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NZ phone market grows, bucks worldwide trend

New Zealand phone shipments grew 0.9% in 2022 - State supported connectivity projects march on - Does high-speed internet boost exporting?
NZ phone market grows,  bucks worldwide trend

IDC says New Zealand phone shipments grew 0.9 per cent in 2022 to reach 1.47 million units. That not only bucks the recent local trend of falling sales, but is in stark contrast to the international market which saw worldwide shipments fall 11.3 per cent last year.

There’s little room for optimism. In the fourth quarter New Zealand shipments dropped 21 per cent year on year. That’s considerably worse than the worldwide drop of 18.3 per cent in the same quarter.

IDC says New Zealand’s fourth quarter was the slowest for phone shipments since 2010.

Zachary Candy, IDC New Zealand’s lead analyst for client devices – mobile phones says the drop is down to scaled down consumer spending as the fear of recession looms over the economy.

“Adding to the challenges for vendors, consumers have begun to rethink how often they are upgrading their devices. Software upgrades are available for longer, and there are fewer step changes/innovations between the updated series and the former version thus reducing consumers’ motivation to upgrade as frequently”, he says.

Samsung remains New Zealand’s top phone brand with a 43 per cent market share, down from 45 per cent a year earlier. Second placed Apple is moving in the opposite direction with 37 per cent of the market, up from 35 per cent. Apple moved ahead of Samsung in the fourth quarter. Oppo is a long way behind in third place ahead of the Vodafone-branded handsets which are fourth.

Nokia is the only other brand to figure. IDC says shipments remain flat, but its market share has increased.

Gloomy revised outlook for international phone shipments

IDC’s updated forecast of 2023 worldwide phone shipments now shows a decline of 1.1 per cent. The research company previously forecast 2.8 per cent growth. It expects 1.19 billion units to ship this year and says the market will recover next year.

There are two bright spots: 5G models and foldable phones. IDC says 5G phones will account for 62 per cent of all phones sold in 2023. Meanwhile it expects twice as many folding phones to be shipped in 2023 as last year. Yet at 22 million units, that’s a mere rounding error on the billion plus phones that will be shipped in 2023.

The rise and fall of worldwide phone shipments 2011 to 2022

A useful chart from Counterpoint Research shows the big picture for phone shipments over the past 11 years with a clear rise and fall in demand. The market in 2022 fell back below the level of 2014.

Global phone shipments 2011 to 2022.

State supported connectivity projects march on

Crown Infrastructure Partners latest quarterly update says 45 new mobile towers were added to the nation’s network in the last three months of 2022. The towers cover an additional 105 km of State Highways, bringing the total to 1211 km of Rural Connectivity Group (RCG)coverage. The quarter’s build covered an additional 16 tourist spots. The quarter also saw Chorus complete the UFB fibre build programme.

CIP reports UFB uptake is now at 71 per cent while uptake on the RCG towers is at 43.5 per cent.

Does high-speed internet boost exporting?

Research published by the Productivity Commission looks at the benefits and potential of high speed internet connections for New Zealand’s exporters.

There’s no evidence the arrival of fibre and the UFB network has delivered an across the board easy-to-measure export pay-off, but authors Lynda Sanderson, Garrick Wright-McNaughton and Naomitsu Yashiro say the technology along with websites and other online platforms can increase the visibility of exporters to potential foreign customers. It can reduce search costs and international frictions in establishing trade relationships.

They write: “If used well, these technologies can also have an indirect impact on firms’ ability to trade internationally, through increasing their productivity and reducing costs, thus giving them a competitive edge in the global market.”

The report found: “The positive relationship between exporting and UFB uptake is limited to services industries. This is consistent with their greater ability to deliver products via digital channels. In contrast, we find no significant relationship for goods-producing and trading industries, which typically use ICT less intensively.”

It goes on to say: “To the extent that UFB adoption is of particular value to smaller firms and to professional services industries, such initiatives may help to diversify exports away from traditional products and exporters.”

The authors wrap up with a reminder of the work exporters still need to do to get the productivity benefits from fast networks. This is something the government’s Digital Boost programme aims to fix.

Applications where high speed fibre shines

Writing at the ABI Research blog, analyst Jake Saunders looks at four applications he says fuel demand for high speed fibre connections.

Television and streaming video top the list. Saunders say video content will consume 82 per cent of total worldwide internet traffic this year.

In itself, this is not new intelligence. A decade ago New Zealand’s fibre companies and service providers first noticed a significant uptick in customers signing up to fibre as streaming video services came online.

However, new higher definition services mean streaming video demands more bandwidth than ever.

Saunders writes: “4K and other Ultra-High Definition (UHD) content requires about three times the bit rate speed of HD TVs, and around 15 times that of Standard Definition (SD). And when there are multiple devices being used simultaneously, the strain on the home network compounds. These network capacity constraints can lead to delayed load times, video buffering, latency, and network disconnect.”

Despite having been around for a generation, virtual reality applications are now starting to gather momentum. ABI’s Saunders thinks this will drive fibre demand.

He says fibre is a good match for “immersive Extended Reality (XR) and metaverse applications, such as social media, video game streaming and interactive video.” He says you need a local network throughput of 25 Mbps or better and latency below 50 ms for these technologies.

While the first three applications are well known drivers, or potential drivers, of fibre demand, the smart home is less obvious. Saunders says users can manage homes remotely using tablets, laptops and phones. Many smart home applications don’t use much bandwidth, but video cameras and voice control do.

“Contingent on device settings and features, a smart camera alone can use up anywhere from 18 GB and 400 GB of data every month.”

The surprise prediction in Saunders’ blog post is consumer robotics. He says these devices can consume vast amounts of data.

In other news…

Hardware maker HP saw a 19 per cent revenue fall in the first quarter of the 2023 financial year. That’s the steepest fall in seven years, but an improvement on analyst estimates. HP says orders from businesses are down as companies tighten budgets. The company expects sales of PCs and notebooks to decline again in the second quarter. Last year the PC industry suffered a 16 per cent decline, this year another fall is expected. Gartner expects PC shipments to drop a further 6.8 percent in 2023.

After pouring resources into a metaverse project that appeared to be going nowhere, Meta is now scrambling to divert its energy into generative AI. The company has formed an AI product team and is unifying various AI projects around the business.

Twitter users around the world suffered a two hour outage on Wednesday two days after the company laid off 200 staff members including the engineers who keep the site ticking over. The New York Times reports that under new ownership Twitter now fails much more regularly (paywall).

Security writer Brian Krebs says hackers managed to get past defences at German mobile phone giant T-Mobile more than 100 times in 2022.

New features are being added to popular video streaming social media site TikTok in a bid to limit teenagers’ screen time to 60 minutes a day. Chances are the kids who need the most help will be able to find ways around the limit - they always do.

Ford, the motor company, is working on a technology that could see cars repossess themselves and drive back to the showrooms if customers miss payments.

The Download Weekly is supported by Chorus New Zealand.