Apple iPhone sales are reportedly flagging

Gadget giant Apple has apparently cut its orders with suppliers in response to lower-than-expected demand for its latest iPhones.

The scoop comes from the WSJ, which spoke to the usual, shady people close to the matter in the Apple supply chain. They’re apparently bent out of shape because they have planned according to a previous, more bullish Apple forecast and are now faced with over-capacity problems.

Of the new models it seems that the cheaper XR is the one that is most undershooting initial expectations, with the WSJ suggesting orders may have been cut by a third. This has apparently all come as a nasty shock, although if those suppliers had been tracking Apple’s recent earnings announcements, in which it down-graded its forecast,  they might have been better prepared.

The piece cites a bunch of circumstantial evidence, such as overtime being cut at Foxconn, as further evidence and it’s interesting to speculate about the reasons. It’s unlikely to be price, with the X having sold plenty and the cheaper model heaviest hit, so this is probably a cyclical thing. The global smartphone market has been in recession all year and people are probably waiting longer to replace their phones, especially the most expensive ones.

Xiaomi apologises for misleading UK consumers

Chinese smartphone vendor Xiaomi says an apparent £1 smartphone offer was meant as a raffle, blaming marketing message lost in translation.

At its launch event in London, Xiaomi announced that for a limited period, users would be able to buy Mi A2 and Mi 8 Lite,  both launched earlier this year, for only £1 from its web-shop. When the time came however, social media was flooded by complaints from frustrated hopefuls who have failed to scoop the jackpot.

Some users decided to take the matter into their own hands. Phil Williams from Stockport managed to dig out the browser script as well as checked the online shopping platform’s developer page, and shared his findings on Twitter.

It turned out that the script was written in the way that as soon as a user clicked “Buy Now”, the browser would return an “out of stock” message, without going through the loop to check the inventory status.

Tweet on Xiaomi stunt 1

Tweet on Xiaomi stunt 2

Tweet on Xiaomi stunt 3

Xiaomi’s official response came in three days later, claiming that it was a lost-in-translation blunder. The so-called “flash sale” in essence was a raffle draw, and only ten smartphones (five pieces of each model) were made available for the lucky ones across three days. Xiaomi explained that “Of the thousands who clicked ‘buy’ simultaneously, our system will randomly select the winners”. However on the Terms & Conditions page linked to the promotion, it was spelled out clearly under “£1 Flash Sale” that “Products available under this sale are limited in quantity and are given away on first-come, first-serve basis.”. Xiaomi has not responded to Telecoms.com’s request for clarification of the contradiction.

There are potentially two issues surrounding this case. At the launch event we never heard any mention of lucky draw type of “flash sale”. Rather the message given was very similar to a “Black Friday”-type of “deal”. The misleading promotion message could fall foul of the Advertising Standards Agency. A more serious issue relates to GDPR. All those entering the raffle needed to log in with their Mi account. This would mean that Xiaomi should not keep their data more than the raffle period if the accounts were created specifically for this purpose. It would be interesting to see if this rule is being followed.

Xiaomi the difference: Chinese smart device maker vows to disrupt UK market

Xiaomi launched Mi 8 Pro, the first time it has unveiled new products outside of Greater China, a sign of its ambition to expand in more mature markets.

At a Hollywoodian event (as almost all smartphone launches are nowadays) in Barbican Centre on Thursday, Xiaomi became the latest Chinese smartphone maker to introduce their latest products in London, following recent launches by Huawei and OnePlus. The company unveiled Mi 8 Pro, an upgrade version of its Mi 8 model launched earlier in China.

After registering impressive growth in India and other markets in Asia, as well as consolidating its position in China, Xiaomi, like some other Chinese brands, is eyeing the mature markets for new growth. Western Europe is an attractive option as the market is not flooded with hundreds of smartphone brands as in India and China, and there is a sizeable open market that is easier for new brands to set a foot in instead of having to crack the carrier market as in the US.

“Today we witness a new chapter in Xiaomi’s global expansion journey, underpinned by our global ambitions. We are thrilled to make great strides by announcing our arrival in the UK,” said Wang Xiang, Senior Vice President of Xiaomi Corporation.” By bringing a range of our amazing products at honest pricing we want to offer more choices and let everyone in the UK enjoy a connected simple life through our innovative technology.”

The newly launched Mi 8Pro and its predecessor share exactly the same hardware and software, powered by Qualcomm’s Snapdragon 845 CPU, 6.21” AMOLED display (yes, need to go to the second decimal digit), 8GB RAM and 128GB onboard memory,12MP+12MP AI dual camera on the back, and 20MP selfie camera, Dual 4G SIM, Dual frequency GPS (to minimise coverage dead zones, like near tall buildings), infra-red facial recognition (to unlock with facial ID in the dark).

On the software side, Xiaomi overlayed a light MIUI skin on top of the latest Android release, plus a couple of its own preloaded apps (browser, messaging, etc.). Presumably the main point is not how many people will use its apps but rather to gather usage data. The Xiaomi executives did stress the number of active MIUI users in the world and in Europe (its products are already being sold in Spain, Italy, and France). It has also preloaded a MS Office suite, one of the first offers Microsoft made to the Android ecosystem back in 2016.

Under the spotlight was its photography technologies including the so-called “4-in-1” super-pixel, that is combining 4 pixels into 1 to take in more light, therefore to capture more details even in low light environment. Also being boasted is the speed the phone focuses (using the so-called Double Pixel Auto Focus, DPAF, technology, demonstrated in a video as faster than both the iPhone XS and the Samsung S9+). Nowadays, no presentation of smartphone cameras is complete without talking AI, and Xiaomi is no exception. The main talking point here was on the analytics capability to separate foreground from background, making post-shot processing easier.

The only genuine upgrade the Mi 8 Pro offers over the Mi 8 looks to be the fingerprint reader. It is at the back of the phone on the Mi 8, but is upgraded to on-screen reader on the Mi 8 Pro.

All the bells and whistles aside, what Xiaomi most wanted is to stand out in two areas: design and price. It is clearly successful in one, maybe less so in the other. Xiaomi claimed to go down the minimalist route for its design, claiming that it was inspired by the exhibits at the Helsinki Design Museum. It even got the director of the museum to go on video to endorse an earlier product. But what it got to show its innovative design on the new product is a transparent back-cover where the upper part of the inside of the phone is visible. But to those of us old enough to remember the 1990s, this is more a retro than inno. Swatch’s Skeleton series, anyone?

Xiaomi Mi 8 Pro_Front resized Xiaomi Mi 8 Pro_back resized

But when it comes to pricing the strategy is much bolder and more likely to succeed. Xiaomi broke through in the device market in China in 2011 by offering smartphones with decent specs at a very affordable price. This strategy has carried them through ups and downs all the way to London. The Mi 8 Pro will be retailed at £499.99. This is vastly lower than other smartphones with comparable hardware specs. Xiaomi is clearly targeted at the so-called “affordable premium” segment.

On the distribution side, Xiaomi started in China exclusively using online distribution channels. There have been followers with mixed success, but at the same Xiaomi is also diversifying to brick-and-mortar retail outlets in markets like India, Malaysia. Xiaomi also aims at a mixed channel strategy in the UK, it opens its own online shopping channel, getting online and offline channel partners (Amazon, Currys, Carphone Warehouse, Argo, John Lewis, etc.) on board, as well as opening its own authorised retailer in southwest London on 18 November. It also tied a partnership with 3UK, though Xiaomi executives would not tell more details of the terms or the packages 3 plans to offer.

Also introduced to the UK market at the event are a smart wristband (Mi Band 3, main feature being its display larger than previous generations) and an electric scooter, to deliver the “ecosystem” story—the executive stressed Xiaomi is more than a smartphone company. On display in the experience area were also smart speakers, set-top boxes, smart kettle, and smart scale.

Our overall feeling is that, the Mi 8 Pro smartphone is decent but not fantastic. However the price point Xiaomi sets it on is disruptive. This strategy has worked for the company in China and other Asian and European market, taking them to commendable market positions and financial success. It may stand a chance.

Xiaomi event pic2

Samsung details its foldable display plans

Tech giant Samsung reckons there might be a market for a foldable phone that turns into a tablet.

Samsung has been banging on about flexible displays for years, but it has always been teased in a vague, utopian way. Just imagine a world in which devices can bend, they invited us to do on an annual basis, without going to far as to actually detail the practical benefits of such a thing. There was even talk of rollable displays that we could unfurl like a high-tech scroll.

But now, finally, all this talk has coalesced into an actual product: the Infinity Flex Display. It was revealed at Samsung’s developer conference in San Francisco, together with a concept smartphone that unfolds into a tablet and a new version of Samsung’s Android user interface called One UI.

“Samsung continues to build on its legacy of category-defining form factor and display innovation that has paved the way for a breakthrough foldable smartphone form factor,” said the supporting announcement. “The Infinity Flex Display together with One UI delivers a new kind of mobile experience allowing users to do things they couldn’t do with an ordinary smartphone.

“Users now have the best of both worlds: a compact smartphone that unfolds to reveal a larger immersive display for multitasking and viewing content. The app experience seamlessly transitions from the smaller display to the larger display as the device unfolds. In addition, users can browse, watch, connect and multitask without losing a beat, simultaneously using three active apps on the larger display.”

Clearly Samsung understands that just enabling novel form factors alone won’t achieve much; it needs to catalyse an ecosystem that develops applications and functions designed to make use of its unique qualities. Merely making use of the greater screen real estate would be unremarkable, but enabling a smooth transition between smartphone and tablet mode while, for example, watching a video might be handy.

A short video of the announcement can be seen in the Samsung tweet below, followed by one from veteran consumer tech hack Vlad Savov, which illustrates some of the challenges Samsung will face in turning its flexible display technology into something people will want. Lastly there’s an infographic from Samsung detailing how great it is at mobile displays, for anyone not already convinced of that.

 

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Smartphone market continues to plunge, with Samsung worst hit

Samsung’s smartphone shipments have declined for the past four quarters and the overall market has followed.

At the same time Huawei continues to go from strength to strength. Annual smartphone shipment growth of 41% allowed Huawei to take second place in the global rankings last quarter and 32% growth this quarter was enough to keep Apple at bay once more. Samsung’s shipments declined by 13% this quarter and if these trends keep up Huawei could grab the top spot before long – a previously unthinkable event.

“Global smartphone shipments tumbled 8 percent annually from 393.1 million units in Q3 2017 to 360.0 million in Q3 2018,” said Linda Sui of analyst firm Strategy Analytics. “The global smartphone market has now declined for four consecutive quarters and is effectively in a recession. The smartphone industry is struggling to come to terms with heavily diminished carrier subsidies, longer replacement rates, inventory buildup in several regions, and a lack of exciting hardware design innovation.”

“Samsung is losing ground to Huawei, Xiaomi and other Chinese rivals in the huge China and India markets,” said Neil Mawston of SA. “Samsung must solve its China and India problems before it is too late. Huawei remains the world’s second largest smartphone vendor with 14 percent share. Huawei has little presence in the valuable North America market, but its Android models are wildly popular in most of the rest of the world, particularly Asia and Europe.”

One interesting twist to the numbers was Apple’s decision to stop reporting shipment numbers from next quarter onwards. Since this is always its strongest quarter you have to wonder what Apple is playing at. “Starting with the December quarter, we will no longer be providing unit sales data for iPhone, iPad and Mac,” said Apple CFO Luca Maestri on the earnings call. “As we have stated many times, our objective is to make great products and services that enrich people’s lives, and to provide an unparalleled customer experience so that our users are highly satisfied, loyal and engaged.

“As we accomplish these objectives, strong financial results follow. As demonstrated by our financial performance in recent years, the number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business. Furthermore, a unit of sale is less relevant for us today than it was in the past, given the breadth of our portfolio and the wider sales price dispersion within any given product line.”

Fair enough but the market will be the judge of how relevant Apple’s unit shipment numbers are. Companies like Strategy Analytics will still publish estimates and journalists will still write about them. Apple was one of the few smartphone vendors that still published its numbers so maybe it has decided, as has LG, to get in line with its competitors on this, with the overall declines in the smartphone market possibly contributing to that decision. But the weak reasoning offered above will leave many unanswered questions in the minds of investors.

Smartphones Q3 2018

How will Xiaomi’s launch into Europe impact the smartphone market?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Steve Pappas, VP, Asset Value Recovery Services at HYLA Mobile, examines the likely effect of Xiaomi entering the European smartphone market.

The European smartphone ecosystem has welcomed a new player, Xiaomi, who has made an aggressive play for the market. The Chinese smartphone manufacturer has already gained a good portion of market share too thanks to its portfolio of cheaper devices, which seem to be appealing to price-conscious European consumers. The company’s Senior Vice President, Wang Xiang, has even stated that the operator’s differentiator is its “premium product” without the “premium price”.

Traditionally, consumers have invested in the latest and greatest smartphones as soon as they hit the market. Large players such as Apple and Samsung have brought new models and technologies to the industry each year, and we have seen national newspapers cover the queue of fans waiting outside brick and mortar stores to get their hands on these latest devices.

But today, consumers are holding onto their devices for longer, and in fact, are waiting 2.8 years before considering an upgrade. This trend can be attributed to the rise in device prices over recent years, along with a perceived lack of innovation from consumers.

So, with this in mind, and with Xiaomi now entering the European smartphone market with a more affordable alternative, what will this mean for the industry, its players, and their customers?

A new era for the mobile device market  

Mobile analysts have described Xiaomi’s devices as “looking like an iPhone, performing like an iPhone, but half the price of an iPhone”. In fact, its flagship Mi 8 model released in May has been described as brazenly copying the iPhone X, with similar features such as facial unlock and iOS-like Animojis. And at a much lower price point of £350, Xiaomi will be hoping to draw favourable attention from Apple fans unwilling to pay the £999 price tag of the iPhone X.

According to CCS, more consumers are searching for alternative means to secure a smartphone. More than half are on SIM-only contracts, which have been found to be better value, compared to purchasing a device and SIM separately. CCS’s research also revealed a growing interest from consumers in second-hand and refurbished devices.

For the cost-conscious consumer, it can be difficult to turn a blind eye to a device that can offer close to everything Apple can, without the hefty price tag. It’s entirely possible that we could see some Europeans seduced by the cheaper alternatives offered by Xiaomi, and move themselves away from their decade-long relationship with the likes of Apple.

But is Xiaomi ready to take on the likes of Apple?

Xiaomi appears to be a strong contender, having a 10.57% market share in Asia— not far behind Apple, who has a 13.14% market share. Now with its eyes set on the West, Xiaomi’s market share has grown by over 999% in the first quarter of 2018, as recorded by analyst firm, Canalys.

While Xiaomi is still in the early days of its European expansion, having only recently announced its expansion into Britain in May, is now the time for Apple and other manufacturers to reconsider their current marketing plans? We have recently seen Apple announce a “less-expensive” iPhone in September, the iPhone XR, as well as an even more expensive device the XS MAX. The lower cost device has been priced at £700—but this is still a considerable amount more than a Xiaomi device, which is priced anywhere between £300-£500, depending on the storage size.

But there is method behind Apple’s madness. With the launch of Apple’s latest devices, the manufacturer is able to target a slightly broader audience. First and foremost, with a more affordable device, Apple could tempt the cost-conscious consumer to upgrade to a newer device at a more reasonable cost, that could be made even less-expensive by trading-in an older device.

Secondly, consumers know that Apple is a premium brand; no matter the price, some customers will always be willing to pay the cost for the latest device. And that’s what it comes down to. People are invested in the Apple brand, and there will be some that always will be. What it boils down to is whether consumers are ready to try an unfamiliar brand, even if they know its capabilities and price?

There’s no doubt that consumers are searching for lower cost alternatives to secure the latest mobile device, whether that be through purchasing the device and SIM separately, purchasing a pre-owned device, or using their old device to offset the cost of a new one. The cost-conscious consumer is happy to hold onto their device for longer, and shop around for the best deal on the market in order to make the rising cost of owning a smartphone more affordable. And while Xiaomi’s entry into Europe has the potential to disrupt the status quo of the market, we won’t see dominant players, such as Apple, be overtaken just yet.

New Euro Android charges could be $40 per device

Google announced earlier this week that it was going to start charging Android smartphone makers for its apps but didn’t say how much.

Tech site The Verge, however, reckons it has got hold of some documents that detail the tariffs Google intends to impose on its blameless OEM partners to make sure it doesn’t lose a single euro of profit while it wrestles with the European Commission’s trust busters. According to this ‘confidential fee schedule’ Google could demand as much as $40 per device, it’s alleged.

But these monetary considerations could just end up being bargaining chips in a process through which Google forgoes the cash so long as OEMs play ball by preinstalling all the stuff it wants. In other words Google seems to be saying “We won’t insist our stuff is bundled with Android but we will fine anyone who doesn’t.”

In that context the actual amounts involved seem irrelevant, since Google may well write them off in exchange for docile compliance, but we’ve only done three paragraphs so we might as well have a look at how they will be calculated. Essentially OEMs will have to pay more for larger screens and for exporting to richer countries. So a top-end device into the UK could be stung for $40, while a rubbish phone into Greece might only cost an extra couple of bucks.

Google seems to be somewhat sulkily throwing down the gauntlet to the EC by saying “OK, two can play at that game – if you won’t let us bundle then we’ll punish OEMs. How do you like them apples?” The EC will presumably have a bit of a think about whether this new tactic still represents an abuse of Google’s market dominance and then act accordingly.

Android creator rumoured to be working on completely idiotic idea

Essential Products, the consumer electronics company founded by Android creator Andy Rubin, is reportedly working on a new smartphone that messages people for you and has a significantly smaller screen.

It’s an idea which sounds like something out of Hollywood, which is partly because it is. According to Bloomberg, Rubin has ditched efforts to follow up his first-attempt at a smartphone and also an entry into the smart speaker market for an idea which quite frankly sounds ridiculous.

The smartphone wouldn’t look like anything you would consider a smartphone today, featuring a much smaller screen with functionality relying on a voice user interface. Users wouldn’t even have to worry about reading or replying to messages as the AI would do this for you. In theory, should the AI be personalised enough, an entire conversation could happen without you even contributing to it once.

The idea itself seems to be a rip-off of the product which assists Jonny Depp in the movie ‘Her’. The device is smaller than anything you would see today, while connected earphones allow Depp to communicate with the AI seamlessly. While this might sound futuristic, it is a completely absurd idea, and the research team who validated such a preposterous proposal should be banned from working in the technology industry forever more.

Firstly, the voice user interface is not technology which has been perfected, and hasn’t been adopted by the general public. To drastically change the way we use mobile devices, the voice UI would have to be commonplace elsewhere. Smart speakers and infotainment systems in cars are a good start, but the idea is a long-way off normalisation. We’re not saying the voice UI will not become more important, but it is unfeasible to think it would overtake the touch UI in the foreseeable future.

Secondly, the AI would have to be incredibly personalised for the idea to work. Not only have we not seen an application which meets this criteria, but it would have to be trained by a huge amount of in-depth and incredibly personal information. Considering the world is turning against the technology industry because of the way data is being used and pro-privacy trends are gathering momentum, the credibility of this idea is completely undermined.

Thirdly, even if people are embracing brevity when it comes to communications, they still want to be part of the conversation. People are social and enjoy socialising with other people, even if it is short back and forth messages. Why would anyone want an AI to have all their conversations for them and essentially become a hermit.

Finally, Rubin seems to have missed the point of smartphones. These are not simply communications devices or PDAs anymore, they are evolving to become entertainment centres where users can watch movies, play games and search through images for their next holiday. Removing the large screen removes the potential for all of these uses; what user would want to buy this device? Rubin does has stated in the past he would like to help people break-free of their smartphone addiction, but you have to create a product which people would want to buy. This is the most basic business principle you could ever come across, a nine year-old would know it, but Rubin seems completely oblivious.

After laying the foundations for the Google entry into the mobile world, Rubin founded Essential and launched his own smartphone. The smartphone, named ‘Phone’, was supposed to be an alternative for premium Android users, and was a complete flop. Rubin ditched any attempt at a follow-up, instead intending to build his own smart speaker, though this has also been dropped in favour of this ludicrous device.

Essential is backed by about $300 million in investment, though the backers must be pulling their hair out as rumours emerge of such ideas. This looks to be a complete and utter waste of $300 million.

Google adds some Pixels

Internet giant Google ramped up its involvement in the consumer hardware space with the launch of new Pixel branded smartphones and tablets as well as a home hub.

The Pixel 3 and its XL variant offer both an industrial design and spec upgrade on their predecessors. Initial impressions indicate the redesign is well received and the spec upgrades are significant. There also seems to be more AI stuff going on, including a call screening functions that taps into Duplex technology to save you having to interact with a caller if you’re not sure about them.

Google debuted a new device category in the form of the Pixel Slate – a tablet running Chrome OS that seems to be positioned as a direct competitor to Microsoft’s Surface product range, with an emphasis on hybrid laptop functionality. Once more initial takes seem positive, especially about its attempt to be the best of both worlds, although the full range of requisite peripherals and accessories does make it an expensive proposition.

Lastly we have the Home Hub, which is an AI-driven smart speaker with a 7-inch screen that will compete with equivalent products from Amazon and Facebook. One big difference is that Google is making a virtue of it not having a camera installed in an apparent bid for people to take it into the bedroom or even the bog. There’s also a physical mute switch to prevent the device listening to you, which seems like a good say to allay fears about being spied on by Google, but does call into question what the point of the device is.

“Our goal with these new products, as always, is to create something that serves a purpose in people’s lives – products that are so useful they make people wonder how they ever lived without them,” said Rick Osterloh, VP of Hardware at Google. “The simple yet beautiful design of these new devices continue to bring the smarts of the technology to the forefront, while providing users with a bold piece of hardware.”

The Pixel 3 starts at £739, with the XL coming in at £869. The Slate starts at £549 without peripherals, while the Home Hub will set you back £139. Google has managed to throw down the gauntlet to the majority of the consumer tech world with one set of launches, which is fun, but time will tell whether any of them are able to claim significant market share. Here’s a vid.