-March Quarter of 2018. Then for the equivalent first year sales somewhat apples-to-apples, HMD/Nokia would have done 10.5 million sales in its first full year and do roughly as good as Apple in its first year. Do not misjudge these early numbers. As long as HMD continues in GROWING from this start, then this is a VERY strong start indeed. 1.4 million sold in one month at the end of Q2? Yeah, 2.5 million they'll definitely then do in Q3, probably more. And if HMD/Nokia can sell 2.5 million Android smartphones in Q3, when they add 2 new smartphones for Christmas, 3.5 million is a reasonable early estimate for Q4 Christmas sales as well.

I think these numbers have considerable upside potential, and very little downside below my conservative estimate. But we will monitor more info as it comes in, hopefully more measured results to give us a sense, of whether these numbers hold (is there continued growth), do carriers buy into the Nokia comeback story and start to promote HMD/Nokia smartphones - and will the Christmas sales period bring joy and presents in the land of Santa Claus. 

My very best to HMD, this blog is in your corner. If you dare to reveal any more numbers, please do so!!! Tsemppiä!

Noted in Passing: Microsoft Smartphone OS Platform Passed Away

So it comes as no surprise to readers of this blog. But it's now official. Microsoft has announced that it has stopped the development of the smartphone OS platform that once was known as Windows Mobile, at another time Windows Phone and most recently Windows 10 Mobile. The existing product is not yet ended but all development has ended. You say tomato, I say potato. Same difference. Windows on smartphones is dead. Good riddance too!

Very briefly, I was chronicling the rise of Windows onto smartphones and chaired the world's first smartphone conference. I kept tabs on the role of Windows which briefly was the world's second-bestselling smartphone OS a decade ago. I warned of the mistakes Microsoft was making that started the death-spiral - very importantly from Windows Mobile to Windows Phone, the bizarre arrogant decision by Steve Ballmer to not have a migration path to Windows Phone OS (this was still before the Nokia related end to the platform). I was proven right and Windows lost half its share and fell to fifth ranking in smartphone OS wars just as the 'Bloodbath' was heating up (which we followed intensely on this blog).

Then came the end. The unholy alliance of Nokia and Windows, orchestrated by the worst CEO in corporate history, Stephen Elop (aka E-Flop as he's often called in Finland). Nokia's inept CEO messed up what chances the partnership would have had. I predicted that Nokia sales would collapse (as they did) and Nokia's handset unit which had never one in Nokia's history produced a loss - would start to produce losses (which it did) and that Nokia would never return to profits in smartphones (which it didn't) and that Nokia would have to sell its handset business (as it did) and that would be to Microsoft (as it occurred). Not bad predicting, eh.

And a few months after the Nokia deal, Steve Ballmer then put the final nail into the coffin of Windows smartphone hopes - when Microsoft purchased Skype. Once again, as with the previous forecasts, when I explained why Skype was the death-nail to the smartphone OS platform, numerous readers came and loudly protested in the comments, claiming I was a fool. Yet in a matter of weeks, all other major Windows Phone handset makers instantly quit the platform (like SonyEricsson, LG, Motorola, Dell) or dramatically cut down the Windows Phone product portfolio (like Samsung and HTC) and Windows share collapsed from 5% the year before to half that by the time the first Nokia branded phones started to ship on the platform. It was not the Nokia deal that killed Windows, it was Ballmer's purchase of Skype - as I explained and as turned out to be true. The carrier community put Windows smartphones into a sales boycott and Microsoft never recovered. This all happened before Nokia started selling Lumia phones on Windows, but later, when Nokia CEO was asked about a sales boycott, he admitted one existed and that it was hurting all Windows phone makers, including the then-brand-new Nokia Lumia sales. Various other Nokia and Microsoft execs admitted the boycott or in some synonyms like 'carrier reluctance' to sell the Windows OS phones (not just Nokia Lumia but from other Windows vendors too that remained, like Samsung and HTC).

Nokia Lumia edition 1 failed as I predicted. It was replaced by edition 2 on a new version of Windows Phone OS which failed, as I predicted, and then the third edition failed, by which time Elop was demoted and Nokia sold the whole handset business to Microsoft, tossing Elop in the package back to his former employer too. I predicted that Nokia would recover with the telecoms infrastructure business which is at Nokia's core telecoms competence (as it did). I predicted that the ex-Nokia handset business would continue to be a failure at Microsoft, exactly as it did fail too.

Of the Nokia handset business sale to Microsoft, again, I made a series of predictions, that now every single one of my predictions came true. I said that the first recourse at Microsoft to the failing handset business would to fire the incompetent Elop from running the handset business (as it did). I said Microsoft would give their handset unit to another exec to run (which it did) and that exec would have two years until the business unit would be shut (as it happened). I even postulated a fantasy 'Hollywood ending' scenario by which Nokia's handset business would be sold back to Nokia, after it had failed at Microsoft. While that technically did not 'exactly' happen, gosh, it is close, considering how the sale happened to HMD. I then said that the OS platform itself, was obviously doomed because HMD aka 'New Nokia' would release Android phones, not Windows phones - as it happened - and now we see the end of Windows smartphone OS itself. Incidentally about the timing? I said Windows OS at Microsoft had a rough life span as a doomed 'dead man walking' division of never producing profits, of about two cycles of two years ie four years. Look at the calendar? Its autumn 2017. Four years on the dot.

There is nobody else in the industry who gave all this in predictions before they happened. And nobody else who explained each of these events WHEN they happened (no migration path Windows Mobile to Windows Phone, Skype Purchase, Nokia Partnership, Nokia Purchase, ex-Nokia Sale to HMD) and how that would impact Windows smartphone OS platform. Every single step in Windows fall was predicted correctly here on this blog and nobody else saw all that happening. This is now the final part. Yeah. It makes me happy to see Microsoft suffer, I hated Microsoft long before they got involved with Nokia. But regardless of my feelings about the company, the actual events - every single one I predicted, came true, and nothing I ever predicted did NOT come true. I even pointed out the silly forecasts of famous industry analysts who promised Windows would be bigger than the iPhone today in 2017 haha and have something above 20% market share of smartphones today. I was here,  when it happened, and told you exactly what would happen. As it all happened.

Oh. One more bit. I was the first to also tell you that Google won the battle of the century for the OS of all high tech - when Android was passing Windows (all devices, not just smartphones, but PCs included). Nobody else told you that either. It is now becoming apparent to many experts that Google owns the tech world via Android. Who told you first? The dude who saw how Windows was truly collapsing and that iOS was never a threat to Google's world domination plans. Yeah, we'll return to those issues in coming years no doubt. Goodbye Windows smartphones and by darn it, good riddance too! Ballmer gone. Elop gone. Lumia gone. Windows smartphone OS gone. Now when can we see Microsoft the company gone too, please, next?

It Opens Like a Book - How 'Good' Would a Fold-Open Screen Be Like? Anticipating Samsung Innovation

At first thought, a 'fold open' screen for a mobile phone does seem 'obviously better'. Every one of us has been in that situation at some point, with some picture, video, website, game or other content, when we felt "I wish the screen was bigger". And I've been on this blog telling that 'Screen Size Trumps Everything'. We've seen the reversal from the trend of mobile phone handset devices getting ever smaller (from 1980s to 2007) and the opposite, via first the original iPhone, and then subsequent ever-larger screens which have brought us the massive phablet screen sizes that barely fit into any pocket or hand. By the two most important measures of the three measures of physical size (Height x Width x Thickness = Volume) and I mean height and width (not thickness) the modern largest phablet phones are larger than most commercial mobile phones of the mid 1990s.... Only by the thickness aspect, are we currently ahead of the phones from two decades  ago. yeah, thats 'progress' for you. 

So when someone says 'how about a folding screen on a mobile phone' - folding like a magazine, to give us a larger screen - that does sound like a brilliant idea. That oh yes, please, lets not try to make our current oversized phones even larger, what if we had a smaller phone, and just offered it with a folding screen in some way, that gets us the larger screen size, but in a far-smaller handset overall (while then, very likely, somewhat thicker, bulkier, to allow for two layers of the screen element, when folded into our pockets).

Well, we're probably gonna see it soon. Samsung has been teasing developments into that direction and now it does start to look, like we may see the first flagship phone by any major brand, that has a folding screen that folds in half when in the pocket, and opens up to twice-size when opened up for any screen work. It may be somewhat like an old Motorola flip-phone (flipping upwards) but its more likely to be like a 'palmtop' such as a Nokia Communicator, opening sideways. Like a book. It may end up having an extra screen, smaller, to use when it is 'closed' like later editions various flip phones and folding phones like Communicators. So you don't have to open the folding screen to use it. 

COMMUNITIES DOMINATE ORIGAMI

And that has me thinking (oh-oh...). Will it really be any good? I don't mean mechanically (will it be durable, will the seam between the two sides of the fold, be visible..). I mean for the CONSUMER. What good would a folding screen really be?

And first off, you might say, duh, Tomi. It is TWICE the size of the screen! As long as the phone doesn't cost twice as much, of 'course' it will be better. It will be twice as good. Didn't you say that screen size trumps everything? 

Yes, I did say that. But we have a nagging warning from the recent past: the hapless Blackberry Priv and its square screen. No matter how you turned it, horizontal or vertical, you could not get more to see in a movie, video, photograph. Unless that picture was taken with some ancient square-film camera, you only lost and never gained with the square screen. So aspect ratio plays a big role in our display. So old style TV images were 4.3 aspect ratio but most modern flat screen TVs are in 16:9 aspect ratio (Wider). And movies often are in 'widescreen' which can be as wide as 2.2 to 1 aspect ratio. And recently we've started to see wide-screen smartphones in the rough mid-point between those, using an 18:9 aspect ratio.

BABY YOU'RE SO SQUARE

So what does this do to our viewing pleasure? Lets stay with the most standard screen size today, 16:9. And lets flip our screen. Here the blue screen is any regular smartphone in portrait mode, and the yellow part is the same screen turned sideways to horizontal orientation for landscape images, videos & movies:





Now, lets try a twin-screen out of the same phone. So it is standing up, portrait, identical size to the above, and is a 16:9 aspect ratio screen. Then we open it up 'like a book' (or magazine) and we get two screens, side-by-side. But what happens when we view something on it? What? A standard video clip on YouTube or the picture we just received about our nephew? If we now use the double-screen to view any content that is formated for 16:9 aspect ratio video, and we view it on the double-screen, we get this yellow image. I have superimposed on the same image, what would be the SAME screen, in single-screen size, but flipped sideways to landscape mode....


 



Note the gain is truly modest. The light green image sideways is not twice as big as the blue screen sideways. It is only 26% larger in area, and only 13% wider. It is yes, visibly bigger, but only just. Barely so. Is this worth a ton of money? I kind of doubt it. The concept might not be worth the extra money and it could be a huge waste of effort. Because most people who could afford a premium Samsung folding-screen smartphone, would also own other phones and definitely have friends with similar phone screen sizes (unfolding phones) and the comparison would be too easy to make. How much more are you gaining from this? Not really that much, considering the folding screen IS twice as big (costs at theoretically twice as much in pixels, but probably even more, due to the folding tech, and while the whole phone won't need to be twice as expensive, this would definitely mean a more expensive phone...).

LIFE'S GOOD

That is with a 'normal screen' phone, at the 16:9 aspect ratio. What happens if we do the new wider 18:9 aspect ratio? Now there is literally no gain (in terms of width of image, vs flipping the same phone screen side-ways). Then the image looks like this:






Yeah maybe LG was playing some offense in its defense against Samsung, when they introduced the 18x9 aspect ratio screen size haha... Ok. How DO we gain from the folding screen? Would you believe it, the best gains come if we go down to old-fashioned screen formats, like 4x3 of old TV. Here we DO get a benefit, especially if we are viewing 16:9 type of content (which was already poorly fitting to the orig 4:3 screen). If Samsung went 'back' to this type of screen format, then the GAINS would be big from doubling the screen... 




(Note that I now added a new color, red, to illustrate the 16:9 format image on the single-pane 4:3 screen, turned sideways for landscape viewing.) But the OTHER issues with phones would then come into play - in other words, we'd get wide phones that don't fit in our pockets (as modern phones have screens that go very near to the edge of the phone. What could we then do? If you want DRAMATIC increase in a folding screen, then you'd really need to go to 3-way folder with 16:9 aspect ratio. THIS is what would be an impressive folding screen:




But that would then bring us tons of new problems such as... the second fold. Its not like folding paper (yet, haha Communities Dominate Origami)

I don't want to sound like a wet blanket, and I DO DO DO so hope for innovations and new form factors for our phones... but the folding screen? Gosh, it does seem like awefully lot of trouble for a truly modest gain. It might turn out not quite the miracle breakthrough that we had hoped..

iPhone X: Now the pain

Well that was a nothingburger. Apple's event is over. The new flagship iPhone X has what? Wireless charging and face recognition. Oh, and don't forget the animated emoticons. For this the price is jacked up by more than 200 dollars to $999 without contract for the cheapest Model X. Seriously? The screen is SLIGHTLY larger in a slightly smaller body. Then the rest is utter cosmetics and trivial tweaks. But the flagship iPhone price is suddenly jacked up by a quarter? This may bring nice revenues from most loyal iSheep but some who were already concerned about the price evolution of the iPhone line, and had started to ponder a possible rival phone, they may well now feel that this is just going too far.

I did expect SOME magic to suggest this, the largest leap in iPhone's price in its history (as percent compared to previous flagship) but no. Nothing there. So while yes, the loyalists will stand in line for the X, this flagship will not grow Apple's iFlock. In fact, this will scare away some who were lukewarm nearly iBelievers and this is a great opportunity for many rivals to snatch SOME high-value iCustomers to the Android fold. And this underwhelming iX comes at a time when Samsung's Galaxy Note 8 is doing record business for the Sammy; and various next-tier players from Huawei to Xiaomi to Vivo are reporting hot sales - and even a nearly-forgotten Nokia brand is doing a flagship for us. The iChains are strong but they are not unbreakable. Some will say they can't see the value in the iPhone X, not if they have to pay $999 or more.

At the same time the other two new iPhone models numbered 8, are also priced very highly and not priced to move the model line into any new market segments at all. The only stuff Apple has for those lesser mortals who would pay TWICE THE AVERAGE RATE of a smartphone - is old obsolete iJunk smartphones. All this spells to me - lackluster iPhone sales into the Christmas quarter ie calendar Quarter 4, and poor performance in China's New Year gift-giving period that follows in the January-March calendar Quarter 1. With Q4 lukewarm sales - after how this year has gone for the iPhone - we can expect roughly flat iPhone unit sales vs year 2016. We could see a fall in iPhone sales vs 2016. That would be the second year of falling iPhone unit sales. (Warning bells? Anyone? The overall smartphone INDUSTRY is still growing. Why is Apple not able to even match the growth level of the industry?)

Worse than that, is how it bodes for the start of next year. This is Apple's 'best shot' of the year, and it is truly underwhelming - combined with highway-robbery level price increases. Any sensible rival can make SMALLER price jumps, but put in some more exciting tech, and steal some of Apple's potential customers - in particular those who are not yet fully in the iSheep camp. Samsung's next Galaxy flagship has a HUGE opening now to move some goalposts (and there is the persisting rumor that we will get a folding-display to double screen size). If we get two years of falling iPhone sales, as is now quite possible - it then sets quite large hopes/expectations for the XS model for this time in 2018. And there IS a surging Huawei coming. It has held the third-ranked smartphone manufacturer title for four years in a row (annual unit sales) and certain to add this year, to make it 5 in a row. In that time Apple has fallen from 20% to 14% while Huawei has climbed from 5% to 10%. By the summer of 2018 we should see individual Quarters where Huawei inches just ahead of the iPhone - and then that will be a dramatic shock to many who have truly iBelieved in the iMagic and in imaginary iEconomics. Around year 2019 we may see full-year sales for Huawei on par with Apple and a true race for second place (Samsung is obviously safely the largest smartphone maker now and then).

Well.. the old adage holds true - to see what Apple will do next on its flagship, just look at an old Nokia flagship. Wireless charging? Nokia had in 2014... Now as to things like OLED displays haha, those have been staples on various rivals from Samsung to Nokia for YEARS. 

Will this new iPhone 8 and X model line sell well? Yes. Will Apple make massive sales revenues and humongous profits? Sure. But will these phones grow Apple's market share? Of course not. Apple has not just stopped growing market share (5 years ago) but it has now stopped even growing mere unit sales. And if you thought last year was an anomaly, and the 'anniversary iPhone' would somehow fix the 'temporary' drop in unit sales then no, that will not happen. These iPhones will continue the slow decline in annual unit sales of iPhones. And while most iFans will just cheer on, giddy in ridiculous-level profits - some sensible analysts will start to get a .. little bit .. alarmed that wait, haven't we seen this movie before?

Now about movies seen before. I gave you a prediction on this blog about a total flop for the Apple Watch. I said there is no market for smart watches and the iWatch, sorry the Apple Watch will not survive to 3 editions. On that, today I have been proven wrong. Apple did get its third edition Apple Watch out - so yeah, I am not infallible and I got that call wrong. As to smart watches? They are a disastrously bad market opportunity for anyone. If Tim Cook wasn't personally married to the apperance of the Apple Watch as his first 'post Steve Jobs' product, he'd have killed it already. But yeah. There is SOME sales. The sales numbers are so bad - that Apple refuses to give us the numbers and hides behind guesses made by analysts. We know from that, that the true Apple Watch numbers are EMBARRASSINGLY bad. But yeah, I predicted that Apple would pull the plug at this stage. They rather maintain the embarrassment for another cycle. Ok, I got that guess wrong. I still hold that there is no big market for smart watches and that if Apple honestly felt the Apple Watch was a success, they'd be yelling about those sales numbers and publishing them at every Quarter. Apple know the iWatch is a total flop. But ok, they did make a third edition. I did get that call wrong. I am sorry about that. Just don't be mistaken into thinking there is any sustainable mass market for any wrist-based media etc... Some iSheep will wear the iBracelets yes, but there is no mass market for smart watches. It will be a fad that will soon be gone.

Back to iPhones. Am truly disappointed in that Apple had nothing amazing for us, yet it did that outrageous price bump. Again their timing is off. Apple COULD have done this when they did the phablet screen bump. At THAT point, Apple left so much money on the table and had a missed opportunity (I told you then, calculated on this blog, that a market for $1,000 dollar price premium smartphones was viable). But this move now, with this lame an upgrade, is going to hurt Apple. Not that they would be in any danger for their total revenue growth or profits, but for unit sales - now it looks like a second year of unit sales numbers actually fall - or at best, are flat vs 2016. There is no 'recovery' powered by the anniverary iPhone.

Now finally. We do know how Apple intends to revise modern mathematics. The new iMath by Apple goes like this, based on iPhone model numbers: 0, 2, 3, 4, 5, 6 7, 8, X. No ones, no nines. And the 'cool way' to 'write' a 10 (which by octa-math is of course what we know as an 8 on our decimal system) is with X. I could go with that, but by that logic, shouldn't a 'zero' then be a slash? like / or would the zero be \? I am not sure...  

I am not saying Apple is doomed. I have NEVER said that on this blog. I AM saying, that this X model and the 8 iPhones will not resurrect the iPhone line into unit sales growth. And yes, obviously, I was correct back when I said that Apple's market share had peaked. That has never recovered either. More market share declines coming. But Apple the company will be fine, more revenue growth and more profits yes. Just don't think the iPhone or iOS is anything more than a niche market. Rich, large niche yes, but a niche market. The mass market and digital future of the next decade (indeed, this century) belongs to Android and Google.

Anticipating Apple Strategy Shift with iPhone, with Warning From History

There are a bunch of stories that signal the timing for an Apple shift in strategy. Some numbers from Apple tell that the 'next iPhone' has not materialized (iPad, Apple Watch) and the old businesses have more-or-less peaked (Mac, iPod) and now we are possibly on the verge of 'Peak iPhone'. If the iPhone business also stops growing in unit sales - I do not mean grow market share in iPhones, that stopped several years ago (and this blog was the first to point it out) but I mean, actual UNIT sales of iPhone will ALSO peak at some point in the future (or may have just now peaked). That too is inevitable, only a question of time. The iPhone is a premium phone brand, it will not be sold to everybody with a phone: it is too expensive for that. It means, literally, that there will have to be a limit to annual unit sales, that the iPhone can achieve. And we are now close to that final limit. I personally don't think they've yet hit the absolute peak iPhone but they well might have. And even if they still manage to grow this year vs last, then very soon, possibly next year already they will stop growing and indeed, we would have reached peak iPhone. But even if Apple is able to magically create five years more of tiny growth per year vs last, they will hit their peak in the coming years. That is inevitable. Peak iPhone is imminent.

Then Apple needs one of four things. It needs to either grow the iPhone into where the market has grown (lower cost iPhones, that could cannibalize iPhone sales, revenues and profits); or invent a 'new iPhone' type of product category (I advocated for the iCamera to be that). Or they have to adjust their strategy from pursuing unit sales to pursuing higher revenues from the same sales (raising prices - this usually means lowered sales, however). Or fourth - they could change their strategy from pursuing unit sales, to pursuing increased profits. Make more profits per device sold. Then even as their overall market has stopped growing, they could still bring more value to shareholders, by delivering better profits. Bearing in mind, that Apple is already the most profitable company that has ever existed in human history, this would be quite a thing haha, but that is the fourth option. These are not 'mutually exclusive' options, Apple could try more than one of those simultaenously, of course.

Now the immediate next step from Apple seems to be breaking the $1,000 price barrier for the iPhone (ie option 3, raising revenues without increasing unit sales). Note, this also is a strategy that was first offered on this blog (at least, first that included any scientific analysis ie offering the current handset price pyramid, and ilustrating that strategically, it was possible for a premium handset maker like Apple, to raise their prices. In other words, that I felt there was a market segment of consumers who would be willing to pay up to $1,000 for a new iPhone, when new iPhones back then cost about $600 a piece - excluding the handset subsidy of a 2 year contract of course. All prices that I talk about on this blog are the real price, not the fake subsidised price distortion that is still in use in some countries like the USA). So yes, sorry about that, you can blame this blog for at least partly contributing to the direction that we suddenly got a few years ago, when top-end phones started to be priced at ever higher levels... So in terms of this 'strategy' of suddenly 'alarmingly' high prices for iPhones, yes, this blog argued that strategy first (at least first, when supported by current market data of handset prices). If Apple do now release an iPhone 8 at the 999 dollar or above price, then yes, this blog has once again, predicted correctly the direction of Apple's iPhone strategy's near future. So what are you thinking next, oh Sage Tomi? Haha. Lets take a lesson from history. A painful one.

WHEN YOU ONLY HAVE A HAMMER

So, first the warning. If the only tool you have is a hammer, you tend to see every problem as a nail. My background was strongly influenced by my last full-time employment at Nokia HQ (I left 16 years go) Yes, I've been a consultant, analyst and author ever since, and worked with almost every player in the industry but in some ways, you can see throughout my writing, that Nokia plays a disproportionate part in all of my analysis. I tend to see lessons from Nokia in various developments we have in the industry. So just a word of warning to start off, I will yes, make a Nokia analogy here, and it may just be that I am foolish about now having that hammer and seeing any problem as 'Nokia happening again'. But don't worry, this is not about Stephen Elop the most incompetent lunatic CEO ever to run any company (and to destroy it). This is about the decade that came before Elop. This is a lesson for Apple of how Nokia approached a very similar situation in the same industry.

So you like Apple today? Biggest mobile company by revenues and profits. The most valuable company in its industry (actually, most valuable company of any time in any industry). Recently made a management change, its iconic CEO is now gone. The market share growth has stopped, stalled and turned into decline, but the company easily makes the biggest profits of any rival in its industry. Now consider Nokia only twelve years ago. Nokia was the world's largest mobile company by revenues and profits. It had the largest market share of all phones, but its market share had peaked. Its iconic CEO was scheduled to soon quit, and a successor was being groomed already. And Nokia announced that it will stop pursuing market share growth, it would shift to pursuing profit growth instead. And part of this shift, was to move from lower-cost 'featurephones' ie 'dumbphones' to the new highly-profitable 'smartphones'. Also Nokia wanted to sell its very low-profit networking unit (that part which today remains, as Nokia later was forced to sell its total handset business to Microsoft).

Initially Nokia's strategy worked well. For a few years. It continued to make incredible profits, and through two world recessions, Nokia was the only full-portfolio handset manufacturer that was profitable in its handset unit in ever quarter. Every other full-portfolio handset maker rival of Nokia at that time - from Motorola to SonyEricsson to LG to Siemens to Samsung - reported losses in their handset unit, at some point in those world recessions (I am ignoring what back then were tiny specialist smartphone makers like HTC, Blackberry and Apple). But not Nokia. Nokia was SAFELY the most profitable of its industry. And even as Apple would climb to take third ranking in smartphone sales (and fourth place overall in total handset sales), and Apple prodcued bigger total profits in handsets vs Nokia, even then compared to ALL of its MAJOR rivals (full portfolio handset makers, those who made mass market dumbphones as well as the new modest-scale premium smartphones) ie Motorola, SonyEricsson, Samsung, LG etc - Nokia towered over all those with its profits. Only Apple - which soon would become the most profitable company in ANY industry - only Apple made bigger profits in selling only smartphones. Even then, Nokia sold more than twice as many total smartphones as Apple sold iPhones. So yeah, Nokia in purely 'smartphones' when measured against Apple - had fallen to second place in profits - but vastly outsold Apple in total smartphone units. This is not 'failure' at Nokia. While yes, Apple was besting Nokia in profits.

But now consider how the strategy went, and how the investors took this strategy. Initially, the investors loved it. Yes, their favorite tech brand (before Apple, Nokia was THE tech brand in the mobile sector. The nearest thing to a 'guaranteed' investment. Time and again, the Nokia share was split, and Nokia value just kept climbing and climbing, until it became the most valuable company in mobile, as well as the most valuable company in Europe. And Nokia could do now wrong. It had a conservative management, that always gave the truth on whatever was happening, good or bad. And it always was cautious in reporting what was coming up. Then in its quarterly results, it would tend to match or slightly beat what was the expectation. And if you invested in Nokia in the late 1990s or early 2000s, you could not fail. Any mid-term or long term investment in Nokia, as long as you only eliminated the regular cyclical down-turns of the economy - then Nokia was the best investment of the major tech brands you COULD make, in mobile (until Apple).

So Nokia overtook Motorola to become the largest handset maker in 1998. Then Nokia went on to own a third of the handset market, and then it came close to 40%. And then Nokia CEO (Jorma Ollila) announced that Nokia would not pursue market share anymore, but would pursue profit instead. And what happened after that? For the rest of Ollila's career as CEO, and all through the next CEO Olli-Pekka Kallasvuo, Nokia continued to be profitable in its handset division - in EVERY SINGLE QUARTER. Where all of its major rivals stumbled. Nokia continued to produce the biggest profits vs any other 'global major' brand in handsets, ie a full portolio handset maker - and Nokia which still of course sold more dumbphones than smartphones - was making bigger profits than most PURE SMARTPHONE makers like HTC or Blackberry. Only Apple with its iPhone, grew to make more profits as a pure smartphone maker.

But now, as Nokia was focused on profits, "not market share" - what happened to market share? It started to decline. And then EVERY QUARTER the market share number was down. There could be a tiny blip, one quarter, where it might tick up a bit, but then it was again down. While total REVENUES grew, and Nokia reported the best profits of the (full portfolio) handset peers, the market share news was 'negative' every single time Nokia was in the news. And that - inspite of good profits EVERY TIME - and often Nokia RECORD profits time and again - the market PERCEPTION changed from Nokia being a winner, to Nokia being in trouble and a loser.

Before Jorma Ollila's announcement of focusing on profits, there was no end to Nokia's share price growth. After that announcement, shortly thereafter comes the Nokia price peak and then it never recovered. The share price started to tumble, and then it tumbled, and then it tumbled and then the new CEO was replaced with another new (idiot) CEO and the Nokia share price started to collapse and it collapsed further and further. After a decade of astonishing growth, came nearly a decade of ever worse decline.

Does this sound familiar? Is Apple now telling us, we won't worry about unit growth or market share (anymore) and we will rather raise our prices sky-high and pursue high profits instead? There is no 'next iPhone product' to save Apple. The new iToys like Apple Watch are in fact, failures. And now the only way forward is to make bigger profits.

PARALLELS ARE VERY CLOSE

Apple is the most profitable company in mobile, which previously built its size in an adjacent tech field (computers). Nokia was the most profitable company in mobile, which previously built its size on an adjacent field (telecoms networking hardware). Apple has seen its market share peak. Nokia saw its market share peak. Apple is seen as invincible and unbeatable. Nokia was seen as invincible and unbeatable. Apple seems to be now shifting its focus from caring about unit growth, to only focusing on profits (the news is that the first run iPhones made at Foxconn will be less than in previous years, only 5 million units - this suggests that Apple may try to squeeze maximum profits out of a shrinking market). Nokia openly announced it was shifting from a unit growth/market share strategy to profit strategy.

So first, it is quite possible that Apple is able to grow its unit sales for Christmas and raise its prices for the iPhone 8 and get gargantuan profits while doing so. It is also possible that Apple has some wonderful features or new tricks they've prepared in secret for us, on the iPhone 8, that it becomes a massive hit phone. So say it cures cancer, has teleportation and time travel. That kind of things. But if the iPhone 8 is 'just another iPhone' - it IS facing ever stronger competition. Samsung for once is not stumbling with explod-a-fones. Huawei IS gaining on Apple. An ever more dangerous field of powerful rivals from Vivo to Xiaomi is joining the usual gang of LGs and Lenovos. Even Nokia is making a noisy come-back. If the iPhone 8 is 'only a regular' update, and not something spectacular to celebrate the 10 year anniversary of the iPhone, then this Christmas season for the iPhone could be far more challenging than usual. And that is BEFORE we consider the raising of the price.

I said when I told you that iPhones could raise their prices, that the optimal time to make that jump was, when the iPhone would do its phablet models. Not now. Today, if Apple does not have something CLEARLY SUPERIOR in the next iPhone, then a big jump in the price would seem like price-gouging. Being greedy. Milking the iSheep. And Apple could face some backlash. I am not suggesting that Apple FANs would stop buying their next iToy, obviously. They are safely brainwashed into the iCult. I mean the undecided consumers, that will make the difference between an ok Christmas 2017 for Apple or a great Christmas.

So if the iPhone 8 is not 'revolutionary' and radical and supremely desirable, but it suddenly jumps the prices up massively - then all economists suggest that it should mean lower sales (increased price = lower sale; reduced price = increased sale. Basic Economics 101). Now if the rumors are true (Foxconn gets reduced early orders for iPhone 8 and iPhone 8 price jumped to about $1,000 and also the rumored specs of the iPhone are true (nothing exciting coming) - then we could see a 'disappointing' Christmas Quarter for the iPhone - followed by an EVEN MORE disappointing FIRST Quarter 2018 (January-March quarter, calendar quarter, I am not talking of Apple fiscal quarters). Because First Quarter (Jan-Mar) is driven by Chinese gift-giving season. If the Chinese feel that hey, the iPhone is a rip-off, and far better phones are available - including their beloved Nokia - then many who otherwise were buying iPhones in the recent past, will suddenly abandon the iPhone for Chinese New Year gifts, and the China sales in early 2018 will be ALSO DISAPPOINTING.

And suddenly, Apple would have TWO CONSECUTIVE bad quarters of press. The market share is in decline, the unit sales are in decline, the quarter AND ANNUAL sales of iPhones fell - against most analysts' early predictions - and this all would create an echo chamber that suddenly spells 'doom' to Apple. While it generates obscene profits (remember, Nokia generated record profits too). Now what if some other player (Google, Facebook, Amazon) suddenly reports exciting growing profits and becomes the 'new tech darling'? Apple COULD see the same kind of decade-long decay and decline like Nokia did, where soon the shareholders will demand Tim Cook be replaced (because he is no Steve Jobs) and they start to demand ever more 'new strategies' that eventually in Nokia's case led to the hiring of madman Stephen Elop and his suicidal Windows strategy for Nokia.

THIS IS THE CERTAIN PART

Some of this is warning from history. History doesn't repeat itself, but it rhymes. Apple could 'do a Nokia' and I don't mean the death-of-Nokia like Elop, I mean the 'loss of trust' Nokia that was the years of Olli-Pekka Kallasvuo. Even as Kallasvuo precided over every single year a profitable Nokia, only one QUARTER did he see a quarterly loss, and that was not in the handset unit, that was in the networking unit (after it had bought Motorola's loss-making networking unit, and this during the worst economic recession in our lifetimes). So Apple could shift into a period where every year, and most quarters, Apple reports declining iPhone Unit Sales (and market share) with no 'next iPhone' success in sight. And while Apple also reports concurrently astronomical profits, the investors become ever more gloomy and alarmed, that the iPhone is heading towards the dangerous 10% market share level. And then old Apple investors remember the Mac vs Windows wars, and how Apple was on the brink of bankruptcy in 1997 yes literally only 20 years ago. They say that which goes up, must come down. It is far more likely that an Apple share value peak is upon us (soon) than somehow Apple ignores all economic history and lives in an alternate economy and just keeps breaking all the rules. If Apple openly, or just by its actions, shifts its strategy from pursuing unit sales growth and holding market share, to a declining unit sales and plunging market share (in a market that is still growing, mind you!) then I think it is inevitable that at some points, Apple investors will revolt and say, I don't want you to go to selling one iPhone that costs 50 Billion dollars, per year, to one silly mega-billionaire. I want Apple to be viable in the future and must go back to growing market share.

And THAT will be the death-nail. Because being a profitable niche-player is incompatible with being a mass market leader. If the investors accept the Apple new strategy, then that is ok. But they will be hearing perennial bad news, every single quarter, how Apple is down to 13% market share. And then down to 12% market share, oh, and Huawei is now number 2 and Apple fallen to number 3. And then Apple is down to 11% market share, and someone else, like Vivo or Xiaomi or Gionnee is now chasing Apple for that number 3 slot, and then Apple is at 10% market share and so forth. That to me, sounds like the malaise that hit Nokia in the late 2000s decade. Remember, Apple will not be number 1 to begin with. SAMSUNG will easily be the biggest smartphone maker - and Sammy will also be profitable almost any quarter that it just doesn't deploy pocket explosives to its customers. Some investors will hark to the days when the iPhone was larger than Samsung's smartphone biz (has happened in 2 quarters in the past 6 years) and now they observe that Samsung is more than twice the size of Apple and even Huawei is 30% bigger.... Then Apple reports numbers where the iPhone market share is at 9%.... 

I don't think this is a strategy that is long-term sustainable. I think it will doom Tim Cook. Now, many MANY things can happen in the interim. Imagine a 'new iPhone' product like what initially the iPad looked like and what many hoped the Apple Watch would be. Maybe something like the iCamera. And its possible Apple shifts to a 'broad portfolio' premium smartphone strategy, especially as they eye India - releasing lower cost iPhone models to hold onto more market share. Even then, they are a premium brand. They cannot get back to 20% market share. Huawei has the reach, but a far broader portfolio - it is only a matter of time when Huawei passes Apple for second place. And when THAT happens, I think the alarm sets in. That 'oh my gosh, Apple is not invincible' and then - the hope and hype built into years of iHysteria would come out, and Apple could see years of unending value decline.

And on that note... what ELSE could Apple possibly do? They have by far the world's largest consumer segment ever to go for a niche premium-priced product. Steve Jobs promised 10 million annual sales of iPhones. That was laughed at by most insiders of the industry as utterly poppycock (not me, this blog calculated how they could achieve exactly that in their first year). But look at Apple's enormous success. They now do 20 TIMES that level of sales in a year. A level which was seen as ridiculous as a goal, set by Steve Jobs ten years ago. What else COULD Apple do now? They have nowhere else to go? They can't turn the premium iPhone into a discount brand to compete with say Samsung in scale. Their ONLY way is to now secure the maximum possible profits out of this level of customers. But if Apple iPhone sales have now peaked and they start to raise prices - that is it. There will be no more organic growth left for the iPhone and iOS. That is then acknowledged also at Apple, if not explicitly, then implicitly by their actions at least.

Now just to remember. There was a time when TomTom was unassailable in GPS. Or when GoPro was the huge success in camera tech. Or when the iPod was the music player that could not be defeated. Microsoft, gosh Windows, was supposed to be such a powerful digital powerhouse it would never be toppled, yet Android took the (pocket) computer market as easily from MIcrosoft, as taking candy from a baby. (Granted, Steve Ballmer is a big baby). But just because RECENTLY Apple seems to be doing nothing wrong.. that is EXACTLY the same feeling we had of Nokia 12 years ago. And just 20 years ago, Apple was on the brink of bankruptcy. If Apple can sustain a passionate fan-base of iSheep who buy every iToy and stand in line for the whole night to get their next iFix, all is good. If Apple starts to push silly iFailures at those consumers (Apple Watch? Seriously?) how long will that passion remain? It will certainly stop GROWING. and if Apple's only response then, is to resort to ever more expensive iToys to keep profits growing - that means at some point, most sensible people will abandon the iTax and go to normally-priced better-value sensible products. But if the GROWTH ends, then magic of Apple seems to have burst, and that will be blamed on Tim Cook (and probably also on the price-gouging strategy too, especially if there are other devices coming like Apple Watch that seem only to be made to milk profits from iSheep). 

I am not an investment advice blog .But for this blog article, I will be very 'liberal' in allowing discussions of profits and shareholder expectations into the comments (usually those topics are forbidden). Please readers, don't take advantage of this in today's evaluation talks. Limit your views to 'long term' investment views, not today's market status, ok?

Because of the lesson of Nokia, shifting from 'market share strategy' to 'profit maximising strategy' in this VERY same handset industry. And because of Apple apparently getting ready to try that same shift, I wanted to write this blog as a warning. I do think that would be short-termism and foolish and not sustainable. But I also think Apple will do that next. The signs strongly suggest it is what is coming from Apple in the coming months. What do you think? Lets talk in the comments.

I Dream. No I Still Dream the iDream. Shouldn’t Apple Give Us the iCamera Now?

I STILL dream the iDream. Lets re-visit the thought of an iCamera. I do not mean a better camera on an iPhone. I mean a radical new disruptor concept for Apple, to do to cameras, what Apple already did to the music biz, the phone biz, the tablets biz etc. A new product category. Bear with me. This is worth your while.

So the Apple Watch turned out to be a dud, barely a whimper. Did not take the world by storm, it is now only an accessory for some iPhone users. Most smart watch makers have already quit that futile attempt. The Mac was a huge success, revolutionized the PC world 3 decades ago and still today powers a part of Apple’s profits. The iPod was a huge success, revolutionized the music biz (including iTunes store) and still today powers a small part of Apple’s profits. The iPhone was the biggest success in the history of technology, and still powers more than half of Apple’s profits and spawned several additional accessory markets from wireless earphones to Apple Watches to of course the wildly successful App Store with its 30% iTax. And the iPad was a success too, while its sales levels never matched the hype and expectation of the iPhone (what possibly could top that? It was and is the world record) and excepting for the iPhone, the iPad is Apple’s second best success of its recent past. The iPad business alone would be the super glory ‘crown jewels’ product with ANY other tech company today, from HP to Lenovo to Sony.

The iWatch, sorry, the Apple Watch was ‘supposed to be’ the ‘next iThing’ but it fizzled out. Don’t blame Apple for that - nobody is infallible. Apple itself has also done this in the past, do I need to mention the Lisa or the Newton? If Apple never failed, it would mean they are not trying hard enough. It was a good lesson for Apple management, that even they are not infallible. Now its time for the next iRevolution. I dream the iDream. I STILL dream the iDream. I wrote about my iDream in 2015. Lets do the shorter more updated version of that iDream. I think its time is coming.

IMAGINE TIM COOK AT AN APPLE EVENT

Imagine Tim Cook finishing his keynote to some ho-hum Apple event to the loyalists. It could be the intro of a new Apple product like an iPhone or an update to the software, or just some quarterly results meeting. And Tim Cook clearly came to the end of his presentation and starts to walk off the stage... ..then taking que from the master, we truly do miss Steve Jobs... Tim Cook says, “Oh, I forgot, there is one more thing.” The whole room quiets down. You can hear a pin drop. The background of the huge screen is blank. Black. Ominous. Tim Cook smiles. He says, “We are announcing a new product today. It is not an iPod or Mac PC or iPhone or Apple Watch or iPad. It is a new product type for Apple. We are launching the iCamera today.” The room is in stunned silence. The screen has some elaborate expensive graphics that reveal the new iToy, and suddenly they see the iCamera.

And Tim Cook starts the pitch, “The iCamera is the world’s best pocketable camera. In many ways it is the best camera ever made. It has a sensor of 100 megapixels...” The screen is synhronized to Tim Cook’s presentation and now 100 megapixels is superimposed on the screen shot of the iCamera. The room explodes, Twitter crashes, Tim Cook gets a 10 minute standing ovation and the crowd chants ‘I-Cam-Ra, I-Cam-Ra’. Tim Cook becomes clearly embarrassed on the stage as the crowd refuses to quiet down and the Voice of God in the room asks for silence so Tim Cook may continue.

He finally is allowed to contine, he says, “The iCamera also has 32 times optical zoom...” The screen shows the second feature now under the 100 megapixels, and again the room explodes. The Apple share price has jumped 20% in 5 minutes in after-hour stock markets. Eventually Tim Cook gets to continue, each of his spec mentions creates minutes of euphoria in a room going nuts. He tells the audience, “The iCamera also has dual Xenon flash with zoom” (massive reaction). “The iCamera has a microSD card slot for 256 GB storage” (massive reaction). “The iCamera includes the iPod player so you can listen to your music when you take pictures (massive reaction). “The iCamera runs iOS so you can have all your apps on it, and the camera industry can join this iRevolution to create great apps to make photography magical” (huge long reaction and standing ovation, Apple shares take another jump on the after-hours stock market and are up by 40%). “the iCamera shoots video natively in Ultra HD” (huge reaction). “The iCamera connects to your Apple Watch and you can use the Apple Watch as a remote viewfinder for the camera (huge reaction). “The iCamera also includes a full iPhone including the micro SIM card slot, so you don’t need to carry a separate phone, when you take pictures (massive, massive, massive reaction, standing ovation, chants of I-Cam-Ra, I-Cam-Ra last for 15 minutes and Apple share price is up 50% in overseas markets).

And Tim Cook pulls the prototype iCamera from his pocket. It is about the same size as any larger pocket camera like a Nikon, Olympus or Canon today - and he briefly plays with it, and ends with “and it sees through walls, as it also has FLIR, which means Forward-Looking Infra-Red. Yes, it sees inthe dark and sees through walls. It is magical. It is the iCamera.” This is the moment that ‘makes’ Tim Cook and gives him ‘the second coming of Steve Jobs’ status, and resurrects the iMagic image of Apple, post Steve Jobs.

HOW STEVE JOBS WOULD DO IT

Let me start first, that this CANNOT BE an ‘iPhone camera edition’. That is a non-starter. This HAS to be ‘the best camera ever’. Think of the Mac. It was not a ‘better PC’ - the Mac didn’t even SUPPORT the current mass media storage of ‘floppy’ 5.25 inch diskettes. It only did the ‘hard’ ie ‘Mac’ disks of 3.5 inches (and added wow, CD Rom, truly epic storage). It was a revoution.

Think of the iPod? It didn’t do C-Cassettes like Sony Walkmans or any digital diskettes of digital Walkman ideas. It was a REVOLUTION. Think of the iPhone, it wasn’t like a Nokia of the time, it didn’t even TRY to be a traditional phone, it didn’t even have a keyboard! The iPhone was a revolution. And now think back - Apple sold Macs when it introduced the iPod. Did Apple try to sell the iPod as a ‘mini music Mac’ no. Of course not. Is an iPod Touch actually a pocket PC, yes. But Apple NEVER marketed the iPod as ‘a Mac’.

Now what about the iPhone? Yes, it had the functionality of the hugely-successful iPod, yet what did Steve Jobs do? He never once marketed it as an iPod - but he often remarked that the iPhone had full iPod functionality built-in. THAT is how you do it. Don’t sell the iCamera as the ugly iPhone. Sell it as the best camera, that just happens to also have phone functionality built in.... Which means - you can CHARGE MORE. Remember your first reaction to the iPod and its ridiculous pricing? You thought, what a wonderful idea, to have all your music with you, but gosh, that is sooooo expensive. But Apple moved the goal posts, created a whole new market space, and now the MOST EXPENSIVE music player became the BEST SELLING music player! That is what economists tell us, should not be possible....

Same thing happened with the iPhone. The first iPhone in 2007 wasn’t even a proper smartphone, yet it was outrageously priced. Today, ten years later when everybody makes i-Fon-A-Clones, Apple easily owns the top price range and has not just the most expensive major phone, it also is the best-selling phone (model, not brand). That should not be possible. But Apple has that iMagic. Look at Mac PC, look at iPad, look even at Apple Watch, in every case, Apple owns the top end. And is viciously profitable in all those areas, where rivals struggle and most are not profitable....

So think of this as the new class of smartphone. The camera-optimized smartphone. The ‘not-thin’ form factor. A logical evolution of what started with Nokia’s N93, then evolved with 808 Pureview and its ‘hump’ and the physically clumsy and ugly Samsung Zoom series of Galaxy models. All of those phones were the thickest, ‘ugliest’ phones of their era, but they had BY FAR the best cameras, ever put into a phone, at that time. They are to the iCamera, what the Newton was to the iPhone.

But now, how would Steve Jobs do this? Steve Jobs would say, this is not an iPhone. I don’t want an iPhone. I want the best camera that has ever been made, that fits into the pocket. I want this to be the ultimate camera. The one we do not want to leave at home, at any time. And into that phone, will include full iPhone functionality, so the iCamera owner could theoretically live with only the iCamera - even if this cannibalizes some iPhone sales.

Because this will be MORE EXPENSIVE than the iPhone. It is only MORE profit to Apple and more addiction to our users. Most who buy the iCamera will still want their SECOND phone to be a regular iPhone. And some who buy the iCamera will not be current iPhone users, who will join the iOS family. And most who buy the iCamera will have a PC, but with the iCamera, many who now own a Windows PC, will want their NEXT PC to be a Mac instead.... Steve Jobs would kill any iCamera that sacrificed ‘camera’ quality for ‘sexy iPhone looks’. He would INSIST on ‘perfection’ in purely the camera side, and the iPhone basic functionality to be the after-thought (but done in perfection, of course, so it feels like an iProduct).

Remember the original iPod phone? the first iPhone of 2007? It was RIDICULOUSLY HUGE if you though of it as an iPod music player? Why that huge screen for a music player? The iPhone was one of the largest phones (in terms of pocket size) because of that screen. The ONLY way it was made, was that Steve Jobs said, forget about the iPod. Make this the best phone, for internet and voice use. We’ll add the iPod functionality later. Never was the iPod ‘form factor’ considered in the iPhone - it doesn’t even have the scrolling-wheel that iPods had.......

So if anyone thought of this as the ‘iPhone Camera’ (which in reality it is, like the iPhone in reality was the iPod-phone) they would think of this as ‘the ugly iPhone’. Boy it WOULD have to be ugly, if compared to the sleek and sexy iPhones. But it is ‘not an iPhone’. It is a POCKET CAMERA. And now, go to the camera store and look at the Canon, Olympus, Nikon, Sony, Leica etc cameras. THAT is what you are competing with. And now the kicker. They are RIPE for Apple iDestruction.

The camera industry are RIPE for an iCamera. Why? Because they are worried about their shrinking market, and are devoting their R&D to the top-end where there is still ‘life’. The DSLR camera segment. Those professional cameras with removable lenses and tons of expensive accessories. That is where they put their R&D. So they are not even ATTEMPTING to create the best possible pocket camera. The pocket camera segment is stagnant and dying. Exactly like the music player Walkman market was before the iPod. Exactly like the tablet market before the iPad. Remember the Steve Jobs rule, make this the best pocketable camera.

WHAT IS BEST POCKETABLE CAMERA

Lets start with the basics. Take the sensor. We are in sensor classes of 20mp to 24 mp in top end pocket cameras today. First, yes, I know that megapixels alone do not a good camera make. I am not an idiot. But look now at the MOST EXPENSIVE cameras today. DSLR cameras at the top end go to 40mp and 51mp (various Canon, Pentax, Sony etc DSLR cameras). I do not mean more megapixels ‘automatically’ is better - I DO mean that one way to improve a photograph is the number of pixels in the sensor.

The current world champ is Hasselblad which takes 200 mp pictures but that is electronic trickery, the actual sensor size is 50mp and then several pictures are taken with it, to create the 200mp image. And on smartphones, there are many in the 20mp range and tops are the two Nokia models that hit 41mp. If Apple wanted to ‘break the bank’ all they really need is about a 52mp sensor and can claim the title of world’s biggest camera sensor (typical Apple hype) but that is not how Steve Jobs would do it. He would want to create an earthquake.

So where is the ‘ridiculous’ number - it is less than twice the number of pixels from the current leader - why not go to 100 mp? It would be the shocker-story in every news item instantly. Not just the biggest sensor ever in a phone, Apple has the biggest sensor ever installed in ANY camera. This is by definition the best camera ever made (and don’t complain about pixel size, I know all that, this is about Apple marketing not about the reality). That is not cheap, but that is not catastrophically expensive either - if Nokia was able to do 41mp in 2012 with a smartphone that cost 400 dollars, gosh, Apple can today do 100 mp on a flagship iCamera that will cost more than $1,000 dollars haha... It will instantly shake the world and be a must-have toy for every camera nerd and geek, and all in advertising and marketing will want one.

That is before we go to optics. The iPhone has plastic toy lenses on their cheap camera element (nothing like say the serious glass on say Carl Zeiss optics used by ahem, some others...). The reason iPhones take good pictures is not the plastic, it is inspite of the plastic lenses and tiny sensors, they have GREAT SOFTWARE to fix the problems. That is an Apple secret sauce gain. Lets ignore that for the moment. What would Steve Jobs do? He would insist on the iCamera being revolutionary and just ‘inherently better than anything else’.

So take the second element. Optics. The iPhone has plastic, the iCamera, glass. What kind of glass? Would it have a removable lens like professional cameras? No. This is not the best camera. It is the single, pocketable best thing ever. The camera with iMagic. So break the bank. Do the best-ever optical zoom into one lens, that means that you do not need other lenses. What do you get in pocket cameras today? They go up to 30x optical zoom today. The best ever seen in a mobile phone? Was Samsung’s K Zoom with 10x optical zoom. Even if Apple only did 12x optical zoom today, it could claim the iCamera is the best cameraphone ever made, has the best camera on any smartphone, ever made.

But how would Steve Jobs do it? He would look at the Sony Cyber-shots and Canon Powershots and Panasonic Lumix pocket cameras, and say - we have to be BETTER than these! So lets do 32x optical zoom (or haha, might go to 40x). Now understand this aspect of the camera. Here is my illustration of 10x optical zoom:





The 32x optical zoom gets you even more close than this. You can shoot pictures of the moon, and get the whole picture to be INDIVIDUAL CRATERS, where the whole circumference of the moon doesn’t fit into the picture, haha... THAT is 32x optical zoom. You have not binoculars in your pocket (like 10x optical zoom) you have a TELESCOPE in your pocket.

But a 100 megapixel camera, with 32x optical zoom - will yield actual picture ‘sharpness’ that is far FAR FAR above what most professional cameras can do, with gear that costs well above $10,000 dollars. Not in all conditions, but on some conditions - before we ADD the iMAGIC of Apple software.... This is not ‘rocket science’. 40 megapixel camera sensors and 30x optical zooms already exist in pocket cameras today, that cost in price ranges of about $500 roughly - less than top end iPhones.

Even if we push both a little bit (ok, push the sensor a lot), there is room also then to charge more. But I’m not done. What would Steve Jobs do? He would have all the major parts that real photographers want - like what real DJs wanted out of a music player in the iPod. This would be camera revolution. So yes, it would have to have removable media (something Apple DOESN’T do in iPhones - but Apple happily does in Macs...). See, it is an iCamera. It even breaks Apple’s own rules. But that is how Steve Jobs would do it.

It is a camera. It HAS to have the tripod screw. For semi-pro and pro camera buffs who WILL want to put this iCamera on a tripod. But also for all the silly youth, who love using their selfie sticks. Selfie sticks have the same standard camera screw as on tripods... And for this, of course (duh) Apple will then sell its own selfie stick (ridiculously overpriced, but by far best selfie stick, no doubt made out of carbon fiber) with the exclusive Apple ‘quick trigger’ superduper fast wireless triggering to take pictures faster than with bluetooth triggers... whatever to further hype that accessory that will be, needless to say, astronomically overpriced.

Then FLASH. Not toy LED flash like on most cameraphones today. Real proper Xenon flash. Now, how would Steve Jobs do a flash on the ultimate pocketable camera? First, do dual flashes on both sides of the lens, to remove the ugly shadow that often comes with the flash on one side (above, below, to side of the camera lens). So two Xenon units not one. Not radical, this has been done, but who does this in a cheap pocket camera? But yes, that is what would be on the ultimate iCamera.

But wait. We had 32x optical zoom. The wide angle of the camera, even with 2 flash units, needs the light to be spread REALLY REALLY widely (the optical zoom would start in the area of mild ‘fish eye’ lens, to get to 32x optical zoom). And if you spread the light very widely, it means it won’t light up much. And many would be quite disappointed, if the actual effect is so diluted, the LED flash on the regular iPhone seems ‘stronger’ haha... so easy solution to this, from professional camera flash light units - is ZOOM flash.

Yes, put a moving mirror into the Xenon flash units (both of them). And this is an Apple, it is electronics. So just match the zoom effects to the camera optical setting. Automate the zoom of the flashes, to the zoom setting of the optical lens. Now, the flash will never ‘light up’ something very far away (haha, the moon) but adding zoom to a Xenon flash IS HOW LIGHT IS FOCUSED. That is how professional photographers take pictures of rock stars on stage.

Once you put 2 Xenon flash tubes into the camera, and add even modest zoom to them - this will be the brightest pocket camera flash ever seen. It will rival the low-end STAND-ALONE flash guns which cost something around $100 a piece with its own battery etc... If you have optical zoom, why not also have zoom flash. The tech is not rocket science. Professional camera gear has this. If Steve Jobs insisted on ‘make this the best pocketable camera’ that would be natural stuff.

And if it is INTEGRATED with Apple usability - every picture would be as nearly-perfectly lit as is technically possible today, matching always the right lens, right aperture and right flash power (and flash zoom setting). Yeah, you may have caught that. Aperture. Yes, give this pocket camera user-control to the aperture - it is the best pocket camera ever made - and those who know about the tech, a Xenon flash means there has to be a physical shutter as well.

This is a proper camera, not a plastic toy. In fact, this is what Canon or Nikon WOULD do, if they were not allowed to make DSLR cameras, and fear that the pocket device would kill off the DSLR business. Add a few other parts, FLIR, yes see through walls. How expensive is FLIR? You can buy accesory FLIR units for Anroid or iOS that cost a couple of hundred dollars. It is not cheap tech, but considerable price gains would be found by integrating with the iCamera. I would imagine there is a ‘sliding sensor’ that would use the same optics.

The first edition FLIR likely would only have modest resolution, but its more the gimmick than the utility, at this stage (like original iPhones only having 2mp cameras and no selfie cameras; they didn’t even shoot video, can you imagine that)... I would guess that the INCREMENTAL cost of adding basic FLIR to a cameraphone, as say an ‘internally sliding sensor’ would cost in the magnitude of $100. But the iMagic of seeing in the dark, seeing through walls, seeing heat (thermometers, etc)... Apple would have a field day with this.

THE PHONE PART

Now, the important bit. I know some of you at Apple are reading, so this is for you. When you do this, do this smartly. Don’t do the iPod Touch silly version (the Apple Watch without SIM card). Do this properly or you will fail. It HAS to be a fully-functioning iPhone with SIM card from the start. Do NOT FEAR cannibalizing your top iPhone users. This will be MORE EXPENSIVE than the top iPhone today. It is ‘good’ cannibalization for every existing iPhone owner, who migrates to iCamera. But having it a full iPhone will mean that iPhone users can leave the ‘phone’ at home, and only live with the iCamera.

As it will be a fully-functioning iPhone, with all iPhone stuff including iOs and something like a 5 inch touch screen. On the SIM card. This is for you Apple execs. The carriers will decide on the success of this device. If it is a success, you will sell 50 million of these per year, maybe more. Half of that will come from buyers who today do not use iPhones. You grow the iPhone iOS ecosystem by at least 25 million with the iCamera. Users who today do not have iPhones. This is pure golden magical profit for you. MOST who buy the iCamera will have a PC to edit their pictures or videos. At least HALF of the buyers of iCameras will not have Macs, and probably half of those will end up upgrading to a Mac in the next few years because of the iCamera. There will even be a small group of iCamera users who will end up buying an Apple Watch. This is the goose that lays golden eggs for you, which the Apple Watch was not.

The iCamera will DRAMATICALLY INCREASE the total reach of iOS and expand the congregation of iSheep in the iChurch willing to pay you their iTax on all things iOS. If you bring the SIM card fight into the iCamera, this product will fizzle. It will be exciting only in the camera market and it will not take the world by storm. If you privately tell all your carrier relations, that this is the ultimate iPhone and the highest most profitable - and biggest loyalty anchor - iPhone with PHYSICAL SIM CARD - they will LOVE YOU and they will sell this everywhere. And now you have reach that goes to 50 million iCameras sold.

If you threaten the carriers and try to introduce this with a ‘virtual SIM card’ the product will not be stocked and the carriers will sell other devices including lesser iPhones instead. Note how critical this marketing aspect is. For CONSUMERS and any dumb analysts, this has to be marketed as ‘this is not an iPhone’. So nobody bothers about how ugly it is - compared to slab slick thin iPhones. But compared to any cameras, it will be uber-cool sexy slick professional die-to-have-it metalic awesome must-have tech. And meanwhile, privately, to the carrier community - you need to have this phone SUBSIDISED AS A SMARTPHONE (where subsidies are used, ie AT&T, Verizon, NTT DoCoMo, Softbank, Vodafone, etc have to include this at the top end of their subsidised smartphone contracts!) And all carriers have to have this device as the ultimate iPhone. I

t cannot be sold ‘only in camera shops’ while yes, it will ALSO be sold there. If you anger the carrier community with no SIM card, this will hurt the iCamera. You are fighting the long game and you want to WIN NEW iSheep. You need to convert them from Samsung Galaxy users, etc. You cannot do that with another iPhone. They won’t come. You have taken all there is to squeeze from that orange. Now get a new method. This iCamera gives you NEW CUSTOMERS who have never used an Apple before.

And most importantly, the iCamera is the tool to SWITCH millions of camera-users of PC and tablet users from Windows. There is nothing wrong to also offer a parallel non-mobile phone version (like early iPhone had the iPod Touch as parallel product). I would price this somewhere around $1,200 to perhaps even $1,500. If the current new iPhone goes to near the $1,000 level now, then the iCamera would be a shock price but not impossible price. And it would be the device that single-handedly kills off most camera makers and takes that stand-alone pocket camera segment, to Apple, and at massive massive MASSIVE profits.

I would also then arrange a release cycle, where on alternate years Apple releases the new flagship thin phone (phablet) ie iPhone classic, and alternate years, the flagship iCamera. And after a year of milking iCamera users with the ridiculously priced say $1,200 dollar (unsubsidised price, perhaps $800 subsidised price with 2 year contract) iCamera, release the cheaper version that has say ‘just’ a 50mp sensor, 10x optical zoom, no FLIR. But otherwise of course a full iCamera, at say $999 price and compatible with all accessories.

Oh, accessories? A superduper fast speed connection to the Apple Watch - so you can use the Apple Watch as the screen to aim your iCamera. Add a separate physical viewfinder (with retina display and diopter correction so older users who need eye glasses can use the iPhone physical viewfinder without their eye glasses - remember many iPhone buyers are older people..). Add a separate Apple branded super-flash for far distance (ie rock concert type pictures). I even imagined a 3D setup where two iCameras could be digitally and physically linked to form one 3D camera (imagine anyone in Hollywood told, that for $2,500 ie two iCameras, they can have a 3D camera setup that shoots Ultra HD haha... they’d have an orgasm just on the news).

So is this at all realistic? In some ways it is inevitable that 'camera-optimized' smartphones will come. Why? Consumer data. While silly phone makers (led by those most iSilly in iSillicone Valley) want 'ever thinner' phones haha, and 'phone bumps' are seen as ugly as a pregnant supermodel on the catwalk - we consumers WANT cameras. We use them. How much? It is now the SECOND MOST USED FEATURE behind only mobile messaging, and ahead of the clock function and voice calls. Yes, cameras on smartphones are used by FAR MORE people than ever download the first app (a third of smartphone owners never download a single app haha) or use the internet, etc.

It is INEVITABLE that SOME evolution will happen on the camera side. Apple's meek attempt at the telephoto lens (dual camera concept) is a tiny step into that direction. And yes, do consumers BUY because of a better camera? SYSTEMATICALLY in all surveys around the world, the camera ranks among top attributes that consumers make their decision on. Not as important usually as a larger screen, but it seems that screen envy has reached its natural equilibrium and phablet smartphone screens won't grow much anymore, from where they are, and the focus will once again return to... the camera. I do think the camera is destined to become MORE important, not less, driven by all sorts of things, like say Augmented Reality and facial recognition etc. Even weird gimmicks like Nokia's dual selfies etc.

THE ULTIMATE FAN BOYS

We have seen how much tech industry analysts in the USA and especially in California, are Apple iFans. They love love LOVE that brand. And that seems obscene, something creepy about how passionate iSheep are about their brand. That tech crowd is not actually the most obsessive iSheep. You know who are the most brainwashed iChildren? MARKETING and CREATIVE people. They truly do think that Apple is everything.

Look at a Hollywood movie and find a computer there, and see the Apple logos. It is not that Apple bribed the movie producer to put a Mac into the scene. It is because the creative people are passionate about Apple. This is PARTICULARLY true about VISUAL artists. Why? Photoshop. The origins of Photoshop were on the Mac, released in 1990 and originally, you could only have Photoshop on a Mac. Since then, all creative PHOTOGRAPHY professionals (think advertising and magazine publishing) were brainwashed to become Mac Heads.

Why does Apple not give THEM the iCamera? Many of them are still to this day Mac users. Many of them were first to buy iPods, iPhones, iPads and even Apple Watches. They ALL HAVE PRO CAMERAS. They shoot increasingly the majority of their professional work IN CAMERAPHONES. Why is Apple not giving them the iCamera? It is the ultimate fan base. The marketing and media VISUAL professionals have promoted Apple for DECADES passionately, and they make do with the iPhones today.

If Apple offered an iCamera, regardless of what it cost - this fan base will buy them creating an instant demand for the device. And the publicity will be unprecedented. Yes, unprecedented. The iCamera will get MORE free publicity than the iPhone did in 2007 because why? Because the VISUAL MARKETING people will celebrate this like no tech has been celebrated before. Tim Cook will be hailed a genius. The Apple Watch will be forgotten like the Newton. Apple will be invincible. That would be the smart thing to do.

When Apple introduced the iPod, the portable music player market was about 100 million units and FAR FAR smaller in revenues than camera market today. The stand-alone camera market today is yes, under 100 million but when cameraphones are included, the camera industry has sustained unprecedented growth in the past 15 years. The iPhone already today, for all its plastic nonsense, is one of the most used cameras already. The origins of Apple’s camera interest is the Apple QuickTake 100, their first digital camera 23 years ago.

Its not like Apple hadn’t thought of this. Much like how the iPhone is the grandson of the Newton, the iCamera would be the grandson of the QuickTake. It would have to be an iPhone, without being an iPhone. It would have to have a SIM card slot, but the marketing has to manage to avoid any thoughts of ‘the ugly iPhone’ or the ‘fat iPhone’. It would have to instantly be ‘acceptable’ in appearance to be used as a phone (putting the camera to your ear) and it would have to be heart-achingly beautiful - as a CAMERA (compared to the Olympus, Canon etc pocket cameras of today) in black or silver color metal. It would become the thing EVERY geek needs to have, and all their friends will want to see - does it really have 32x zoom? Does it see through walls? What is 100 megapixels like, show me the picture, take a picture of this... I still dream the iDream. If you want to read my original article (similar thoughts, less organized) from 2015, it is here.

Q2 Smartphone Market Top 10 Numbers

Time for the Quarterly update to the smartphone market. As always, I use the average of the big analyst houses to get the overall market size (is 356.1 million for Q2 of 2017, up 2% from Q1 of this year, and up 4% vs same quarter one year ago). Then I seek the best possible info about the various brands, and do my best fit to get the numbers to work out. It is somewhat a guess-work as so many of the manufacturers in the Top 10 do not give their official numbers (and I am a bit suspicious of the stunningly big Xiaomi number, but am taking them at their word). So here goes. First up the Top 10 brands for Q2 in smartphones:

BIGGEST SMARTPHONE MANUFACTURERS BY UNIT SALES IN Q2 2017

Rank . . . Manufacturer . Units . . . Market Share . Was Q1 2017 
1 (1) . . . Samsung . . . .  80.2 M . . 22.5% . . . . . . . ( 22.7% ) 
2 (2) . . . Apple  . . . . . . . 41.0 M . . 11.5% . . . . . . . ( 14.5% ) 
3 (3) . . . Huawei  . . . . . . 37.7 M . . 10.6% . . . . . . . (  9.9% ) 
4 (4) . . . Oppo . . . . . . . . 27.8 M . . . 7.8% . . . . . . . (   8.0% )
5 (-)  . . . Xiaomi . . . . . .  23.2 M . . . 6.5% . . . . . . . (  2.5% ) 
6 (5) . . . Vivo  . . . . . . . . 21.3 M . . . 6.0% . . . . . . . (   6.3% ) 
7 (9) . . . ZTE  . . . . . . . . 18.4 M . . . 5.2% . . . . . . . (   2.6% )
8 (6) . . . LG . . . . . . . .  . 13.2 M . . . 3.7% . . . . . . . (   4.2% ) 
9 (7) . . . Lenovo .  . . . . . 11.2 M . . . 3.1% . . . . . . . (   3.8% )
10 (8) . . Gionee . . . . . . . .9.2 M . . . 2.6% . . . . . . .  (   2.7% )
Others . . . . . . . . . . . . . . 72.9 M
TOTAL . . . . . . . . . . . . . 356.1 M

Source: TomiAhonen Consulting Analysis 23 Aug 2017, based on manufacturer and industry data
This table may be freely shared 

So Xiaomi jumps back in (kicks out TCL/Alcatel). The top race was close between Huawei & Apple but the iPhone held the second ranking by one percentage point of market share. Check back this time next year, I think Huawei will then be one point ahead for this same quarter haha. On the top, no real surprises, Sammy, iPhone, Huawei is the Top 3. Oppo holding a pretty comfortable fourth place. A bit of a scuffle in mid-field but older smartphone brands LG and Lenovo are struggling and close to falling out. Gionee the newcomer last time holds the last Top 10 slot. A note from outside the Top 10, former Top 10 brand Coolpad seems to have some accounting problems and has for second period delayed its reporting... Don't hold your breath that they might be coming back any day soon.

In Smartphone OS wars, its Android with what, what was iPhone? Eleven and a half? So call the rest of the market at 12% and Android thus 88% market share. iOS 11.5% and rest of the pretenders at roughly 0.5%, combined.

In the Installed Base, the story also gets to be pretty boring.

SMARTPHONE INSTALLED BASE AT END OF JUNE 2017 BY OPERATING SYSTEM

Rank . OS Platform . . . . Units . . . . Market share  Was Q1 2017
1 . . . . All Android . . . . . . . . . . . . 2,612 M . . . 81 % . . . . . . ( 81 %)  
a . . . . . . Pure Android/Play . . . . 1,776 M . . . 55% . . . . . . ( 55%)
b . . . . . . Forked Anroid/AOSP . . . 836 M . . . 26% . . . . . . ( 26%)
2 . . . . iOS  . . . . . . . . . . . . . . . . . . 593 M . . . 18 % . . . . . . ( 19 %) 
Others  . . . . . . . . . . . . . . . . . . . . . . 17 M  . . . . 1 % . . . . . . (   1 %)
TOTAL Installed Base . 3,223 M smartphones (ie 3.2 Billion) in use at end of Q2, 2017

Source: TomiAhonen Consulting Analysis 23 Aug 2017, based on manufacturer and industry data
This table may be freely shared 

There you go, no big changes but note, the 'other OS' combined category is mathematically at 0.53% so we are JUST about to round 'other' to zero, quite possibly in Q3 or latest by Q4. It is a two-horse race haha (which is no race, Android won this long ago).

Nothing much to comment here. The industry is headed to about 1.6 Billion smartphones sold this year, and a little bit over 80% of new phone handsets sold this year will be smartphones (under 20% ie about 350 million to 400 million units will be 'dumbphones' also known as featurephones). For those tracking 'Nokia return; numbers via HMD, note that the threshold to break into Top 10 brands is at about 10 million units quarterly - if Nokia sold 1M units of one handset in India in pre-orders, they still have a long way to go to get to 10M quarterly sales levels - but its a nice start nonetheless... Same threshold obviously holds for others who may dream of a comeback (Sony?) or brands who wish one day to be global giants (India brands like Micromax, Karbonn and Lava) etc.. 10M is the target number currently for quarterly sales...

As always, all data on this blog may be freely shared... If you need last quarter's numbers, they are here. More numbers after Q3 data is out.

Whispers From the Void - When nothing is going on in tech, a few brief observations on the occasional news tidbits

This seems to be an exceptionally quiet summer for tech. I don't remember this quiet a summer in mobile/tech news in 20 years.. but there have been a few slight items that may be worth mentioning.

Nokia comeback ie HMD. In India Amazon has seen 1M preorders of Nokia 6 in one month (before it ships). That is a VERY healthy sign for HMD.

Talking of Nokia, haha, this is the 'real' Nokia not HMD - Apple reached settlement to pay $2B yes BILLION in royalties to Nokia out of iPhone patent infringements and a long-running lawsuit. Yes. Apple admits by this action (while not admitting in public) that it had been stealing from Nokia intellectual property for YEARS. And this proves finally and conclusively that even APPLE admits, that Nokia was the leader that they stole from. Which confirms my long-running thesis we've often laughed at on this blog - to see what will be on the next iPhone, just look at a 3 year old Nokia flagship haha... Yes, Apple now paid $2 Billion dollars. 

By the way, can you imagine working for a tech company that was 3 years ahead of Apple - AHEAD of Apple - and twice the size of Apple in Apple's 'main' business ie smartphones (which wasn't even YOUR main business at that time, when Nokia's main business was still 'featurephones' ie dumbphones) and then your CEO declares that your company is sinking and you have to jump off a burning oil platform? You'd be suicidal and know your new CEO was a maniac. And obviously he was, the worst CEO in corporate history - Stephen Elop. Yes Elop, the E-Flop as many called him in Finland, the dimwit CEO who took the company 3 years ahead of Apple, selling more than 2x the number of smartphones than Apple, profitably, and the only handset maker that had never reported a loss even in two tech recessions, either in its dumbphone unit or its smartphone unit - and the CEO threw all that away.

PS Windows Phone is of course dead. An increasing number of major app developers are now abandoning the support of the platform. It is dead. It has been dead for years.

Now onto other companies. What is it with Samsung. Hey, first CONGRATULATIONS. Did you notice it? Samsung just passed Intel as the world's largest chip-maker !!! Wow. First Sony (TV sets) then Nokia (handsets) now Intel (chips). Wow. Samsung rulez...

And what about our favorite race? Is it possible that Sammy is going to bring us DIFFERENTIATION? We have 3 items of interesting news. There is a new FLIP phone Sammy with dual large screens inside the flip. Interesting experiment in form factor. What about camera races? Rumors say Note 8 will have 3x optical zoom. Oh, I'd love to see some real competition again in camera tech on smartphones.... and what about the thing we most want in our phones? BATTERY LIFE. Rumors suggest Galaxy 9 will feature a BIGGER battery. While Apple obsess about making the ridiculously-thin iPhone EVEN THINNER (who said their phone was too THICK?) like a supermodel attempting to slim down by throwing up all the little bit of food they temporarily digested - as the iPhone focuses on silly-thin specs, Sammy finally seems to have listened to what consumers BEG for - better battery life. Gosh, a bigger battery in Galaxy 9 - that could be another killer feature where Sammy leads the iPhone for several years again... good move (if the rumor turns out to be true, of course)

Talking of rumors - Apple rumors suggest iPhone will launch on time. Lets hope so. And here's to wishing Apple give us a monster iPhone that will celebrate 10 years of iPhones and set the Christmas sales period on fire. (Although all rumors of the new specs seem to suggest nothing spectacular at all)

Did I mention Windows Phone is dead? Oh, and Elop was the Worst CEO Ever? Good.

iPhone Q2 and IDC and Strategy Analytics Top 5 Smartphone Numbers.

The Apple Q2 Results gave pretty much expected iPhone unit sales (ignoring the last-minute hysteria of some analysts) ie Apple hit pretty much a 12% sales level of 41.0 million units. We now await to find out the other data points we'll get and I'll do the Top 10. Meanwhile IDC and Strategy Analytics both gave their Q2 numbers for Top 5 and they both agree, its Samsung first, iPhone second, Huawei third, Oppo fourth and Xiaomi fifth. They also agree on market shares of others except SA had a slightly larger total market size, so by their numbers, iPhone market share would be rounded off to 11% if we round off market share to full points. In that case SA would have iPhone and Huawei both at 11% (while H is smaller, they are rounded 'up' while iPhone is rounded 'down' to 11%). So even by SA numbers, Huawei did not quite catch up to Apple (yet). They will. Probably this time next year Huawei will start to hit quarterly sales ahead of iPhone and the quite possibly in year 2019 Huawei would pass the iPhone in annual smartphone sales dropping Apple to third rank. As I've said consistently on every quarterly review since Sammy took its top spot, they are SAFELY the world's largest smartphone maker as they are. Nobody, neither Apple nor Huawei (nor haha Xiaomi) is challenging their lead. The silly articles that suggest that are, well written by writers perhaps you should stop following.... :-)

 

Anyway, getting ready to return from vacation, I'll do the Top 10 when we have all the info in that we can utilize. Meanwhile we know the Top 5.. :-)

 

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...)