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Judging by the latest IDC phone sales report, Apple has now found the point where iPhone prices rises meet customer resistance.

The last two product cycles have seen Apple raise iPhone prices faster than the rate of inflation.

A few anomalies like the troublesome Samsung Galaxy Fold aside, Apple prices have also gone up faster than phones from rival manufacturers. The gap between Apple’s most expensive iPhone and the most expensive mainstream options from the likes of Samsung and Huawei is higher than ever before.

In New Zealand the Apple iPhone XS Max with 512Gb of storage costs NZ$2800. Huawei’s P30 Pro, with 256GB of storage costs NZ$1500. That’s a fraction over half the price of the top iPhone.

Samsung’s Galaxy S10 with 512Gb of storage is $2100. Three-quarters the price of the iPhone XS Max.

Quality?

You can argue Apple’s phones are better than Huawei’s or Samsung’s. Although many readers would dispute that. You can also argue that an iPhone has greater value than an Android for people who have invested in iOS.

Even so, it can’t be an accident that Apple’s sales have dropped both in absolute terms and relative to the market since those price rises.

That fall is not trivial. IDC’s latest phone sales report shows iPhone unit numbers dropped 30 percent in a year. The report says: “The iPhone struggled to win over consumers in most major markets as competitors continue to eat away at Apple’s market share.”

Apple’s iPhone revenues dropped 17 percent.

Third place

IDC says Apple is now firmly in third place behind Samsung and Huawei. The report says the total phone market dropped 6.6 percent year on year. Apple accounted for two-thirds of that drop.

There is evidence much of this drop was in China.

We can’t know for sure there is a direct link between Apple’s recent rounds of faster than inflation price rises and the drop in sales. But it is a plausible working thesis.

Buoyant

For a while Apple’s faster than inflation price rises meant that the company’s phone revenue remained buoyant as unit numbers fell. In effect Apple users were trading up to more ritzy phones. If that was a strategy, it only worked in the short-term.

One aspect of this is that although Apple’s iPhones are more expensive, they contain more technology and more functionality. This might justify the higher price in some cases.

In recent years Apple’s gross margin has been around the 38 percent mark. That sounds huge, but it’s not unusual in the technology sector. Software companies tend to do better.

The most recent result shows the gross margin has fallen from 38.3 percent a year ago to 37.6b percent. In other words, those higher phone prices are not a simple case of Apple cashing in.

Problems everywhere

Samsung and Huawei both face enormous problems. The Galaxy Fold is a potential disaster for Samsung. Meanwhile Huawei is at the centre of a nasty political row. At some point that could affect the company’s handset sales, at least outside of China.

Apple faces a difficult year. If the folding phones from Samsung and Huawei turn out hits, Apple will be on the back foot in technology terms. There’s also the 5G problem. Apple committed to buying Intel 5G chips. It turns out these don’t work, so Apple has turned back to Qualcomm.

For all these reasons, observers are going to judge the 2019 iPhone launch more carefully than any Apple launch over the past three to five years. It might also pay to take a close look at what Apple does with prices later this year. Another big rise would ring alarm bells.

Research company IDC reports that year-on-year phone sales dropped 6.6 percent in the first quarter of 2019. It’s the sixth quarter in a row to see a drop and the rate of fall is picking up. This time last year sales were down 4.1 percent over the same time in 2017.

Samsung remains the leading phone brand albeit with a falling market share. It has been the top-selling brand for each of the last four quarters. During that period Apple jockeyed for second place with Huawei. The Chinese phone maker is now back in second place.

It’s been tough for everyone. Only two of the top five brands sold more phones in the last 12 months than in the earlier twelve months. Huawei and Vivo, which is not visible in New Zealand, both saw sales increase.

Samsung in the driving seat

Samsung accounts for about one phone in five sold. It’s share nudged down a tick as it sold 6.3 million fewer phones than in the previous year. While the company’s premium phone models, notably the Galaxy S10 and S10+, remain popular, Samsung is losing ground lower down the market.

Huawei is the big winner. The company continued its surge that has propelled it past Apple in terms of unit sales. Year on year sales are up 50 percent. In the twelve months to March 2019 Huawei moved to 19 percent market share. That is closing on Samsung’s 23 percent and comfortably in front of Apple’s 12 percent.

This strong growth took place before sales of the recently announced P30 and P30 Pro models could influence numbers. Based on a comparison of the P30 Pro and the Samsung S10 , Huawei may get nearer to Samsung’s share in the coming months.

Worldwide phone shipments

Company1Q19 vol1Q19 share1Q18 vol1Q18 sharechange
1. Samsung71.923.1%78.223.5%-8.1%
2. Huawei59.119.0%39.311.8%50.3%
3. Apple36.411.7%52.215.7%-30.2%
4. Xiaomi25.08.0%27.88.4%-10.2%
5. Oppo23.17.4%24.67.4%-6.0%
5. Vivo23.27.5%18.75.6%24.0%
Others72.123.2%91.927.6%-21.5%
Total310.8100.0%332.7100.0%-6.6%
Figures from IDC, numbers in millions

Apple phone sales fall

Apple’s four percent fall in market share represents something of a sea-change, but is not as dramatic as it is viewed in some quarters. The company’s share price actually rose after it announced its annual results overnight. Apparently iPhone sales were not as dire as expected. The company aims to make up some of the lost revenue from selling services.

We don’t see much of the fourth and fifth brands in New Zealand. Samsung and Apple dominate the New Zealand market with Huawei challenging for a place at the top table. After that, it’s all rats and mice.

For the record Xiaomi’s market share dropped almost half a percent to eight percent. Vivo added two percent of market share taking it to 7.5 percent. Oppo, which is active in New Zealand, was flat and is now in sixth place with a 7.4 percent market share.

Most of the analysts commenting on the results focused on the way consumers are no longer as quick to upgrade phones to the latest models. This makes a lot of sense. A phone should last from three to four years and, advances in photography aside, today’s phones are often not much better than three-year old models.

When new people enter the phone market, they are no longer coming in at the top, but are buying lower priced models from Chinese brands.

Samsung Galaxy Fold

Samsung has postponed high-profile Galaxy Fold launches in Hong Kong and Shanghai. That’s after review phones sent to journalists had screen failures.

Samsung can ill-afford a second major phone launch disaster. In 2016 the company’s Galaxy Note 7 had battery problems that caused the phone to explode. There were two product recalls. Samsung had to withdraw the phone.

The most humiliating aspect of this came every time an airplane took off. Cabin crew would remind passengers of the explosion danger.

Lasting brand damage

If the Galaxy Fold fails on the same scale, and it looks as if it could, there could be long-term damage to Samsung’s brand.

This is a pity. Folding phones were the star attraction at this year’s Mobile World Congress. If they work as promised, they will give the business the biggest shake up since Apple’s first iPhone.

When folded, folding phones look much like today’s premium phones. The difference is they can fold open to give you a much bigger, tablet-like screen. This makes reading and working on a phone far easier.

Galaxy Fold expensive

Foldability comes at a high price. When, or if, they hit the market the early models will cost the thick end of NZ$4000.

Samsung and Huawei both had models on show at MWC. Some other brands demonstrated folding phones that are still in the pipeline.

Huawei gave New Zealand journalists a brief Mate X demonstration. It was long enough to get a feel for how the phones look. The display is impressive, but you do have to live with a slight crease or line down the centre of the larger screen. The hands on session wasn’t long enough to test the phones in any meaningful way.

Across the aisle, Samsung displayed its Galaxy Fold phone in a glass cabinet. There was no opportunity for the adoring crowds to get closer.

Samsung Galaxy Fold, part folded

Folding phones are impressive

At first sight both phones looked impressive. When folded they are at the large end of the phone spectrum. You could fit one in a jacket pocket. They weigh a few grams more than premium other phones. Opened, they are about the size of an iPad mini.

Most modern phone have toughened glass screens. Samsung covered the Galaxy Fold screen with a protective, flexible layer of plastic. The idea is that this stops the screen from getting scratched. If necessary, Samsung can replace this without the need to replace the rest of the screen.

In some cases review devices failed because journalists pulled off this protective layer. This left the screens vulnerable and easy to break.

Battle of the Galaxy Fold bulge

Yet that only accounted for some of the review screen failures. Journalists reported other screen problems. Some has models where half the unfolded display stopped working. At the Verge, Dieter Bohn’s review phone developed a bulge. This broke the screen.

Samsung cranked its communications machine into damage control mode. It issued a statement saying it durability tested phones to withstand 200,000 folds. It also said the problems were with a limited number of early samples.

If that’s true, the company still has a sizeable public relations disaster on its hands. Sending out half-finished breakable products is, at best, irresponsible. Remember, this is the company that once risked airplanes with exploding phones. Samsung should have learned to take extra care with launches.

Huawei Mate X

Meanwhile Huawei is prepping its Mate X for sale. If the company is prudent it will give the first batch extra testing before sending phones out. After all, Huawei has its own publicity problem caused by incompetence to deal with.

It’s starting to look as if Samsung could have a serious cultural problem. It’s not clear if the problem is engineering, marketing or management. One criticism is that management is rigid and unwilling to listen to warnings when things aren’t going well. Staff fear being punished for “disloyalty” and say nothing.

The company is capable of delivering stunning products. Every so often it can claim to have the world’s best phone. Yet, the Galaxy Fold and the Galaxy Note 7 have not been the only missteps. They happen to be bigger and more noticeable.

Otherwise impressive

The incident is disappointing on another level. Folding phones are amazing technology. They are a sight to behold.

I’m a hardened old campaigner when it comes to new products. Often at product launches I’m the grouchy one who isn’t impressed by demonstrations of slight improvements. Nothing makes me more uncomfortable than an enthusiastic employee inviting me to praise a product when I’m working hard to stifle a yawn.

Folding phones weren’t like that. They charmed and impressed me. Sooner or later I’m going to want to own a folding phone.

It’s a cliché in the tech business to say that Apple is often late with the newest ideas, but that when it moves it gets things right. Yet, if Huawei’s Mate X fails to take off, we may have to wait for the iPhone Fold before folding screen technology is ready for prime time.

Apple’s fifth generation iPad Mini packs the power of the iPad Air in a smaller case. That compact size is the secret of the Mini’s appeal.

You may wonder if there’s a market for a 7.9-inch iPad when you can buy a 6.5-inch iPhone. After all, the iPhone XS Max is almost a tablet.

Apple say iPad Mini sales have been steady since the format was first introduced. It’s not for everyone, yet some people who like the Mini are fanatic about their favourite tablet.

One reason is the cost. At NZ$680, the base model iPad Mini costs less than one-third the price of the cheapest iPhone XS Max. It’s not the cheapest iPad, but it’s good value.

Sweet spot

Price is not the only explanation for the Mini’s popularity. The size hits an important sweet spot.

At 7.9-inches, Apple’s 2019 iPad Mini comes in about halfway between the iPhone XS Max and the 10.5-inch iPad Air.

While having a bigger screen than a phone is an advantage, the iPad Mini is still small and light. It weighs 300 grams. It’s handy and very portable.

At a pinch you can fit it in a pocket. OK, a big pocket. Cargo pants could come back into fashion to accommodate iPad Minis. It also slips into a handbag or any other bag. You can hide it in a car glove compartment.

Pythagoras understood

We measure screen sizes across the diagonal. Thanks to Pythagoras’ theorem a 7.9-inch display has 50 percent more viewing area than a 6.4-inch screen. In other words, it’s a big leap.

Among other reasons, the iPad Mini is the right size for people who work on the move. Think of police officers or health professionals. It helps that most people can grip it in one hand.

IPad mini fits one hand

I also find typing on the larger iPad Mini glass keyboard is easier than tapping on a phone screen. That’s because I’m a big bloke with big fingers.

Thumb typing

Apple’s bigger 12.9-inch iPad Pro keyboard works well when laid flat. The Mini keyboard is at its best when vertical. If you hold it up with your hands and hit the keys with your thumbs.

The action is like phone typing, but there’s more room.

This is an effective way of typing when you’re on a crowded bus, train or airplane. I haven’t had the chance to test it on a plane yet. I’m sure if I did I could be productive even in a cramped seat.

The extra screen real estate makes it better than a phone for reading complex information and maps or for inspecting photos. It’s roughly the same size as an e-book reader like the Kindle.

iPad Mini beats phone for web

There’s no question the iPad Mini does a better job of displaying every kind of web or app content better than a phone.

Although you can, at a pinch, run side-by-side apps on the iPad Mini, that’s not its strength. In practice I found I only ever used one app at a time.

In all other respects except the screen, the new iPad Mini uses the same technology as the current iPad Air model. It even has the same A12 chip as the iPhone XR. That means there’s a lot of computing power.

There’s a laminated screen, support for Apple Pencil and True Tone. The last of these means the iPad will adjust screen whites to compensate for lighting conditions. Apple says you get 10 hours battery life. We found that’s about right when we tested the Mini.

Lightning strikes

A couple of quirks: there’s a headphone jack and a lightning port for charging. New Apple devices don’t all have the jack and prefer USB-C over Lightning.

At times the Mini feels more like a big phone than a small iPad1.

The new iPad Mini costs NZ$680 for the basic wi-fi model with 64GB of storage. Boosting the storage to 256GB takes the price to NZ$929. Adding cellular puts another NZ$120 on the price. You might also consider the Apple Pencil at NZ$160.

iPad Mini verdict

My few niggles with the 2019 iPad Mini are minor. The design is the same as seven years ago. There’s less screen and more bezel, the case edges around the screen, than on more modern looking iPads. It also supports the old first generation Apple Pencil, not the new version.

Should you buy the iPad Mini? It’s not the right thing to buy if you’re looking for a laptop replacement. If that’s your goal, get an iPad Air or a iPad Pro model.

If you want a tablet for reading and writing while you’re on the go, it’s ideal. The iPad Mini is a good choice for taking notes and consuming media. It’s also a great upgrade for owners of long-in-the-tooth first generation iPad Minis. I suspect this will follow its ancestor to become another classic.


  1. For perspective, Huawei’s Mate X folding phone has an eight-inch screen. ↩︎

A new unlimited mobile plan from 2degrees can be yours for as little as NZ$40 a month if you are on a shared account. If only one person pays the bill it’s NZ$85. This makes it the best bang-for-buck mobile plan in the country, but there are fish-hooks in the small print.

Unlike rival unlimited offers from Spark and Vodafone, the new 2degrees unlimited plan allows hotspots and tethering.

Yet a sensible journalist might suspect something is up when a press release comes with a footnote attached to the word unlimited.

That’s because unlimited has a non-standard meaning in the 2degrees English dialect. While you may think the word means all-you-can-eat data, at 2degrees it stands for 40GB then the data hose becomes a dripping 1mbps tap.

On top of that, the small print warns: “hotspotting speeds may be reduced further during periods of network congestion”.

So, it’s not unlimited in any usually accepted sense.

That said, the new 2degrees unlimited plan is generous. It is also a better deal than you’ll get from the big mobile carriers.

A monthly 40GB data cap, that’s what we’re really talking about here, is more than you’re likely to need if you use your phone for mail, browsing the web and running everyday apps.

It’s also plenty if you hotspot or tether for similar use. Laptops and iPads can often get through more data than phones.

The 40GB cap is not going to get you far if you watch a lot of streaming video. Even if you stick to modest resolution video, you’ll get through your entire month’s allowance in a couple of days. Choose high-definition video and 2degrees will throttle your connection before the sun goes down on day one.

Small print aside, the 2degrees unlimited mobile plan is beyond competitive. Assuming you get decent coverage on the network, it’s a bargain. The deal is especially good for families sharing a single account. That 40GB cap is per person. Which means you can get all the phone and mobile data four family members need for NZ$160.