NB-IoT gathers momentum

Trials in Australia and the UK involving Ericsson and Vodafone indicate the NB-IoT is starting to become a reality.

Ericsson and Telstra are claiming the longest connection for the narrowband wireless standard that is set to be the default for IoT. The trial used a Telstra base station to communicate with an NB-IoT temperature sensor 94 km away on Mount Cenn Cruaich in New South Wales, Australia. They say the previous range limit was more like 40 km.

“We’re partnering with Telstra to deliver its customers a world-leading capability in NB-IoT extended range cells and demonstrating the huge opportunity that IoT represents in rural and regional areas for both Australia and globally, particularly for logistics and agriculture,” said Emilio Romeo, Ericsson’s MD for Australia and New Zealand.

“Telstra already had Australia’s largest IoT coverage with Cat M1 across our 4G metro, regional and rural coverage footprint,” said Channa Seneviratne, Telstra’s Executive Director of Network and Infrastructure Engineering. “With this NB-IoT extended range feature, we have now extended our coverage to more than three and a half million square kilometers, delivering our customers the best IoT coverage and capability in the country.”

Meanwhile Vodafone has started trialling NB-IoT in the UK, as reported by Light Reading. Energy company Scottish Power is Vodafone’s first UK NB-IoT customer and is using IoT temperature sensors to detect when some of its remote kit might be overheating. They’re apparently powered by standard AA batteries and each one costs a couple of quid.

Lastly Counterpoint Research has found that global cellular IoT connections grew by 72% in the first half of this year and forecasted NB-IoT will account for around half of all IoT connections in the long term. As you can see from the charts below most of the action seems to be happening in China, but Vodafone is leading the international effort.

Counterpoint IoT 1

Counterpoint IoT 2

“Emerging markets like India, Brazil and in Africa while can offer tremendous scale but will likely be late followers compared to China in this path to connected everything,” said Satyajit Sinha of Counterpoint. “However, the massive growth opportunity remains in terms of cellular-IoT connections in emerging markets which will be possibly catalysed by operators such as Jio in India but more specifically from multi-market players such as Telefónica, MTN or Vodafone with plans to deploy LPWAN networks such as NB-IoT leveraging scale across their coverage markets.”

“Revenue generation from the IoT ecosystem is not siloed to any one specific segment of the value chain, rather it is distributed among all segments,” said Neil Shah of Counterpoint. “On an average for a cellular IoT solution deployment, connectivity represents around 12%, whereas hardware components, modules and devices represent 22%.

“The rest of the bulk of the value in an IoT solution is captured by system integrators, middleware, software platforms, and cloud analytics vendors. Hence, if operators are looking to capture maximum value, the strategies need to provide an end-to-end IoT solutions by bundling IoT devices, secure connectivity, platform, and data management to capitalize on the overall opportunity.”

The big variable with IoT, of course, is revenue. It doesn’t look too tough to scatter billions of sensors all over the place and connect them to the cloud via NB-IoT or whatever, but getting companies to pay for services on the back of them is another matter. It looks like a lot of the commercial precedent will be set in China, so the rest of the world might wait to see how that plays out before committing.

OnePlus grabs global market share in the era of the affordable flagship

It looks like we may have hit the ceiling with respect to what people are prepared to pay for a flagship smartphone and cheaper alternatives are benefiting.

Counterpoint Research has released some interesting data tracking the global smartphone market by vendor and also by price tier and region. This kind of slicing and dicing of data can reveal some interesting trends and in this case it uncovers some significant movement in the price tiers immediately below premium.

Apple continues to kick ass at the very top, and it’s hard to see this ever changing given the unique differentiators it has in the form of software, brand, loyalty, etc. But with the start of the iPhone X era, Apple decided to test the market’s price tolerance by going over $1,000 for the basic version of a phone for the first time. It seems to have got away with it, but these new numbers indicate it’s also driving demand for cheaper devices that are almost as good.

You can see the chart below. Counterpoint says and smartphone costing $400 or more is in the premium segment, but then subdivides it by price tier. Above $800 Apple has a near monopoly and then it largely shares the $600-$800 tier with Samsung. Below that, however, is where the Chinese vendors come in, with OnePlus being especially interesting as it’s far less reliant on its domestic market than the likes of Oppo and Vivo. It is doing especially well in the UK and India, in the latter case becoming the leading premium smartphone vendor by volume for the first time in Q2 2018.

Counterpoint premium smartphone Q2 2018 prices

We spoke to Neil Shah of Counterpoint to get some insight into what’s going in in this price tier. “As smartphone users mature on the usage experience curve they are looking for premium specs and experience,” he said. “However, the bulk of them are not able to afford or invest more than $800+ for a phone as $800+ is the new normal for premium specs.

“Hence, there is a pent-up demand for ‘affordable flagship’ grade premium smartphones. Players like OnePlus has been able to offer the flagship grade specs at almost $500-$600 price points helping it significantly grow share. OnePlus has been expanding swiftly in Western European markets with growing  popularity especially in Nordics, UK, Germany and so forth hitting that affordable premium price points.”

The other table served up by Counterpoint was a top-5 list of premium tier vendors by region. As you can see, OnePlus is among the leaders in Western Europe and APAC excluding China. Apple and Samsung top nearly all of the lists, but there’s a reassuring degree of diversity among the next three, with Motorola still doing OK in the Americas, Nokia-branded HMD appealing to the Middle East and Africa and even Asus getting some success in Eastern Europe.

Counterpoint premium smartphone Q2 2018 regions

OnePlus was so pleased with its achievement it even got some more granular data from Counterpoint to use in its own press release. Apparently OnePlus was the third best-selling premium smartphone in Sweden in Q2, fourth in the UK, France, Germany and the Netherlands, and fifth in Italy. That comes as no surprise to us as we found it to represent great value for money even when compared to other premium Android phones.

Fitbit fights back at Apple in the smart watch market

The latest smart watch numbers from analyst firm Counterpoint reveal Apple is still the dominant player but Fitbit is giving it a run for its money.

Total global smart watch shipments grew 37% year-on-year but it’s rapidly turning into a two horse race. Apple hijacked the market as soon as it took the segment seriously but its initial success seemed to stall. Meanwhile Fitbit more recently made the strategic decision to diversify beyond fitness bands and that move seems to have paid dividends.

Apple still dominates with a 41% of global shipments, but that’s down from 48% a year ago. Meanwhile Fitbit has managed to propel its share from 8% a year ago to 21% in Q2 2018, thanks to the apparently popular Versa smart. Everyone else is miles behind, with one-time leader Samsung now bordering on irrelevance.

Counterpoint smartwatch Q2 2018 1

“Back in Q4 2017, Apple stepped up its strategy in the smartwatch segment by enhancing the features of smart watches into broad-based functionalities, including some health and fitness tracking capabilities,” said Satyajit Sinha of Counterpoint. “Moreover, Apple is catalysing the trend of ‘smart watch as a standalone wearable device’ with adoption of cellular connectivity, which is driving the new wave of cellular connected wearables globally, great news for mobile operators.”

It doesn’t look like the market got the memo about standalone smart watches, however. As Sinha’s colleague Neil Shah notes, people seem reluctant to pay the premium just for the opportunity to talk to their wrist like a nut-case.

“Despite initial hype and traction of cellular based Apple Watch Series 3 in the first two quarters, Apple iPhone users are actually choosing the Series 1 as a non-cellular option over Series 3 non-cellular model which is surprising to many industry watchers,” said Shah. Not all industry watchers mate. The strong inference here is that Apple hasn’t done much to improve on the Series 1 other than whack in an expensive and largely redundant modem.

As indicated the Apple Watch Series 1 is the best selling model, followed by the Fitbit Versa. Given that Chinese vendor Amazfit has the third best selling brand despite only having a 4% total market share, that implies these two models are by far the biggest sellers. Unsurprisingly the Fitbit Versa is significantly cheaper than any Amazon Watch, so it wouldn’t be surprising to see it continue to grab share in the coming quarters.

Counterpoint smartwatch Q2 2018 2

Chinese smartphone market is shrinking but we can’t agree on how much

A slew of Chinese smartphone numbers have been churned out by leading educated-guessers and the only thing they agree on is that it’s declining.

Counterpoint reckons Q1 2018 Chinese smartphone shipments declined 8% annually, but Canalys has a much bigger decline of 21%, while GfK is going for a more modest 6% decline. Counterpoint and Canalys will derive their intelligence from the supply-side – i.e. manufacturers, supply chain, etc, while GfK uses point-of-sale terminals to get a demand-side picture.

Regardless of the method there will be a fair bit of extrapolation, conjecture and intuition in all the numbers, which explains why they can sometimes be so far apart.

“2018 started on a slower note for the world’s largest smartphone market,” said James Yan of Counterpoint. “The slowdown can be attributed to lengthening smartphone replacement cycle for the Chinese consumers. Additionally, lack of product launches in Q1 2018 with OEMs focusing on inventory clearance, especially for non-bezel-less display devices, were other key factors impacting shipment volumes. Bezel-less devices are now popular in China and more OEMs are expected to launch sub-1000 RMB (~US$160) bezel-less portfolio to differentiate their offerings in the mid segment.”

“The level of competition has forced every vendor to imitate the others’ product portfolios and go-to-market strategies,” said Mo Jia of Canalys. “But the costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope. While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players.”

“We start the year with a very different picture to the final quarter of 2017, when smartphone demand records were broken,” said GfK’s Arndt Polifke, commenting on the global picture. “In the first quarter of 2018 by comparison, there was a year-on-year decline in global smartphone demand. It’s perhaps no surprise as we hit saturation point in more markets. On the other hand, consumers are tending to choose higher-priced models as they embrace the latest innovations offered by smartphone brands. As a result, the average sales price grew by an astonishing 21 percent year-on-year to USD 374. This led to 18 percent revenue growth globally, which is exceptional for a maturing industry.”

GfK is the only one of the three to talk about value as well, and in its released confirms this global trend is playing out in China. Smartphone revenues there grew by 14% to $41.1 billion in spite of the volume decline. This seems to be down to the growing strength of the big smartphone brands, including Apple, and their ability to persuade Chinese punters to upgrade to more expensive devices.

Counterpoint China Q1 2018

 

Canalys China Q1 2018

Huawei shows its 5G hand, including a 2019 5G handset launch

At a recent event Huawei made a number of announcements regarding its strategic direction for the next few years, with an emphasis on 5G.

The event was Huawei’s own Global Analyst Summit in Shenzhen – the 15th such occasion. It managed to fit some substance in among the usual self-congratulation and miscellaneous corporate propaganda and, while we weren’t there, we spoke to Counterpoint Analyst Neil Shah who was and who has been tweeting prodigiously throughout.

The tweet that most caught our eye was the announcement that Huawei will be launching a 5G smartphone in the second half of 2019 running its own 5G chip. “This points towards their Mate flagship model which launches normally in September timeframe,” Shah told Telecoms.com. “Furthermore, the first wave of 5G devices will be routers, CPE followed by mobile hotpots in early 2019 with their own chipset and then 5G smartphones and possibly an ARM based laptop from the in-house Kirin branded SoCs.”

Huawei seems to be pretty handy at SoCs these days, with Shah saying it pretty much caught up with Qualcomm from 4.5G onwards. “Almost two in three Huawei smartphones sold in Q4 2017, had an in-house Kirin branded SoC, rest was Qualcomm or Mediatek,” said Shah. Another thing Huawei shared was that building a 5G smartphone is more challenging than 3G or 4G as these will include multi-modes (2G,3G,4G,4.9G, 5G SA/NSA) and mmWave support, which makes the RF integration and positioning more complicated.

“Furthermore, a 5G phone needs 5x more processing power, 2.5x more power consumption and 1.3x board size. So Huawei is working on building ASIC 5G chips for smartphones, which is phenomenal! ASIC chips are used for bitcoin mining, so maybe in future you can mine bitcoin on your phone.

The silicon side of things from Huawei often goes under the radar, perhaps because it’s involved in so much other stuff. “They have been almost on par with Qualcomm in terms of performance (from my personal experience) and in terms of technology not far behind especially 4G onwards due to growing share of 4G and 5G patents and IP,” said Shah.

Coincidentally Counterpoint has recently published its global 5G smartphone forecast, which anticipates fully ramping in 2021 to exceed 100 million units shipped. “Growth in the early commercial phase of 5G is expected to be low due to several factors,” said Shah’s colleague Tom Kang. “There are still forward looking 5G standards that are unconfirmed, creating uncertainty around product and service opportunities. We also expect 5G chips to have a higher price point which will initially drive the cost of devices up. 5G capable devices will be premium only in the beginning. Also only a handful of countries will be deploying the first 5G infrastructure.”

Counterpoint 5G smartphone forecast

Huawei also seemed to strike a cautious note on the short-term prospects for 5G, with commercial use-cases also not expected to make a serious appearance until 2021. “In near to mid-term Fixed Wireless Access is going to be huge as an alternative to fibre and DSL, especially in NSA mode,” said Shah. “Post 2024 in Standalone mode, AR,VR gaming, autonomous vehicles, intelligent manufacturing and smart grids which require less than 10ms end-to-end latency will be key.”

The other main pillar of 5G is IoT and Huawei seems to be serving up some pretty competitive silicon in this area too. “Huawei has pioneered NB-IoT networking and is driving the ecosystem from chip (Boudica) to platform (LiteOS) to cloud (Huawei IoT cloud),” said Shah. “Huawei’s upcoming Boudica 150 in Q2 2018will integrate MCU and modem into one single chip with a target cost of under $2, which is very disruptive considering the average LTE-M to 4G chip goes for $10 to $70. Also it will allow faster time-to-market, bringing it down from months to weeks from an interoperability and testing perspective. So far most of the chipsets in the IoT modules have been discrete (as opposed to integrated SoC) solutions.

On top of what we learned from Shah, Huawei has chucked out a couple of press releases from the event. The headline propaganda was Huawei’s ‘vision for an intelligent world of the future’. “In an age defined by greatness, Huawei aspires to become a great company,” said Huawei Rotating Chairman, Eric Xu. “We want to help mankind take its next step forward. This is the basis of our new vision and mission: Bring digital to every person, home and organization for a fully connected, intelligent world.”

To underline these lofty aspirations Huawei has published a report entitled Global Industry Vision 2025, which features a bunch of predictions and forecasts distilled in to three main ‘visions’. Firstly it sees 40 billion personal smart devices and 100 billion connections around the world by 2025. Secondly it anticipates 60 million vehicles will be connected to 5G networks and 100% of new vehicles connected to the internet by that time. Lastly Huawei predicts that the digital economy will be worth US$23 trillion in seven years.

Huawei likes these big corporate extravaganzas and, while there is usually a fair bit of forgettable hot air, they also serve as a pretty substantial statement of intent and throw down the gauntlet to its competitors. Ericsson and Nokia used to do more of this sort of thing and must feel under pressure to raise their game once more each time one of these is held.

Apple on the rebound in China according to Canalys

Analyst firm Canalys reckons Apple’s smartphone fortunes in China are improving after six consecutive quarters of decline.

Chinese iPhone shipments apparently increased by 40% year-on-year, hitting 11 million in Q3 2017, although it should be noted that Apple has yet to formally announce its shipment and revenue numbers for the quarter. Canalys warns, however, that this upturn in Apple’s Chinese fortunes could be fleeting.

“Apple’s growth this quarter is only temporary,” said Mo Jia of Canalys. “The high sell-in caters to the pent-up demand of iPhone upgraders in the absence of the iPhone X. Price cuts on earlier models after announcing the iPhone 8 have also helped. However, Apple is unlikely to sustain this growth in Q4.

“While the iPhone X launches this week, its pricing structure and supply are inhibiting. The iPhone X will enjoy a healthy grey market status, but its popularity is unlikely to help Apple in the short term.”

The Canalys Apple China numbers are below, followed by the year-on-year comparison for the top five Chinese smartphone vendors. As you can see the company reckons overall shipments declined by 5% in the country, but at the same time four of the top five vendors experienced substantial increases.

Canalys Apple China

Canalys Q3 China

Here’s what Canalys had to say on the matter: “Huawei grew shipments by 23%, shipping over 22 million units to take the lead, while Oppo declined slightly (compared to the stellar performance a year ago) shipping 21 million units. Vivo, with a 26% growth was the most impressive performer in the top 3, shipping over 20 million units. Xiaomi and Apple round up the top 5 this quarter.”

Xiaomi looks like it shipped around 16 million for the quarter, taking the total for the top five to 91 million – 76% of the total. Canalys says total shipments fell by around 6 million, but the top five increased theirs by around 14 million, meaning the long tail must have dropped a whopping 20 million shipments annually – around half its likely previous total.

To sanity-check these numbers we asked Neil Mawston at Strategy Analytics for a second opinion. He hasn’t come up with his Q3 numbers yet – quite sensible since the vendors haven’t either – but he did say this: “We provisionally model China at 0% YoY growth (zero) for 121 million smartphone shipments in Q3 2017.” So opinion is divided, but that long-tail drop-off still seems odd.

Canalys thought it might as well have a crack at India while it was at it, which seems to be the engine room of global smartphone growth these days, following the sudden decline of the Chinese long tail. There we’re seeing healthy growth of 23%, driven largely by Chinese vendors, although Samsung is clinging onto top spot.

“Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads,” said Rushabh Doshi of Canalys. “But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between INR15,000 and INR20,000 [US$230 and US$310]), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.”

Canalys Q3 India

There seems to be more consensus on India than there was on China, with analyst firm Counterpoint publishing a pretty equivalent set of numbers, although they’re also still keeping an eye on its featurephone market. Both firms also agreed that India overtook the US to become the second biggest smartphone market in Q3.

“India continues to be an attractive destination for handset OEMs,” said Karn Chauhan of Counterpoint. “With strong smartphone growth and a sizeable featurephone market for at least three to four years, OEMs in India can target a diverse set of audiences. This has allowed a number of OEM’s to still realize double digit growth in the featurephone segment in spite of being absent in the smartphone segment.”

Counterpoint Q3 India

Huawei fleetingly grabs smartphone second spot from Apple

According to research firm Counterpoint Huawei’s smartphones outsold Apple’s over the summer.

As you can see in the table below this was a consequence of both Huawei’s strength and Apple’s weakness. Huawei sustained a rare foray above 10% global smartphone sales share in June and July, while Apple suffered an alarming dip.

“This is a significant milestone for Huawei, the largest Chinese smartphone brand with a growing global presence,” said Peter Richardson of Counterpoint. “It speaks volumes for this primarily network infrastructure vendor on how far it has grown in the consumer mobile handset space in the last three to four years. The global scale Huawei has been able to achieve can be attributed to its consistent investment in R&D and manufacturing, coupled with aggressive marketing and sales channel expansion.”

Counterpoint smartphone table sep 17

Apple always experiences significant spike in Q4, which features both new iPhones and the holiday shopping frenzy. So while it’s possible that Huawei could have maintained its lead in August that will almost certainly change after the iPhone 8 is launched on 12 September.

The longer-term trend, however, is for Huawei to be catching Apple. Our tracker table below shows Apple almost ten percentage points of global market share ahead of Huawei in 2014, but that gap had halved by the end of last year. In Q2 2017 Apple was less than a single percentage point ahead of Huawei, so it seems totally plausible that Huawei could overtake Apple permanently before long.

Smartphone market share Q2 2017

“Chinese brands are growing swiftly thanks not only to smartphone design, manufacturing capability and rich feature sets, but also by out-smarting and out-spending rivals in sales channels, go-to-market and marketing promotion strategies,” said Counterpoint’s Tarun Pathak. “Chinese vendors have become as equally important as Samsung or Apple to the global supply chain, application developers and distribution channels, as they continue to grow in scale more rapidly than the incumbent market share leaders.”

Another factor working against Apple is how good a smartphone you can now buy at a much lower price point. Apple has struggled to introduce anything revolutionary in its phones for year and when you can get a device that does nearly everything an iPhone can for a fraction of the price, many consumers are finding it increasingly hard to justify the Apple premium.