NZ phone shipments forecast 2018

IDC says New Zealand phone shipments dropped 14.5 percent in unit terms during 2017. This is the first year-on-year decline reported in this country. A total of 1.60 million phones shipped in 2017 compared with 1.87 million in 2016.

A phone shipment is not the same as a sale. Shipments count the number of phones sent from manufacturers’ warehouses to retail warehouse. Not all shipped phones are sold. To a degree shipments is a measure of the demand anticipated by phone makers and sellers.

Nevertheless, the fall in anticipated demand is substantial.

Chayse Gorton, IDC NZ market analyst says there are three reasons for the fall: market saturation, changing sales strategies and new features not persuading people to upgrade old phones.

All three are valid, but they are not equal.

Shipments down on saturation

On saturation, IDC says 79 percent of consumers owned a smartphone in 2017. This leaves only a few users hanging on to dumb phones – or feature phones in the industry’s jargon.

Even that number seems too high, you rarely see anything other than smart phones in the wild. I suspect there’s a counting problem with older phones being recycled through families and friends that doesn’t capture everything. It’s possible the carriers would know the approximate number of older, dumb phones on their networks because some are not able to connect to 4G.

Meanwhile phone companies spent 2017 focusing on profitability. In earlier years they were happy to shoot for high volumes and hope everything would be all right later. This change mean the average price of phones from the market leaders: Samsung and Apple, increased 14 percent in the year.

This is reflected in IDC’s graph which shows the value of the market flat or even climbing while numbers fall. Rising phone prices isn’t necessarily a form of inflation as more expensive phones offer more capability.

Little reason to upgrade

IDC doesn’t emphasis the point, but it seems the biggest reason for the drop in shipments is that users have little incentive to upgrade. If you look after a phone, it should work fine for three or four years.

There were no compelling new phone features in 2017. IDC says people only upgrade when they see a significant benefit from doing so. This point was underlined at Samsung’s Galaxy S9 launch earlier this week. The new phone resembles the S8, it has upgraded features including a slow-motion video mode, but that’s not enough to tempt the average user to bin or hand down, say, their S8 and spend $1400 plus.

Meanwhile rival research company Gartner reports international smartphone sales recorded their first ever decline in 2017.

Shipments tumble as NZ phone upgrades slow was first posted at

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Oppo R11sOppo released the R11s, a low-cost Android phone about three months after Apple’s iPhone X emerged. On the surface, the R11s resembles the iPhone X., so that’s quite an achievement.

There’s no question what inspired Oppo’s engineers. The R11s has a similar physical design and a software overlay that makes Android look like Apple’s iOS. It’s not a knock-off, it’s more a homage to Apple.

There are many differences between the R11s and the iPhone X, but the one that matters most is the price. The R11s sells in New Zealand for NZ$800. That’s less than half the $1800 starting price for Apple’s phone. It also half the price of Samsung’s Galaxy S9+ which, once you get past the surface, is more like Oppo’s phone.

While the R11s is great value, its performance and user experience do not match what you’ll find on the more expensive phones from Apple, Samsung or Huawei. Oppo made a number of compromises to keep costs down.

What you make of the price-performance trade-offs are a matter of personal taste and needs. If brand matters to you, don’t buy an Oppo. If you’ve invested in Apple products and services, don’t buy it. If you think Samsung’s Bixby button is cool, don’t buy an Oppo.

Everyone else should at least consider the R11s.

R11s hardware

The R11s looks good, but so does almost every other modern handset. In fact, it looks a lot like almost every other modern handset. At more than a metre or two’s distance, an untrained eye would struggle to tell them apart.

Oppo opted for a wafer-thin design. Like today’s top phones the front is almost all-screen. There are no buttons on the front. Although the back is metal, the phone feels lighter than rival high-end models. It feels cheaper when you first hold it in the hand.

This impression is strengthened when you feel the point where the screen meets the case. On the best high-end phones the two surfaces merge smoothly into each other. On the R11s there’s a noticeable, distracting and slightly unnerving ridge. This is important if you spend a lot of time with your phone in one hand.

The Samsung Galaxy S9 has a similar ridge, but it’s not as pronounced. You wouldn’t cut yourself on either, but there more sharpness about the Oppo R11s.


Oppo uses a 6-inch ultra-wide 18:9 OLED display. The ratio means the screen is longer and thinner than we are generally used to. It’s not to my taste, but this isn’t about me.

The 18:9 screen ratio means the phone can show higher resolution video. This works remarkably well.

Although the display is remarkable for an $800 phone, it doesn’t look as good as the display on the Samsung S9 or iPhone X. It manages to deliver on brightness, but colours are not as vibrant.

In practice this is only really clear when you compare two phones. You’d probably notice the difference if you moved from one of these phones to the Oppo, but that not going to happen often. For most people moving from an older Android handset, the Oppo will be a step up.

There’s a micro-USB port. That was the standard, but other phone makers are now moving towards using the Type-C port. This might bother some people, but again it’s only likely to grate if you come to the R11s from a more expensive modern phone. For just about everyone upgrading from an older handset, this would be business as usual and unremarkable.


We could talk about the phone’s Qualcomm Snapdragon 660 processor and 4GB of Ram. But in the real world these specifications border on meaningless. What you need to know is the R11s has enough power to do most things normal people ask of phones. The R11s boots fast and is snappy most of the time. Standard apps don’t slow it down.

It also has enough working memory. If you’re the kind of person who pushes phones harder, then it may not be enough, but, them, you probably won’t be considering the R11s anyway. The phone comes with 64Gb of storage. If that’s not enough you can more with a MicroSD card.

Oppo includes a 3200mAh battery. In practice you should get a couple of days light use from the phone between recharges. Even if you hammer it, there is enough to get you from an early morning start until mid-evening.

There is no NFC. While this could be a deal breaker for some people, in reality it is rarely used even when it is built-in. You’ll have to make your own decision about the importance of this.


Like every other phone maker, much of Oppo’s marketing effort has gone into telling potential buyers about the camera. It’s a solid camera,better than you’d expect in an NZ$800 phone. In technical terms there are cameras. One is 20MP, the other is 16MP.

There’s also a large dual f/1.7 aperture to let more light hit the sensors. You get crisp images and bright colours. Of course you do. It’s hard to find a high-profile phone that doesn’t manage that. That said, the camera is a long way behind what you’ll find in a Samsung Galaxy S9 or an iPhone 9 or X.

Oppo has included photo software that helps users get better quality shots. There’s also a ‘beauty’ mode, which looks weird to some western eyes but may go down well in Asian markets.

Niggles and verdict

As with any non-Google Android phone, the Oppo R11s is let down by the included software. For the most part, ColorOS skin does not add value. Although, to be fair, nor does it detract much. It’s no worse than other Android skins. ColorOS has a superficial resemblance to iOS, but anyone coming from Apple will be mystified by the way it works at times.

If the comments above read like less than fulsome praise, that’s because here we have compared the Oppo R11s with phones that cost twice as much. Take price into account and the story is quite different.

The R11s beats any rival at the same price by a country mile. It gives you most of what you’d get from an expensive phone. Nothing important is missing. Yet it leaves you with a sizeable amount of money in your pocket. Oppo has been here before. Most non-iphone people reading this should put it on their shortlist.

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Apple iPad Pro 2015
Apple iPad Pro

CEO Satya Nadella has turned Microsoft around. It is relevant again. Things didn’t look that way when he took over the company. His switch of focus to the cloud was timely and has been a huge success. Much of what he says and does is sensible.

Much, but not everything.

In November, Nadella made a playful, off-the-cuff remark about an Apple iPad not being a proper computer. The comment should not be taken too seriously. But as Sahil Mohan Gupta notes at Tech Radar, Nadella’s words speaks volume about where Microsoft is heading and how it views computing.

Real computers

No doubt Nadella thinks all computers made by Microsoft are real computers. Even if some of those computers share a lot with the iPad Pro. Microsoft’s Surface models have many good points. They also have well documented flaws and angry customers. Making too much of a comparison with iPads could backfire on Microsoft.

Nadella’s comments got me thinking about the iPad, especially the large 12.9-inch iPad Pro. I use one now as my main mobile computer.

As far as I’m concerned it is a proper computer. It seems the best computer for a technology writer on the move, although others may not agree with me. Apart from anything else I find writing long documents on the iPad Pro is at least as easy as working on a Mac. There’s something about iOS 11 that helps me focus more on the job in front of me.

iPad Pro ready for serious work

A year ago the iPad Pro was not ready for serious use. The software didn’t handle files outside of application silos. Moving text from, say, a word processor to a text processor or a web-based app was simple enough. But opening a document in a different app was often tricky.

Dealing with attachments that arrived through mail was just as hard. There were basic things the iPad could not do. My router needed a firmware update. The new software arrived as a zip file, needs unpacking and uploading. The old version of iOS couldn’t handle that. The new iOS 11 makes it all possible.

While there are still times I need to reach for the MacBook, those ‘need’ times are fewer and fewer. It’s already a real computer.

There is a Windows computer that is mainly used for games, for running digital audio workshop software and for testing Windows apps. Increasingly Windows looks old-fashioned and iOS looks like the future.

This isn’t everyone’s view, many people reading this will scoff at the idea.

Yet despite Nadella’s comments, Microsoft takes the iPad seriously enough to make sure its key productivity apps and OneDrive all work on the iOS hardware and stay bang-up-to-date. I’d argue that Word is better on the iPad Pro than on a Mac and possibly even better than on Windows. What could be more serious than that?

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Mobile phone handsetA Commerce Commission investigation into mobile market competition is underway. The carriers think they’ve seen enough regulation, with some justification. And yet there are areas where New Zealand’s mobile market does not work as well as it might.

Spark managing director Simon Moutter has a point when he says New Zealand’s mobile market is competitive.

On the most obvious level, the mobile market works well. Prices for monthly accounts, calls and texts have fallen. Consumers pay less and get more.

New Zealand is no longer an expensive place to own a mobile phone. Cellular voice and text prices are in line with those in comparative overseas markets.

2degrees not lobbying for regulation

It speaks volumes that 2degrees is not asking for further market structure changes. The third carrier is profitable and continues to put price pressure on Spark and Vodafone.

2degrees CEO Stewart Sherriff says his company invented competition in New Zealand. His company has certainly made the mobile phone sector price competitive in a way that it wasn’t before.

Prices from the larger carriers didn’t start to fall in earnest until 2degrees got market traction. Sherriff’s company is often the first to move on price. 2degrees is innovative and aggressive when it comes to pricing bundles of mobile services.

In Moutter’s eyes, the tough price competition at this level is enough to prove the market works. Yet we could do better.

Where the market doesn’t work

There is one clear way New Zealand’s mobile market competition isn’t functioning as well as it might. Customer service is, at best, indifferent. Often it is appalling.

If the market was truly competitive, carriers would not be able to get away with leaving customers on hold for hours or failing to solve trivial technical problems.

That’s not something the Commerce Commission can address in a direct way. Complacency about customer service is a clear sign a market could be more competitive. We replaced a monopoly with a duopoly and then an oligopoly. From a consumer point of view: worst, worse and not good.

Areas the Commerce Commission should address

There are three areas the Commerce Commission needs to address in its mobile market review. All three have the potential to improve competition.

  • First, New Zealanders still pay too much for mobile data.
  • Second, there are warning signs of collusion between carriers that should worry the regulator.
  • Third and top of the list is the lack of diversity in mobile phone service retailers.

A lack of retailer diversity is the issue that triggered the mobile market review. Last year the then Communications Minister Simon Bridges wrote a letter about it to the Telecommunications Commissioner Stephen Gale.

Bridges writes:

“I note that submitters raised concerns about the effectiveness of regulation at the wholesale level, particularly with regard to the provision of Mobile Virtual Network Operator (MVNO) services. In other countries, these services are an important part of the mobile ecosystem, and the widespread availability of such services has led to better outcomes for consumers.”

Where are the MVNOs?

The lack of MVNOs in New Zealand is beyond debate. In many markets, these alternative carriers account for a large slice of the total market. Here MVNOs barely register.

It is theoretically possible there are no MVNOs in New Zealand because the market competition is already so perfect and the incumbents look after customer needs so well that there is no room for them.

That argument doesn’t stand up for a moment.

When is an MVNO not an MVNO?

New Zealand’s biggest MVNO isn’t really an MVNO at all. Spark’s Skinny business exists to give the nation’s largest telco a budget brand without cannibalising its core market. Skinny is not a true MVNO because its parent company owns the network.

Skinny is Spark lite. Today Skinny customers get almost the same product as Spark customers but without the value-adds like Wi-Fi hotspots and Spotify. Otherwise, the plans are a few dollars less each month than equivalent Spark plans.

In effect, Skinny is another Spark mobile product line.

The Warehouse

New Zealand’s next biggest MVNO is the 2degrees-Warehouse tie-up. It is price competitive but hasn’t caused any waves in the market. The number of customers would be a rounding error on the numbers for the three big players.

The Warehouse isn’t pushing hard with its mobile option. If you walk into a store you’ll have to hunt to see where you can buy it and sales staff don’t seem motivated to emphasise it.

Vocus is New Zealand’s fourth largest telco. Unlike the three bigger telecom companies it doesn’t own a mobile network.

There are some Vocus MVNO customers, but not many. You could probably fit them all in a room. Vocus doesn’t make much money, if any from them and, like The Warehouse, it isn’t marketed.

Full telco service

In most other western countries a business like Vocus would be able to partner with a carrier and offer its customers a full telecommunications service including mobile. It would be able to bundle services and offer keen prices.

That’s not the case in New Zealand. Likewise, you can imagine other smaller telcos and even companies that dabble in telco like, say, TrustPower, would love to offer mobile as an add-on to power and broadband.

MVNOs perform two vital market functions. First, they often serve more specialist customer needs not catered for by the bigger players.

MVNOs are about choice

Second, they act as a pressure valve for the market. Many disgruntled customers leave one carrier only to find their new choice is just as annoying. The MVNOs give consumers a new set of choices.

Until MVNOs make up about ten percent of the market, preferably more, New Zealand does not have true mobile competition.

The Commerce Commission needs to look at the barriers to entry for MVNOs. If these are structural, then there is a need for new rules.

Skimpy data plans

The second sign that competition doesn’t work well in New Zealand’s mobile market is the skimpy mobile data plans on offer. In recent months carriers have begun selling what they call unlimited data, but the small print makes it clear they are anything but unlimited.

We pay a lot for mobile data. This is especially true when you look at data-only plans. We pay a lot more than, say, Australia.

On the other side of the Tasman, you can pay A$65 a month for 50GB of mobile data. In the UK £25 buys 100GB of mobile data. That’s around NZ$50.

At the time of writing the best deal in New Zealand is 2degree’s 25GB for NZ$70. That’s roughly twice the price Australians pay and, depending on exchange rates and taxes, around five times the UK price.

Economy of scale

While you can argue that Australia and the UK have economies of scale, it’s hard to imagine scale means the cost of supply in New Zealand is twice that in Australia or five times that in the UK.

It is significant that the Australia data deal quoted above is from Amaysim, a MVNO. These smaller MVNO players have put huge pressure on the prices charged by the network owners for data.

There’s another way you can look at New Zealand’s mean mobile data caps. The competitive pressure in other countries means carriers dedicate their spectrum to satisfying the needs of mobile customers. If they don’t, someone else will.

Fixed wireless broadband

Spark mobile customers share the company’s cellular bandwidth with 100,000 fixed wireless broadband customers. If the mobile market was competitive, Spark could not afford to risk degrading the mobile data experience.

How Spark manages its resources is the company’s own affair. It is certainly possible to run fixed and mobile broadband on the same networks without disappointing either group of users — that happens in lots of countries. It’s possible there is enough spectrum to satisfy both groups.

Spark may have a good explanation why 100,000 fixed wireless customers downloading gigabytes each month have nothing to do with mobile market competition. But it’s something the Commerce Commission investigation needs to take into account.

Is there a cartel?

A third area the Commerce Commission needs to consider is something from left field. The three carriers have banded together to build a rural mobile network with shared infrastructure.

The Rural Connectivity Group is an intelligent and innovative solution to what looks like a tricky problem: delivering broadband to small remote communities and filling in the mobile blackspot on country roads.

While it makes sense for rivals to co-operate on a project of this nature, it isn’t without risk. In his book The Wealth of Nations Adam Smith wrote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Smith was no tin-foil hat conspiracy theorist, he is recognised as the father of modern capitalism. His name is forever tied to the ideas of free markets.

Rural Connectivity model

The danger with the RCG is that it could become the model for the next generation of mobile networks throughout New Zealand. There have already been whispers of the carriers considering acting together to build a 5G network.

When Chorus recently floated the idea of creating a UFB-style open access 5G mobile network the carriers were quick to shoot it down. A line hidden in a media statement from Vodafone could be interpreted as suggesting the carriers are thinking of building a shared 5G network:

There is no question that industry-wide collaboration makes sense in some instances, and the industry has already demonstrated working models for this.

You could see this as getting the regulator and others used to the idea of industry collaboration when it comes to 5G.

5G networks

Moutter takes the argument further. He starts by saying Spark can build a 5G network on its own:

No industry amalgamation was required for the transition from 3G to 4G, and none is required from 4G to 5G. Based on our current analysis, we think the investment for 5G will be manageable, as we will be able to leverage our existing 4G and 4.5G physical infrastructure.

Which sounds reasonable. He then goes on to say:

That’s not to rule out sensible infrastructure sharing where that can speed up deployment or address visual pollution issues that might come from the deployment of more network sites – we are supportive of those models. But to jump straight to a conclusion that we need a monopoly network would be crazy.


Which could be another subtle softening up of the idea of a shared infrastructure. When you run a large partly vertically integrated business “sensible” can take on a lot of meanings.

As 5G networks are understood at the moment, they will need many more towers than today’s networks so the deployment issues and visual pollution he mentions are a given.

None of this is to say the carriers are planning to build a shared 5G network, nor is it to say the network structure will be inherently anticompetitive. It is something for a market regulator to consider and watch.

Competition or cartel?

It’s not the Commerce Commission’s job to second guess an as-yet-unsettled technology. Nor can it speculate about plans that may only be written on the back of paper napkins.

Yet it strains credulity to think the three carriers put their heads together to plan the RCG without at least mentioning how such a collaboration might work in the future.

At this point the Wikipedia definition of a cartel is useful:

A cartel is a group of apparently independent producers whose goal is to increase their collective profits by means of price fixing, limiting supply, or other restrictive practices. Cartels typically control selling prices, but some are organised to control the prices of purchased inputs.

No-one would suggest any of this is happening at present, but allowing the three carriers to build a shared network would be a step on the path to a potential cartel-like arrangement.

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Mobile phone handsetPeople are paying more for phones. After years of falling prices, market research firm GfK reports the average price of a phone climbed seven percent in the last year. The number of phones sold worldwide climbed three percent during the year. Sales fell in North America and Western Europe.

GfK works with actual sales data rather than the shipments preferred by some analysts. This means the information is a more accurate reflection of consumer behaviour.

The clear pattern is that phone makers have switched focus towards more expensive premium smartphone models. Apple, Samsung and, most of all, Huawei all moved their customers upmarket. GfK says the premium features have become more important to customers.

What phone buyers want

They now look for: “water and dust protection, battery power and memory, high-resolution sound, camera and video capabilities, bezel-less design and even biometric sensors”.

Rising handset prices run counter to conventional technology hardware wisdom. The usual pattern is for prices to fall over time as manufacturers improve processes and wring out economies of scale. This is accelerated by new market entrants undercutting existing players.

The phone market has been running on a different track ever since Apple introduced the first iPhone a decade ago. For most of that time Apple has made almost all the industry’s profit despite having only a minority market share.

Aggressive phone prices

To a degree Apple’s rivals bought market share with aggressive discounting. That made sense to them during the growth years as people around the world bought their first smartphones.

It meant the phone business went through the usual economic cycle much faster than earlier technology waves. While it was always a competitive business, there were far few players than in, say, personal computer hardware.

There have been casualties along the way. Blackberry, Nokia and HTC were all roadkill on the route to today’s market.

Chasing margins

Now the phone makers, especially the Android phone makers, have turned their focus to margins and profitability. Hence the price rises. Apple pushed the bar higher again with its iPhone X which costs more than NZ$2000. Huawei has an even pricier phone.

Huawei is knocking on the door of Apple and Samsung. It aims to be the first Chinese company to be a global technology quality brand.

There’s still a way to go. The company’s products are excellent quality and contain as much innovation as brands like Samsung. Unlike Samsung, Huawei is on the whole more inclined to invest in engineering than in marketing budgets. That said, the company uses Scarlett Johansson in its advertising to great effect.

Huawei also teams with prestige brands. Its high-end phones use Leica camera lenses and its most expensive models have blingy Porsche designs.

Despite the company’s engineering prowess, Huawei has yet to master the art of looking after a customer after the sale. The biggest complaint you hear is that phone software is rarely, if ever, updated. That may be an issue that only concerns a certain market segment. Ironically, it is the market segment most likely to be drawn to advanced engineering.

Artificial intelligence

Huawei’s latest phone, the Mate 10, includes the kind of artificial intelligence features found in Apple and Samsung models. It’s ability to translate written languages feels almost like magic, or perhaps something from science fiction. In a similar vein, the phones take screenshots when you knock on the display with your knuckle.

For now, the sector’s move upmarket has created opportunities for mid-tier phone makers like Oppo. It’s another Chinese brand. Oppo sells an Android phone with about 90 percent of premium phone functionality for about 50 percent of the price.

Although Huawei would love to be seen as a serious rival to Apple, in truth the two address two quite different audiences. Few Apple iPhone owners would jump ship for a Mate 10. That’s not the case with Samsung customer, the two brands both use the same basic Android software and switching is relatively painless.