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Apple’s China challenge: Cheap Androids own 90.1% of market

Kevin C. Tofel — Thu, 15 Nov 2012 16:14:42 +0000

Apple has repeatedly noted that China is an area of focus for the company, and why not? It’s the most populous nation on the planet with more than a billion mobile phone subscribers. Based on recent data reported by Chinese research firm, Analysis International, which has tracked smartphone sales for the past several quarters, Apple may have a challenging time replicating the market share success its iPhone has seen in other countries: In the third quarter of 2012, Android accounted for 90.1 percent of all smartphone sales in China.

Wired’s editor-in-chief, Chris Anderson tweeted out the data, which we found through Thomas Morffew on Google+ and the chart is stunning when you see Android’s rise since the second quarter of 2011. It’s also notable how fast Nokia’s Symbian platform declined over the same period.

I can understand the Symbian decline, but was surprised to see Android’s continual ascent into dominance. Then I saw what’s the mostly likely reason: Device cost.

Analysis International also tracked the average selling price of handsets by platform and that helps explain the situation. While costs for all smartphones have been decreasing in China, the average Android handset costs about one-third that of an iPhone. In the most recent quarter, for example, an Android handset costs 1393 Yuan (US $223.36) on average. The average price for an iPhone is 4523 Yuan (US $725.25), or roughly three times the cost.

I wouldn’t expect most of the Android devices in the Chinese market to be flagship smartphones or high-end devices, but that may not matter as Chinese consumers migrate to their first smartphone. A low- to mid-end Android model is surely more capable than the phone its replacing. And perhaps this situation shouldn’t have surprised me after all. Just two years ago, I noted that Android was poised to power the next 500 million web users in India, the second most populous nation.

I suspect Apple will still sell more than enough iPhones in China to add billions of profit for the company. But any ideas of iOS taking a large portion of the market in China — or India, for that matter — have to be tempered due to the fast growth of Android.

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Nokia’s Lumia sales shrink; on to the next model again

Robert Andrews — Thu, 18 Oct 2012 11:38:24 +0000

Stop me if you’ve heard this one before – sales of Nokia’s flagship smartphone declined in the last quarter as carriers and retailers pulled back from its first Lumias, leaving the Finnish firm pointing to the promise of yet another upcoming model.

Reporting a “difficult quarter”, Nokia CEO Stephen Elop said Q3 global Lumia sales volume dipped from four million during the previous three months to 2.9 million, amongst a total 6.3 million smart devices.

.@nokia shipped 2.9m Lumia devices for entire Q3 – Apple sold 5m iPhone 5s in one weekend. bit.ly/WrxRS9

— StrategyEye (@StrategyEye) October 18, 2012

Nokia tried to explain this fall happened “as we shared the exciting innovation ahead with our new line of Lumia products” – in other words, because it interrupted the sales flow of its earlier Lumias by announcing an enhanced next model.

That makes it sound like Nokia is master of its own destiny. Nokia’s new Lumia 920 and 820 products will ship with Microsoft’s Windows Phone 8 platform toward the end of October or in November. But it also conceded:

“The sequential decreases in net sales and volumes in North America were primarily due to lower operator and distributor demand for Lumia as well as our efforts to prepare the distribution channel for the upcoming sales start of new devices.”

That has had a big financial impact. Nokia chalked up €120 million ($157 million) in “excess component inventory, future purchase commitments and an inventory revaluation related to our current Lumia products”. In other words, it has bought parts and contracts for way more Lumias than it can sell.

Lumia and Symbian handset sale volumes and revenue also fell in China, where Android rivals are gaining share, while European Lumia volumes also dipped despite a rise in feature phone sales. Only in Middle East and Africa did smartphone sales volume not shrink.

The average selling price of Nokia’s Lumias dipped from €186 this spring to €160 ($209) in Q3 because sales of its lower-priced model, added later, began to filter through, dragging down the average.

Now the firm expects the upcoming holiday-quarter sales to be worse than usual because of the timing of its soon-to-launch new Lumia 920, which have a full quarter of sale to report until next year. So Nokia reports Q4 will be “a ramp-up quarter”.

Quarterly net loss ballooned to €969 million ($1.27 billion) from €68 million in last year’s quarter. Nokia has lost a third of its quarterly smart devices net sales over the last year.

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Development strategies for the app-developer community

Thu, 27 Sep 2012 06:55:21 +0000

App developers are the cornerstones of the multibillion-dollar app market, supplying the talent behind the creation of the millions of apps on the market today. However, the developer community — composed mainly of individuals or very small companies — remains largely unknown and often underrepresented in the app market. And many developers view apps as projects rather than products, making monetization difficult. Given these challenges, those organizations and companies that can bring tools, resources, and a collective voice to this group will be an important factor in the evolution of mobile-app development.

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Mobile 2012 and beyond

Thu, 20 Sep 2012 06:55:31 +0000

Few industries change at the pace mobile does. Whether it’s the iPhone 5, the importance of LTE, or BYOD trends disrupting the enterprise, there are always new technologies, trends, and companies changing the way we define mobile. Here, GigaOM Pro highlights a few segments of the mobile industry that will be important to watch in the coming months, from location-based shopping to wireless networks, and new business models for carriers.

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A near-term outlook for the mobile app marketplace

Fri, 14 Sep 2012 18:07:09 +0000

In the five years since the iPhone hit the market, Apple and Google have delivered more than 40 billion cumulative downloads of apps. Other sources predict the growth has only just begun and that the app marketplace will swell from 31 billion downloads worldwide in 2011 to over 66 billion downloads in 2016. This report examines the app genres primed for growth, the trends that will shape the mobile app market over the next few years, and some of the challenges the industry will face, as well as companies to watch.

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Amid slowing phone sales, Android makes gains

Kevin C. Tofel — Tue, 14 Aug 2012 13:51:34 +0000

Overall sales of mobile phones dropped last quarter as consumers held on their current devices during the challenging economic climate. Research firm Gartner suggested on Tuesday that in addition to financial reasons for slowing phone sales, consumers may be holding out for newer phone models expected later this year. Even with the overall market decline, however, Android phones boosted their market share over the same quarter in 2011.

Worldwide handset sales declined 2.7 percent, says Gartner, when comparing the second quarter sales of 2012 to the year-ago period. The decrease is due to far fewer feature phones sold, however, as smartphone sales growth surged 42.7 percent. And the Android platform took the lion’s share of those smartphone sales, possibly because some may be holding out for a new iPhone model, expected as early as next month.

Android’s overall market share for the second quarter jumped to 64.1 percent in 2012, compared with 43.4 percent in the year-ago period. Apple’s iOS still grew, but only marginally: up to 18.8 percent of all smartphones sold between April and June as compared to 18.2 percent a year ago.

Both platforms grew their share at the expense of the Nokia and Research In Motion, as Symbian and BlackBerry phone sales continue to plunge. Indeed, the relative newcomer to this market, Microsoft’s Windows Phone, sold slightly more than half of the number of BlackBerrys RIM sold last quarter, says Gartner’s data.

Interestingly, iOS and Android phones share a similar problem that can affect their sales. For fans of Apple, phone purchases are often a waiting game as the company typically offers a new handset model every 12 to 15 months. New Android devices, on the other hand, can appear on a weekly basis, leading consumers to either hold off for the “next hot phone” or buy a current model and be slightly disappointed when something slightly better comes along.

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How do you solve a problem like Nokia?

Bobbie Johnson — Fri, 20 Jul 2012 15:45:22 +0000

There’s little doubt Nokia’s in a tough place right now. It’s losing money hand over fist and struggling to make inroads into the smartphone market. And all this despite producing a new range of pretty good devices. The trouble is, the Finnish handset maker just can’t get back the momentum it lost to Apple, Google and Samsung over the last few years.

So what’s the answer? The solution put forward most often is a buyout by Microsoft — already the company’s software partner. But reports suggest that although Redmond did take a look at the idea last year, it didn’t like what it saw. Similarly, rumors of a potential buyout by Samsung seem to have been ill-judged.

So if a sale is off the agenda, what else is there?

Here are five other options that have been suggested as possible paths to redemption.

Keep simplifying

One of the brutal-but-necessary cuts that Stephen Elop made was chopping back the mess of systems and services Nokia was trying to balance. After his burning platform memo laid out the situation ahead of the company, the plug was pulled on MeeGo, and Symbian while not quite dead was put on life support.

These days Nokia is shipping just 10 new handset models: six Asha phones running Series 40 and four Lumias.

That’s dramatically smaller lineup than in the past, but that’s not enough for everybody. Last year Twitter and Square co-founder Jack Dorsey suggested that Nokia “focus on 3″ products in an attempt to bring clarity back to its offering.

Nokia: you make too many products. Focus on 3.

— Jack Dorsey (@jack) October 26, 2011

Slimming down further is tough for a business like Nokia which is used to supplying product at all levels of the market, in many different segments. But it is making more progress down this route, offloading things like the blingy but incompatible Vertu brand. The question is which three products would it focus on?

Look to the past

Plenty of people think that while Nokia’s previous strategy was not perfect, it at least had it in control of the full stack: hardware and software. For some that means that there is still a chance that MeeGo, the Linux-based OS that emerged from work done by Nokia, Intel and others. The MeeGo-powered N9, for example, had a lot of fans.

In fact, MeeGo is still considered viable by Jolla, a startup of former Nokians who are trying to build it into a fully-featured OS. In an interview with the Arctic Startup blog, Jolla CEO Jussi Hurmola laid out a few details, including the fact that the phone “will offer a developer mode that developers and enthusiasts can use to get more out of the device.”

But there are a lot of unanswered questions here still:

A smartphone with out any apps is fairly undesirable these days, so building an app ecosystem will be a major challenge for Jolla. Hurmola only commented that they believe they have the answer to that problem, but it’s difficult to imagine how exactly they will build that support considering that Microsoft is pumping millions into its ecosystem (such as programs like AppCampus), with only fair results.

And then there’s Symbian: not yet abandoned by the company, and still being updated to service the millions of existing users out there. If Symbian keeps its head above water, does it become a viable plan B?

Go Android

Nokia has already said in the past that it considered working with Google but decided against becoming just one of dozens of manufacturers building on Android. And in a situation where it has, that argument makes plenty of sense — after all, why become yet another Android supplier when you can work closely with a software provider (in this case, Microsoft) in a productive, close relationship?

Except here’s the problem, Microsoft is not proving to be the partner Nokia expected: the appearance of Microsoft Surface tablet PC shows its apparent willingness to piss off OEMs, while the decision to make Windows 8 incompatible with previous versions left Nokia having to rapidly discount Lumia handsets.

That’s left plenty of people suggesting that maybe Android will be the way to go: from pundits suggesting that “only Android can refloat Nokia’s sinking ship” to the hackers who are trying to make it happen by getting the N9 running Android Jellybean.

Get rid of Stephen Elop

Like many former Nokia staff, Tomi Ahonen — now a prominent mobile industry analyst — is bullish about the company’s fortunes… if it chooses the right path. But right now, he suggests, what is happening is “carnage”, as the business jettisons its strengths in order to chase. The answer? A change at the top.

In a blog post on Thursday, Ahonen pointed out that the former Microsoft man has presided over a massive decline and suggested his removal would be best for the company:

When Elop took over, in the first full quarter he was in charge, Nokia’s smartphone unit sold 28 million smartphones and had 29% market share. Nokia was twice as big as Apple and three times bigger than Samsung. Nokia’s smartphone unit was growing sales strongly – the year 2010 Nokia had seen bigger growth in units sold of its own smartphones than Apple had with the iPhone! Now the unit sells 10.2 million smartphones, the market share is down to 6%.

[…]

Nokia has thrown away 4 out of every 5 loyal customers it held only a year and a half ago! Yes, we are witnessing history being made – history of the worst CEO of all time (And it will only get worse in Q3). Pay attention to this, this is the classic case study for MBA’s of the future to study how not to destroy your company, using methods like the Elop Effect.

Ahonen’s not alone. Former Nokia exec Lee Williams is another who has ripped into Elop’s management by saying “There’s no overarching vision for this company”, while former Apple and HP man Jean-Louis Gassée questioned his credentials.

“He has zero experience in terms of what makes a smartphone maker tick. And what is his experience in supply chain management? Zero,” he told Computing earlier this month.

There is one option not listed above, of course:

Don’t change anything

Elop is at least consistent in his messaging: turning Nokia into a winner will take time and pain.

And there were some notes from Thursday’s results that felt maybe, just maybe, like a tiny chink of light. For example the fact that Lumia shipped 4 million units in the last quarter, more than expected. There are caveats: shipping is not the same as selling, expectations were already low, and while 4 million may feel like progress it is really just a drop in the ocean (Apple, by contrast, sold more than 35 million iPhones in its Q2).

But certainly a few posters on my last Nokia story argued that things were on the right track. Here’s S Kyle Davis, for example:

“It’s just their low end phone business that is suffering, as the market overall is shifting to smartphones. Nokia is shifting with it, but it will probably take a year or more.”

Meanwhile Evster88 (who accused me of huffing glue) said things were improving.

“You are indeed missing the big picture here. Nokia’s restructuring is WORKING and public opinion on Windows Phone is steadily improving.”

The evidence for that is hard to see. The market, which had an initial small bounce after Thursday’s results, quickly reverted to its gloomy view of Nokia’s future. But Elop is convinced that if he keeps going, it will click. However, even if he is correct there’s another question: whether he’s got the money to keep the company afloat in the meantime.

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Takeaways from mobile’s second quarter

Wed, 18 Jul 2012 06:55:19 +0000

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MobileTechRoundup podcast 273: Nexus 7 plus Jelly Bean is super sweet

Kevin C. Tofel — Mon, 16 Jul 2012 00:51:03 +0000

MoTR 273 is 62:30 minutes long and is a 51.3 MB file in MP3 format.

CLICK HERE to download the file and listen directly.

HOSTS: Matthew Miller (Seattle) and Kevin C. Tofel (Philadelphia)

TOPICS:

Galaxy S III impressions (Nexus and HTC One vs. GSIII?)
Jelly Bean on the Nexus smartphone
Galaxy 7 tablet hands on
Atrix HD in the house
Nokia 808 PureView
Touchfire iPad keyboard, Matt’s first Kickstarter delivery

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A look back at mobile in Q1

Tue, 17 Apr 2012 06:55:53 +0000

The first three months of 2012 proved eventful for the mobile space. Smartphone sales surged both in the U.S. and worldwide, carriers struggled to cope with the ever-increasing consumption of mobile data, and the fight for spectrum remained front and center. Apple continued its lead in the tablet space with the launch of the iPad 3, though Android is gaining traction, thanks largely to the Kindle Fire. New developments also abounded, with Millennial Media’s IPO as well as carriers’ building out their LTE networks. And as Microsoft and Nokia prepare to bring Windows Phone to the next level with an impressive new version of the operating system that could challenge iOS and Android, we are primed for a dynamic 2012. We analyze these trends and more in this report, as well as provide a near-term outlook for the next few months and beyond.

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