Apple forecast to dominate the 5G smartphone market next year

A report from analyst firm Strategy Analytics reckons that then Apple launches its 5G iPhones next year it will immediately become the biggest 5G player.

Right now SA says Samsung has around 40% of the market and Huawei has another 30%. Apple hasn’t launched a 5G phone yet, thanks in part to it trying to get tough with 5G modem leader Qualcomm, before eventually capitulating. That’s all set to change when the next lot of iPhones gets launched, Which SA says will all be 5G enabled.

“It may seem counterintuitive that Apple, which currently has no 5G phones in its portfolio will be able to pass current 5G market leaders Samsung and Huawei,” said SA’s Ken Hyers. “But with three new 5G models coming next year, Apple merely needs to match its current upgrade rates for newly introduced iPhone models to take the lead next year.”

“Currently Samsung is the undisputed market leader in 5G smartphones,” said Ville-Petteri Ukonaho, of SA. “But with the two largest 5G markets in 2020, China and the USA, dominated by Huawei and Apple respectively, these two vendors are set to lead in 5G next year.”

Eventually, however, the balance will inevitably be restored at 5G modems find their way further down the Android product stack. “Despite the strong showing that is expected for Apple in 5G in 2020, in the longer term Samsung will regain the 5G crown,” said Hyers. As more markets cut over to 5G, Samsung will capture the majority of that share by virtue of its dominance of the overall smartphone market and a broader portfolio of 5G devices across more price-bands.”

“Huawei’s potential in 5G smartphone sales is currently limited by the US technology trade ban,” said Ukonaho. “Huawei is dominant in China and will likely remain so. But until the ban is lifted, prospects for Huawei in 5G smartphone sales elsewhere are limited. Regardless of its long-term prospects in terms of 5G smartphone marketshare. 2020 will be Apple’s time to grab bragging rights in 5G.”

Here’s the SA forecast chart, showing Apple quickly grabbing a 40% share of the 5G market and topping 50% by the end of the year. As Hyers indicated the forecasting is simply based on the historical uptake of new iPhones, which seems fair enough. If Apple decides some of its new iPhones are undeserving of a 5G modem then the things could look pretty different.

Motorola resurrects the Razr as a foldy smartphone

It was inevitable really, wasn’t it? Motorola is hoping the Razr feature phone brand can be transplanted into the smartphone era.

The Razr was probably the last time Motorola achieved mass market success in the handset market, but that was 15 years ago. Things have moved on a bit since then but if the brand, design and form factor worked before, it can work again, right? That seems to be what Moto is counting on by launching a smartphone based on the original concept.

The defining industrial design tweak is that this one is the first to bring foldy screen technology to the clamshell form factor. The result is essentially a regular modern smartphone that can fold in half. This distinguishes the new Razr from earlier efforts from Samsung and Huawei, because they’re more of an attempt to go in the other direction  and turn a phone into a tablet by unfolding it.

Moto doesn’t seem to have published a press release so you’re spared the generic-yet-hyperbolic canned quote about how this is the best thing since sliced bread. The site created to let you find out more does speak of ‘a design that shatters the status quo’, so that’s something. And there’s both a vid and a GIF, which you can see below.

Verizon seems to have the initial exclusive on the new Razr, and will start flogging it for $1,500 in the new year. A lot of that cost is down to the foldy screen, of course, but punters might have expected a better chip than the Snapdragon 710 for their grand-and-a-half. Maybe the form factor prohibits more powerful chips due to heat considerations and there is a generous 128GB of storage as consolation.

The original Razr sold well mainly because it looked cool and, at a time when handset design has stagnated, that may be all this one needs to take off too. The price will obviously scare most people off though, and having got used to carrying six inch devices around it remains to be seen how much of a USP being able to fold this one in half will be. Still, fair play to Moto for giving it a go.

 

Bringing Internet to the Other Half of the World

According to data published by the International Telecoms Union (ITU), the United Nations agency overseeing the telecoms industry, 3.9 billion people, or 51.2% of the world’s total population, were already connected to the internet by the end of 2018. While the 50% mark was hit half a year earlier than the agency’s previous estimate, it nevertheless means that half of the world’s population remains unconnected.

Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look at the status of the unconnected and under-connected parts of the world and explores how the industry as well as the public sector can overcome the challenges to bring internet to the half of the world yet to be connected.

The full version of the report is available for free to download here.

Introduction: why half of the world is still unconnected

The low internet penetration is particularly acute in the developing countries. While 81% of the population in the developed world are already using the internet, only 45% in the developing countries can do so. Among them, less than 20% of the population in the 47 least developed countries, defined as “low-income countries that are suffering from long-term impediments to growth”, enjoy this luxury.

Source: ITU

There are three leading factors at play to leave a large part of the world off the grid. The first two are interlinked one way or another, the third is out of the telecoms industry’s remit. The most obvious one is pure economics. Diminishing marginal return or increasing marginal cost, often both at the same time, means operators will be less and less motivated to connect the next subscriber than the last. This could be down to the distribution of population. The more sparsely populated the location is, the less rewarding for the operators to reach them it becomes, because, even if the returns are assumed to be equal, the cost will be higher. This could also be related to the socio-economic status of the people. The less well-off the population is, the less attractive it becomes for operators to make the effort, because, even if the cost could be assumed equal, the return would be lower.

There are also technology barriers. Unfriendly terrains, for example mountainous areas, prove extremely challenging for operators to overcome. Related to the economic factors, these areas are also typically not the most densely populated. Satellite communication could be used as an emergency solution but would be too costly to use as regular internet access mode, or for operators to provide it if there is not a sizeable user base especially business users.

In some cases, the hurdle is simply too high for telecoms alone to clear. High internet penetration in North Korea is highly unlikely to happen in the near future without a fundamental change to the country itself, for example.

With these considerations in mind, this report will address the first two factors affecting internet penetration: economic and technology. Specifically, it will attempt to provide answers to these questions:

  • On the supply side, what technology solutions have been made available to drive down the cost level, therefore to make connecting the unconnected more appealing to telecom operators? What are still debatable or being desired? What business case do they present to operators?
  • On the demand side, what factors need to be in place for the unconnected population to be able to afford the connection, and to be willing to embrace it? And what are the factors beyond cost that may also drive the demand?

——————————-

The rest of this briefing includes sections on:

  • Supply side solutions: OpenRAN, TIP, and all that
  • The drivers for demand: affordability and more
  • What else should be in place?
  • An interview with Thecla Mbongue, Senior Analyst, Ovum

To access the full briefing please click here

Back to basics for Huawei as China remains the bedrock of success

Pretty much everyone in the technology world knows Huawei is under pressure, though with its dominance of the Chinese market, it has more than enough to weather the storm.

According to new estimates from IDC, Huawei has now officially become number one in the market share rankings for tablets in China. These estimates follow smartphone shipment figures which demonstrate extraordinary dominance from the under-fire firm.

Over third quarter of 2019, Huawei shipped 2.12 million tablets, up 24.4% from a year ago, to take 37.4% of the total market. It has leap-frogged Apple to lead the market, the iLeader currently controls 33.8% of shipments, while the rest of the field are no-where near the leading two. Xiaomi currently sits in third position, with market share of 5.9%, a decrease of 47.4% year-on-year.

Although increased tablet sales in China are not going to compensate for the troubles which Huawei are facing in the international markets, alongside the smartphone dominance during the same period, it demonstrates the comfortable position Huawei is currently in.

Talking of smartphone shipments, as you can see from IDC’s figures below, the strong market share position is duplicated.

2019 Q1 2019 Q2 2019 Q3
Shipments (Million units) 29.7 36.3 41.5
Market share 35.5% 37% 42%
Year-on-year growth 40% 27% 64.6%

And even with heavy criticism from the White House, Huawei is maintaining its position as the leading network infrastructure vendor worldwide. In the third quarter, Dell’Oro estimate Huawei owned 28%, though some might suggest this is due to its dominance of the Chinese market. The firm has been missing out on valuable contracts in some European markets though it doesn’t seem to be having a disastrous impact.

Noise from the White House might be starting to have an impact on the Chinese vendors influence on certain Western markets, but let’s not forget how Huawei created such a dominant position in the first place.

Some might suggest the dominance of Chinese companies on the Chinese market is only due to an uneven playing field, Western challengers might be handicapped when it comes to competition, but this is largely irrelevant. This is not a situation which is likely to change in the future, regardless to the number of complaints, therefore it should be accepted.

This dynamic afforded Huawei the confidence to aggressively expand in bygone years, and it will continue to be a comforting thought as uncomfortable aggression floats both directions out of the US.

With continued dominance in the Chinese smartphone, tablet and network infrastructure segments today, Huawei has firmed up its bank accounts. The spreadsheets will not be under anywhere near as much threat as they potentially could have been, as the management team can rely on revenues continue to flow through the domestic market. This is the same position Huawei was in prior to its international expansion.

Huawei is not necessarily a Chinese company anymore. Yes, it was founded in China and the country continues to house its headquarters, but this an international beast with considerable influence around the world. The management team will not be happy its international revenues are being eroded, though the Chinese domestic market can prop this giant up; it is that big.

Irrelevant to the amount of noise coming out of the White House, and regardless of the success it has in convincing its allies to ditch Huawei as a vendor, it will always have the Chinese domestic market to lean on. And as long as it is still one of the country’s leading companies, it will always have the opportunity to expand aggressively internationally. It just has to wait for the anti-China rhetoric to die down, like it did in the early 2010s.

Samsung smartphone recovery overshadowed by semiconductor gloom

Samsung’s Q3 2019 numbers show improved performance in the smartphone business, but the semiconductor sector remains weak, which contributed to the 56% decrease in corporate level operating profit.

Overall the company has delivered sequential improvement over Q2. Total revenues stood at KRW 62 trillion ($53 billion), representing a 10% QoQ improvement despite being 5% lower than the same quarter a year ago. The corporate level operating profit of KRW 7.78 trillion ($6.7 billion) was 56% lower than a year ago, albeit registering a growth of 18% over the previous quarter.

The IT & Mobile communications group, which includes the smartphone and mobile network businesses, now the biggest revenue generator of the company, delivered the strongest recovery. Total income from mobile handsets, predominantly smartphones, amounted to KRW 28.1 trillion ($24 billion), a 17% increase over a year ago, and 16% over last quarter.

More impressive was the profit growth: operating profit at the business group level grew by 31.5% year-on-year, and 87% quarter-on-quarter. The company attributed the profit improvement to “a product mix improvement and cost reduction after a lineup transition” including contributing from the new phablet Note 10 as well as the entry level A series. The “extended technology leadership via launch of Galaxy Fold and additional 5G models” also helped. At the last IFA show in September Samsung announced it had already shipped 2 million 5G phones and expected the volume to exceed 4 million by the end of 2019. Samsung is believed to have increased its smartphone market share to 21%, retaining the global leadership.

In contrast to the smartphone business’s recovery was the continued depressed performance of the Device Solutions group, which includes the semiconductors and display panel businesses, and is by far Samsung’s biggest profit generator. To illustrate the importance of this group to Samsung’s overall performance, the group level revenue, KRW 26.64 trillion ($23 billion), represented 43% of the company’s total revenue, but the operating profit, KRW 4.24 trillion ($3.6 billion), accounted for 55% of the total operating profit of Samsung Electronics, at a 16% operating margin. In comparison, the IT & Mobile group’s operating margin was at less than 10%.

The memory chip sector was particularly weak, where the revenues went down by 37% from a year ago to reach $13.26 trillion ($11 billion) although it was an 8% improvement from last quarter. The operating profit collapsed to KRW 3.05 trillion ($2.6 billion), a mere 22% of the level a year ago, and also more than 10% drop from an already weak Q2. This indicated increased demand for shipment but at depressed price levels.

Looking at Q4 and 2020, Samsung believes 5G will have a big impact on the company’s performance. It foresees that the profitability of the smartphone business will continue to be a challenge in Q4 “due to weaker mix from dissipating new model effects of Note 10 and increased marketing cost under strong seasonality”. For 2020 this group will “enhance competitiveness throughout entire lineup and by addressing growing 5G demand; strengthen foundation for further sales growth, mainly driven by foldable; expand sales of premium models and optimize operations for low-end to mid-range models to improve profitability.”

For the semiconductor sector, Samsung expects the demand for memory chips to be solid in Q4 as clients are replenishing inventory again, although it does note “uncertainties likely to linger due to issues in the external environment.” The system large-scale integration (S.LSI) business expects growth in “shipments of 5G 1-Chip SoC and 64Mp & 108Mp high-resolution image sensors”.

Global smartphone market returns to growth, driven entirely by Samsung and Huawei

Shipments in the global smartphone industry returned to growth for the first time in two years according to the latest numbers from Strategy Analytics.

A total of 366 million smartphones were shipped in Q3 2019, which is 2% up on the year-ago number. Only two vendors experienced growth themselves, however, with market leader Samsung up 8% and second-placed Huawei up 29%. Huawei has doubled its share of the global smartphone market in the past three years, largely at the expense of the long tail, with once prominent brands like Sony, HTC and Alcatel being swallowed up.

“Samsung shipped 78.2 million smartphones worldwide in Q3 2019, jumping 8 percent annually from 72.3 million units in Q3 2018,” said Neil Mawston of SA. “Samsung has lifted its global smartphone marketshare from 20 percent to 21 percent in the past year. Strong sales of the premium Galaxy Note 10 and mass-market A Series models boosted Samsung’s smartphone shipments and profit during the quarter.

“Huawei once again surprised everyone and grew its global smartphone shipments by an impressive 29 percent annually from 51.8 million during Q3 2018 to 66.7 million in Q3 2019. Huawei captured a record 18 percent global smartphone marketshare in Q3 2019, up sharply from 14 percent a year ago. Huawei surged at home in China during the quarter, as the firm sought to offset regulatory uncertainty in other major regions such as North America and Western Europe.”

That’s an understatement if we compare SA’s global numbers with Canalys’s China ones from yesterday. Canalys has Huawei’s shipments in China alone increasing by 16.5 million units, while SA has its global shipments increasing by 12.5 million. In other words Huawei shipments to everywhere except china decreased by 4 million, which is considerable.

There’s something odd about those Huawei China numbers. To suddenly grab 18 points of market share in such an incredibly competitive market stretches the limits of plausibility. But even if we assume the numbers are legit, Huawei must have made some pretty exceptional business moves to pull them off and we have to question how sustainable they are.

 

Xiaomi goes Suomi for camera research

The Chinese smartphone maker Xiaomi has set up in Finland its largest R&D centre outside of China for imaging technologies.

Xiaomi announced today that it has opened an R&D centre in Tampere, west Finland, to focus on smartphone camera technologies, including camera algorithms, machine learning, signal processing, and image and video processing. This will be Xiaomi’s largest Camera R&D team outside of China, the company says.

“The setup of this R&D team in Finnish city Tampere is a milestone in our global expansion journey. In this journey, not only do we consolidate ourselves in operations and business, but also work with local talents to further improve our products with highly innovative technologies,” said Wang Xiang, Senior Vice President of Xiaomi, adding that “this move all the more highlights our longstanding commitment of ‘innovation for everyone’.”

First reported by the website Suomimobiili.fi, Xiaomi’s local business entity, Xiaomi Finland Oy, was incorporated in May, and has rented an office space for around two-dozen employees at the Hermia Technology Park (Hermia-teknologiapuisto), not far from the University of Tampere’s technology campus, which is rated as one of the leading facilities in imaging related research.

Tampere used to be a key R&D centre for Nokia, giving the Finnish phone maker the leadership in camera phones. As Xiaomi’s press releases acknowledged, Tampere “has been greatly contributing to camera and imaging related innovations of leading smartphone brands since the 1990s.” That legacy is not lost. According to an earlier report by the local newspaper, Aamulehit, Nokia entered into a significant patent licensing agreement with Xiaomi two years ago.

Jarno Nikkanen, one of Xiaomi’s first Finnish employees and the Head of Xiaomi Finland R&D, was a Nokia veteran, with a PhD in signal processing from the Tampere University of Technology (now merged with the University of Tampere). He started his current role in June, according to his LinkedIn profile. “Xiaomi’s philosophy has been innovative and highly engaging. It’s all about empowering the teams and individuals to find solutions on their own. What we’re developing in Tampere will end up in the hands of hundreds of millions of users and Mi Fans around the world. That is really motivating,” said Nikkanen in the press release.

Xiaomi was not the first smartphone company to tap into local talents in Finland following the capitulation of Nokia’s phone business. Huawei set up its first R&D centre in Helsinki in 2012, to conduct new technology research for mobile devices, then a new facility in Tampere in 2016, to focus on camera, audio and imaging technologies for consumer electronics.

Huawei destroys the competition in Chinese smartphone market

According to the latest numbers from research firm Canalys, Huawei’s Q3 smartphone shipments in China increased by 66% while all its competitors declined.

Huawei’s massive shipment numbers are all the more impressive when you consider the overall market is in decline, with total Chinese smartphone shipment numbers down 3% year-on-year. Somehow, in the space of a year, Huawei has managed to turn a competitive market into one it dominates, with more than double the market share of the second placed vendor.

“Huawei opened a huge gap between itself and other vendors. It has 25% more share than this quarter’s runner-up, Vivo,” said Nicole Peng of Canalys. “Its dominant position gives Huawei a lot of power to negotiate with the supply chain and to increase its wallet share within channel partners. Huawei is in a strong position to consolidate its dominance further amid 5G network rollout, given its tight operator relationships in 5G network deployment, and control over key components such as local network compatible 5G chipsets compared with local peers. This puts significant pressure on Oppo, Vivo and Xiaomi, which find it very hard to make any breakthrough.”

“Vivo, Oppo and Xiaomi’s shipments are in freefall, despite new products constantly being pushed to market,” said Louis Liu of Canalys. “Smaller vendors hope to leverage 5G to rapidly boost market share given that China major operators have aggressively pushed 5G pre-registration with plentiful discounts and free 5G data allowance, which has resulted in over 10 million subscribers registering an interest to move to 5G.

“In addition to Huawei, Vivo, ZTE, Xiaomi and Samsung have launched 5G-capable smartphones between US$500 and US$1000, with more products likely to follow in Q4. However, Canalys expects 5G tariffs and device prices to fall rapidly to attract mass market consumers, with similar intense competition to the 4G era among major vendors, causing first-mover advantage in 5G to diminish in next to no time.”

So apart from simply acknowledging Huawei’s overall size and strength, Canalys seems to think its advantages in 5G account for this violent swing in its favour. This may be a factor but it seems unlikely to be the main reason. More likely Huawei has been aggressively cutting prices and incentivising the channel to show preference to its products as it seeks to show the US its sanctions aren’t biting.

This enabled Huawei to be bullish over its last quarterly numbers, but it’s not a sustainable strategy. The overall market is in decline and smartphone replacement cycles are typically at least two years. Huawei may have one or two more quarters of domestic smartphone growth to come, but after that it may not find revenue growth so easy to come by.

Huawei launches its foldy phone in China

At a smartphone launch event in China Huawei announced the imminent commercial availability of its Mate X foldy phone.

There doesn’t seem to have been much in the way of formal announcements and none in English that we can see. So we’re reliant on Huawei’s Weibo announcement and its Chinese consumer site, via the magic of Google Translate, as well as some reports, for confirmation that the Mate X will soon be seen in the wild.

Apparently it will go on sale on 15 November for 16,999 yuan, which is not far short of a couple of grand. Ten years ago that would have been a ridiculous proposition, but China has evolved so rapidly since then that it’s easy to imagine a few people dropping that kind of cash, if only for the status symbol value.

Since the foldy form factor is still very novel and untested, it makes sense for Huawei to only launch it in China, where it can presumably contain any damage from teething troubles more easily than anywhere else in the world. Samsung had to delay the launch of its foldy phone earlier this year after it broke in the hands of early reviewers.

Incidentally Huawei has also seen fit to send a press release announcing it has shipped 200 million smartphones already, two months earlier than last year. They didn’t really say anything else other than to conclude it must be because their phones are so great. The unspoken sub-text, however, is defiance towards the US and its allies but demonstrating Huawei is doing better than ever. Let’s see how things look this time next year.