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Gartner’s latest New Zealand shipment forecasts makes for grim reading if you are in the device business.

The total device market is set to drop by 14.6 percent in 2020 when compared with 2019. That means a total of 360,000 fewer devices.

New Zealand fares worse than the rest of the world which Gartner says will see a 13.6 percent fall in device unit shipments.

Falls everywhere

There are falls in each category Gartner measures, see the table.

New Zealand shipments forecast by device type (thousands of units)
Device Type20192020
Traditional PCs (Desk-Based and Notebook)439396
Ultramobiles (Premium)199190
Total PC Market637585
Ultramobiles (Basic and Utility)538474
Computing Device Market1,1761,059
Mobile Phones1,3251,077
Total Device Market2,5002,136
Due to rounding, some figures may not add up precisely to the totals shown.
Thin and light notebooks are listed under premium ultramobiles
Tablets and Chromebooks are listed under basic ultramobiles
Source: May (2020)

Mobile phone sales have fallen faster than computing devices. Gartner forecasts 1.08 million units in 2020 compared with 1.36 million units in 2019. That’s a drop of nearly 19 percent.

The analyst company says it expects consumers to extend the life of their mobile phones replacing them on average once every 2.7 years. For more on this see How long should I keep my phone?

Pandemic device impact

Looking at the worldwide numbers, Gartner says the fall could have been so much worse if it were not for pandemic lockdowns. Because millions of people were forced to work or study from home there was an increase on spending on notebooks and tablets.

Gartner says getting on for half of all employees will work remotely for some or all of the time after the pandemic. This compares with around 30 percent of employees beforehand.

This has accelerated the move from desktop PCs to notebooks.

Phones

While people have used their phones more during the lockdown, Gartner says lower disposable incomes mean that people will upgrade more slowly than in the past. Gartner sees the average life of a mobile phone increase from 2.5 to 2.7 years.

One other trend spotted by Gartner is the relative lack of interest in 5G handsets. Before the pandemic it was widely thought that the appearance of 5G mobile networks would kick-start a handset upgrade cycle.

Gartner now forecasts that 5G phones will only account for 11 percent of handset shipments this year. In part this is because of the delayed delivery of new handsets. Gartner also says the extra charges imposed on 5G customers is inhibiting sales.

IDC reports shipments1 of new phones dropped 11.7 percent year on year in the first three months of 2020. That’s a total of 275.8 million phones.

It is the biggest year-on-year drop ever seen.

First quarter numbers are usually lower than the fourth quarter which includes all the phones purchased as Christmas gifts. The fourth quarter usually also captures sales of new phones immediately after the major product launches.

Yet this took place before phone buyers faced the full impact of the Covid–19 pandemic. Sure parts of China were closed down. And China does account for about a quarter of the worldwide new phone market. That’s going to have a huge impact.

Likewise, most of the world’s phones are made in China. Production and the pre-production supply chains were badly affected in the second half of the quarter.

It’s unlikely the current quarter will see much improvement. China may be back at work, but people elsewhere have been, many still are, in lockdown. That’s not great for phone sales. Nor is the economic uncertainty. That new phone sale is an easy expense to cut when the future looks tougher.

Samsung hit hard

While Samsung remains top dog with 58.3 million phones and a 21.1 percent share, it suffered the largest drop in shipments during the quarter. Year on year sales are down 18.9 percent.

There is good news for Samsung. IDC says the higher price of the Galaxy G20 phone means better profits.

Samsung has two important phones scheduled for launch later this year. The Fold 2 and the Note 20 are both likely to be expensive phones at a time when demand for pricey high-end models could cool.

Huawei better than you might expect

The political waves rocking Huawei’s boat have harmed phone sales less than you might expect. Year on year sales are down 17 percent. That’s bad, yet not as bad as Samsung.

Apple’s year on year sales were, in effect, flat with a 0.4 percent decline. This translates into an increased share of the overall market. It has 11.8 percent. The company’s success was mainly thanks to its iPhone 11, which in certain configurations is the most expensive non-folding handset.

IDC says that if the trend to lower price phones continues, and let’s face it that looks likely, Apple should have a hit on its hands with the iPhone SE.

What next?

To get an idea of how this quarter could go, Qualcomm, which makes chips for mobile phones, says it expects a 30 percent year on year drop for the current, second quarter. Given that it takes orders from phone makers ahead of manufacturing, it has a good handle on the market. That would be a huge drop.

IDC suggests a bright spot could be 5G. People need new handsets to use the faster wireless technology. It’s possible customers will trade up to 5G phones later in the year.

On the flip side of this, most users won’t notice any performance difference from switching to 5G. Data will download faster, but at the time of writing there are no mobile apps that can use faster data speeds.


  1. Shipments is industry talk for products that have left the warehouse en route for customers. While a shipment is not the same as a sale, it is close enough. Retailers don’t tend to carry huge inventories of product these days. ↩︎

Virtual reality winter

In The VR winter Benedict Evans writes about virtual reality and its failure to take off:

We tried VR in the 1980s, and it didn’t work. The idea may have been great, but the technology of the day was nowhere close to delivering it, and almost everyone forgot about it. Then, in 2012, we realised that this might work now. Moore’s law and the smartphone component supply chain meant that the hardware to deliver the vision was mostly there on the shelf. Since then we’ve gone from the proof of concept to maybe three quarters of the way towards a really great mass-market consumer device.

My first encounter with virtual reality was in the 1980s. It was so bad it was laughable. Then again it had a second run of interest in the mid-1990s. There were consumer plays which were only a little less awful than the 1980s experience. Huge unwieldy headsets and odd gloves were all part of the deal.

Silicon Graphics teased journalists with a vision of how the technology might work for business analytics. It sounded convincing at the time.

The idea went something along these lines:

“Imagine you are standing in a field and all the waves of grass are blowing around. Each blade represents a data point – maybe the sales performance of individual outlets or even counter staff working for a multinational retail chain. One or two blades are, perhaps, a different colour. You walk over and investigate these. The purple blade is your best performance sales person. The red one is your worst performer.

And so on…”

Ridiculous

While this sounded plausible to the audience in 1995, in hindsight it seems faintly ridiculous. Although there may be many powerful data analysis applications of immersive three-dimensional worlds, finding employee of the month this way seems daft when the results would leap out of an everyday spreadsheet.

A more practical and topical use of immersive three-dimensional graphics might allow researchers to walk around and explore a giant model of, say, a virus to help identify weak spots that medicine or a vaccine could address.

In his story, Evans works through most of the reasons why virtual reality never took off. In part it was always too niche. He offers other reasons, but I think he misses something in his story.

I’ve yet to see a VR experience which is not so bad that I’m embarrassed for the people who made it. There was a VR presentation at an Auckland press conference a year or so ago. Apart from feeling slightly sick and disoriented during the presentation, it was, to say the least unimpressive.

Three years ago at Mobile World Congress a slew of mobile handset companies showed VR systems based on phones. There were at least seven displays, but between them there were only two pieces of content on show. Most shared the same roller coaster ride VR demonstration.

At the time I noted that the fact so many huge names had to show the same content at one of the world’s biggest tech events implied there’s precious little worthwhile content. At last year’s Mobile World Congress, the most visible VR content was the same demonstration. The technology may or may not have been better. Either way it left me cold. Yet the companies pushing it hadn’t bothered to invest in creating the content to show it off.

Virtual reality killer content

There is a chicken and egg here. Put aside for one moment the clunky graphics, the fact that movement isn’t smooth and the possibility of toppling over or vomiting from VR sea sickness.

For VR to take off it needs killer content, but creating immersive, high resolution content is expensive. Far more expensive per minute of content than the cost of a blockbuster movie. And yet almost everyone can watch a blockbuster movie. Only a handful of people can watch VR. Not enough to make it worth creating that blockbuster content.

So until this is resolved or until someone creates a mainstream business application using the technology, VR going to remain a backwater. Every so often the idea will get dusted down and presented again before it’s put back in the too hard basket.

Samsung’s Galaxy Z Flip is a another take on the emerging foldable phone format.

Unlike earlier foldable phones which are the size of everyday phones that open to become an iPad mini-sized tablet, the Flip opens long ways. It resembles the flip phones that we are supposed to feel nostalgia for.

It’s neat, but not as useful as other folding phones for reading complex documents.

Samsung Galaxy Z Flip

But there’s something else about the Galaxy Z Flip that appeals to me. It goes a long way to protect you from notification hell.

There’s a tiny screen on the front of the phone which lights up when there is an incoming notification. This is a lot less distracting than having a conventional phone screen light up with with a notification message.

Moreover, because you have to physically open the phone to read the full notification, there is a lot more distance between you and the incoming distraction.

It is easier to ignore the notification and easier to park it for later when you are not trying to focus. It’s not much protection, but enough to ease the cognitive load for a moment or two.

Of course the other possibility is to turn notifications off. That would be cheaper.

This year’s Mobile World Congress in Barcelona has been cancelled after mass cancellations from exhibitors worried about the corona virus. GSMA, the organising body pulled the plug on Wednesday, two weeks before the event was due to begin. Before GSMA acted big names such as Cisco, Nokia, Vodafone group and Facebook all dropped out.

The Financial Times (behind a paywall) reports:

The conference’s cancellation will be a big blow for Barcelona, where hotels and restaurants ramp up prices in expectation of a bumper week that attracts high-spending telecoms executives. Local media has estimated that it generates €492m for the city, and creates about 14,000 temporary jobs.

This makes a lot of sense. MWC is a huge four day event, more than 100,000 people from all over the world attend. Many are from China where the virus is most prevalent. Last year the organisers boasted there were more than 1 million business meetings at the event.

If only one of those people tested positive for the virus, all the attendees would need to be quarantined for two weeks. Apart from anything else, the expense and logistics of that would be on an unprecedented scale.

Apart from the financial risk, the danger for GSMA is that cancelling this year’s MWC could put next year’s event in jeopardy. But let’s not dismiss that financial risk, the show’s insurers appear unwilling to pay out for cancellation.